Tea-Infused BS

TW: I cannot take it anymore. All of this hypocritical BS from the tea-infused Republicans must be stopped.

From Barry Ritholz:
"Once upon a time, there was a President. He was elected in the middle of a recession, following an economic crisis and a decade long bear market. He came into office on high flying oratory, but was regarded by many as a lightweight.
Once in office, he passed a variety of legislation over the objections of a hostile opposing party. The pundits and the thinktanks derided his big spending, his tax cuts, and his reorganization of government. He had very different priorities than the prior president, and tried to put his stamp on government in a variety of reprioritizations.

The President had barely been in office for 18 months when the pushback to his agenda became fierce. The media and the opposing political party all focused on the budget deficit. Most of it had been accrued long before this President came into the office, but that did not stop him from getting the full blunt of the blame. “We must stop this fiscal profligacy, or it will be the end of us!” the critics all cried.
But the president ignored the critics, and put forth a deficit laden budget that contained a massive stimulus and tax cuts. He even joked about the debt issue: “I am not worried about the deficit. It is big enough to take care of itself.”
By the second year of his presidency, the stimulative effects of the deficit had their impact. Unemployment began to come down, incomes went up, and the stock market roared ahead.

By now, it should be obvious that we are not discussing President Barack Obama, but rather the 40th President of the United States, Ronald Reagan.

Which raises an interesting question: We seem to be overrun with Austerians, newly minted deficit chickenhawks who recently have discovered the evils of deficit spending.

What would all of these deficit foes have said to Ronald Reagan during the first 2 years of his Presidency? Mr. President, we cannot spend more than we take in? Mr. President, we cannot afford those tax cuts — or to spend so much on the military?
The current president, who obviously has very different priorities than RR, is in many ways following his path: Huge deficits, tax cuts targeted to his electoral base, allowing policiies of his predecessor to expire.

I find it terribly amusing that some conservatives have latched onto the deficit as their key issue, when they took the idea of deficit spending to great new heights! Whether you are looking at the economic policies of Ronald Reagan or George W. Bush, reining in the deficit was clearly of no concern. (Forget speechifying, I refer to actual policies).
~~~
I continue to see the Austerian movement in the United States as thinly disguised partisan politics. These are people who will say anything to keep the subsidies and tax benefits flowing to their electoral base. They will say anything –regardless of whether they actually believe these things — to thwart the opposing fellows priorities.

Anyone who believes the new deficit fighters care about deficits has not been paying attention. This is simply about power and money and legislative priorities and cash. With only a very few exceptions, it has nothing to do actual fiscal priorities and debt loads and deficits.

The vast majority of these new deficit chickenhawks — who voted for unfunded entitlement program (prescription drugs), who gave away trillions in unfunded tax cuts, who voted for a trillion dollar war of choice, are simply not to be believed. Their past actions speak far louder than anything they might say today."

All You Need To Know

From Barry Ritholz' Big Picture Blog:
"There is a huge CBS/NYT poll and article (Poll Finds Tea Party Backers Wealthier and More Educated) about the tea party members.

I was not surprised to read they skew older, white, Republican, better educated and higher income than the average American. I was surprised to read they favor Social Security and Medicare.

Towards the end of the article, I read a shocking data point. In the orgy of coverage of this poll and article generated, no one seemed to mention this:

The percentage holding a favorable opinion of former President George W. Bush = 57%

A substantial majority of Tea Party members hold a favorable opinion of the man that history will very likely deem the worst president in American History (Presidential Historians disagree as to whether he is in the bottom 3 or 5 as of today).

Its all you need to know about the Tea Party."

via Big Picture blog (I think) click to enlarge

TW: Photo entitled "Fruit"
via the Big Picture blog (click to enlarge)

Some Symptoms Of the Decline Of Our National Discourse

TW: Barry Ritholz seems like a fairly level-headed and a financial commentator who keeps his politics largely separate from his investment insight. His description of what happens with CNBC seems to me symbolic of what happens with most TV outlets. Things are getting less informative not more.

From the Big Picture:
"I had lunch the other day with several other analysts, strategists, money managers and economists, all of whom shall remain nameless. All make frequent media appearances. The conversation drifted over to CNBC. The consensus is everyone at the table wants to do less of it.

The reasons given:
-Producers try to tailor the discussion (“Be more Bullish/Bearish”);
-Too time consuming;
-Law of diminishing returns — the benefits are less and less each appearance;
-Nuance has become a dirty word (“Pick a Letter to describe the economy”);
-Last minute cancellations when “better” names become available;
-Dumbing down of the discourse (One person called it “Foxification”)

I then mention that while I still do a ton of media, I have become Persona Non Grata at CNBC.

There was an issue with some really obnoxious blog comments (they were deleted); I started asking not to be booked with really dumb guests (I also requested no Octobox). I did do Fox a few times (But really, who cares about that? I do all media outlets on behalf of my firm).

With Dylan gone, I dont hear from Fast Money, and with Kudlow, I was told I was “too nuanced“– a phrase that is hardly ever used to describe me..."
http://www.ritholtz.com/blog/2010/02/persona-non-grata-at-cnbc/

Empower the Corporations!!

TW: Have been meaning to get to this. The five conservatives on the SCOTUS have decided corporations should have the same rights as folks. Barry Ritholz quoting Jeremy Grantham captures a key difference between the average volk and a corporation. The populists may think these days that the Republicans are their huckleberries but not so much.

From the Big Picture blog:
"Supremely Extreme: Another “Day That Will Live in Infamy”.
Five Supreme Court justices today announced that not only are corporations people and that their money is free speech – this is old hat and a very ugly hat at that – but now, there should be no limit to the money they spend to influence political outcomes. This would be one thing if corporations really were “democratic associations” of humans that the Founding Fathers may have wanted to protect.
They are, instead, small oligarchies of top management. Thus, the top management of major oil and coal companies can decide what political outcomes they want to promote, say, unlimited production of carbon dioxide (none of their CEOs apparently has grandchildren!), utterly without any approval of their decisions by the millions of actual owners.

The financial power of corporations was already in danger of overwhelming the democratic process in Congress and this makes the damage potentially unlimited and puts the Court’s seal of approval on it. So let’s do it in style and have a name change. The U.C.A. has a familiar look: The United Corporations of America!"
http://www.ritholtz.com/blog/2010/01/grantham-usa-uca/

Right On Barry!!

TW: As Ritholz say mixing politics and investing is a recipe for disaster. Now that Murdoch et al. have control of the Wall Street Journal watch out. As he frames the editorial pages of the WSJ have always been a swamp of right-wing polemics in opposition to any and all even marginally progressive ideas. The actual business news pages were far less partisan, this appears to be changing for the worse.

From Barry Ritholz at his Big Picture blog:
"The politicalization of the WSJ has moved to a new and more risky phase. The paper is now in danger of being a money loser — not for its investors (tho that has already happened), but for those traders who read its content.

It used to be that articles on the Market or specific companies or various finance stories were objective and reliable and free from bias. Sure, you could always count on money losing, bat-shit crazy nonsense in the editorial pages, but that was a special area of sequestered partisans, who due to their insanity cared not a whit about how much capital their lunatic ravings lost their readers. (The list is long and varied, but the Boskin “Obama Crash” on March 6th is a good place to start; then read anything Don Luskin writes — he is a reliable contrary indicator).

I assumed the drunks on the OpEd page did not care about what they did to your portfolio if you drank their Kool-Aid. But they were easy to steer clear of — you simply avoided that page, or read it and laughed. Smart investors could easily say “Go sell crazy somewhere else –we ain’t buying.” That was possible because you knew that the business pages were sacrosanct, always run with a steel-eyed objectivity that professionals could rely upon.

That is no longer the case. The lunatics now run the asylum, and henceforth, I am moving the WSJ into the column of “Stuff to read, but not take very seriously.”

I am bereft over this. This is a major change for me, for I have loved this paper for years, even decades. I read the Times (along with many other papers), but as someone who works in finance, I marveled at the quality and breadth of the business reportage at the Journal. Accuracy was paramount, political bias limited to the cartoon (Opinion) pages. For a long time, it was the best paper in America.

Those days are now ending.

...Politics and investing are a fatal combination to performance.

....Hence, I must now move the Journal out of my column of “Essential investor reads,” and into the column marked “Infotainment.” Under Murdoch, the paper has become politicized to the point of losing a significant portion of its value.

Investors beware."
http://www.ritholtz.com/blog/2010/01/wsj-jumps-the-shark/

Exactly!!

From Barry Ritholz at the Big Picture blog:
"I spoke at a conference recently at a major bulge bracket firm. A friend introduced me to a bond manager who runs an enormous amount of money.
He is not the typical manager. He said one of the most amusing things I’ve ever heard:
“Isn’t it funny when you walk into a investment firm, and you see all of the financial advisors watching CNBC — that gives me the same feeling of confidence I would have if I walked into the Mayo-clinic or Sloan Kettering and all the medical were watching General Hospital…”
-Senior portfolio manager, UBS"

TW: I would add also analogous to a voter who watches Fox News all day and then tries to make an informed decision.

Food For Thought (cont.)

TW: All three of these folks USED to work at Merrill Lynch. Their observations are focused on investing but relevant for many other life pursuits.

From Big Picture blog:
"Richard Bernstein’s Lessons
1. Income is as important as are capital gains. Because most investors ignore income opportunities, income may be more important than are capital gains.
2. Most stock market indicators have never actually been tested. Most don’t work.
3. Most investors’ time horizons are much too short. Statistics indicate that day trading is largely based on luck.
4. Bull markets are made of risk aversion and undervalued assets. They are not made of cheering and a rush to buy.
5. Diversification doesn’t depend on the number of asset classes in a portfolio. Rather, it depends on the correlations between the asset classes in a portfolio.
6. Balance sheets are generally more important than are income or cash flow statements.
...10. Leverage gives the illusion of wealth. Saving is wealth.

David Rosenberg’s Lessons
...2. Never be a slave to the data – they are no substitutes for astute observation of the big picture.
3. The consensus rarely gets it right and almost always errs on the side of optimism – except at the bottom.
4. Fall in love with your partner, not your forecast.
5. No two cycles are ever the same.

Bob Farrell was considered the best strategist on Wall Street, and while he still pens a stock market letter, his “lessons learned,” written back then, are as timeless today as they were in 1992.
1. Markets tend to return to the mean over time.
2. Excesses in one direction will lead to an opposite excess in the other direction.
3. There are no new eras – excesses are never permanent.
4. Exponential rising and falling markets usually go further than you think.
5. The public buys the most at the top and the least at the bottom.
6. Fear and greed are stronger than long-term resolve.
7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chips.
...9. When all the experts and forecasts agree – something else is going to happen.
10. Bull markets are more fun than bear markets."

http://www.ritholtz.com/blog/2010/01/lessons-from-merrill-lynch/

Food For Thought (cont.)

TW: I would assume we have all seen these type studies before but one would do well to keep constantly reminded about their realities.

From John Mauldin at the Big Picture blog:
“...a group of people were asked to read randomly selected studies on the deterrent efficacy of the death sentence (and criticisms of those studies). Subjects were also asked to rate the studies in terms of the impact they had had on their views on capital punishment and deterrence. Half of the people were pro-death penalty and half were anti-death penalty.

“Those who started with a pro-death sentence stance thought the studies that supported capital punishment were well argued, sound and important. They also thought that the studies that argued against the death penalty were all deeply flawed. Those who held the opposite point of view at the outset reached exactly the opposite conclusion.

“As the psychologists concluded: ‘Asked for their final attitudes relative to the experiment’s start, proponents reported they were more in favor of capital punishment, whereas opponents reported that they were less in favor of capital punishment.’ In effect each participant’s views polarized, becoming much more extreme than before the experiment.

“In another study of biased assimilation (accepting all evidence as supporting your case) participants were told a soldier at Abu Ghraib prison was charged with torturing prisoners. He wanted the right to subpoena senior administration officials. He claimed he’d been informed that the administration had suspended the Geneva Convention.

“The psychologists gave different people different amounts of evidence supporting the soldier’s claims. For some, the evidence was minimal; for others, it was overwhelming. Unfortunately the amount of evidence was essentially irrelevant in assessing people’s behavior. For 84% of the time, it was possible to predict whether people believed the evidence was sufficient to subpoena Donald Rumsfeld based on just three things:
1. The extent to which they liked Republicans
2. The extent to which they liked the US military
3. The extent to which they liked human rights groups like Amnesty International.

“Adding the evidence into the equation allowed the researchers to increase the prediction accuracy from 84% to 85%. Time and time again, psychologists have found that confidence and biased assimilation perform a strange tango. It appears the more sure people were that they have the correct view, the more they distorted new evidence to suit their existing preference, which in turns made them even more confident!”

“We’ll pluck significance from the least consequential happenstance if it suits us and happily ignore the most flagrantly obvious symmetry between separate aspects of our lives if it threatens some cherished prejudice or cozily comforting belief; we are blindest to precisely whatever might be most illuminating,” wrote Ian Banks, of the protagonist in the science fiction novel Transition I am currently reading..."

http://www.ritholtz.com/blog/2010/01/2010-forecast-the-year-of-uncertainty/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29

NYT Heat Maps

TW: I find these heat maps interesting, these are a global and a US only view of visitors to the New York Times website for one day in June last year.

The New York Times site traffic, World View, June 25, 2009 from Nick Bilton on Vimeo.

The New York Times site traffic, US, June 25, 2009 from Nick Bilton on Vimeo.

A Climate Change Meme Rebuttal

TW: Here Ritholz tries to put some of the denialists into context. He does not claim it as definitive but this effort to condemn climate change UNLESS change believers can prove without ANY doubt its efficacy is a bad path for world.

From Barry Ritholz at the Big Picture blog"
"One of the memes I’ve heard recently in the climate debate is that there is no scientific consensus — that there is actually strong disagreement.

The main basis of this argument is that 31,486 dissenting scientists have signed a petition against the belief that Global Warming is man made at the PetitionProject.org. I don’t want to debate climate change; rather, I want to look at that argument to see if there are any statistical flaws in it. My problem is whenever anyone uses a single, out of context, data point. What does this number actually mean? Is 31,486 alot or a little? How many scientists are there in the US? etc..."


http://www.ritholtz.com/blog/2009/12/statistics-scientific-consensus-on-climate-change/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29

Amazing

(click on image to enlarge)

From Boston Globe's Big Picture blog:
"This is called the Hubble Ultra Deep Field. Starting in late 2003, astronomers pointed Hubble at a tiny, relatively empty part of our sky (only a few stars from the Milky Way visible), and created an exposure nearly 12 days long over a four-month period. The result is this amazing image, looking back through time at thousands of galaxies that range from 1 to 13 billion light-years away from Earth. Some 10,000 galaxies were observed in this tiny patch of sky (a tenth the size of the full moon) - each galaxy a home to billions of stars."

TW: Our knowledge of the universe is ridiculously limited.

Jim Cramer: Whiny Beeetch

From Jim Cramer appearing on Meet the Press:
"The CEOs I talk to, they’re hiring. They’re hiring in Brazil, they’re hiring in Russia, China. Why are they hiring in those countries? Because it’s steady, we know what to get from the government. It’s a rather — it’s rather quizzical that we know what the Communists will give us but we don’t know what the capitalists will give us."

From Jim Bianco (another Wall Street investor) via Big Picture blog:
"Let us get this straight, in corrupt and Communist countries companies are hiring. They have transparency … that the government can nationalize your company whenever they want and execute you if you complain. Here we are paralyzed because we don’t know whether our tax rate will be 40% or 42% next year"

TW: The sentiment expressed by Cramer is not unique. Wall Street and conventional American business folks are the whiniest bunch of bitches of all-time. Last summer and fall, you may recall Cramer on TV literally pounding the table demanding government intervention. Now that Armageddon (apparently) is averted, he is leading the charge back to laissez-faire. Meanwhile, heaven forbid the wealthy go back to 2000 tax rates or face any regulations to prevent the next crisis.

"Socialism" In Action

From the Big Picture:
"This is actually terrific news:
“The Obama administration’s push to solve the nation’s energy problems, a massive federal program that rivals the Manhattan Project, is spurring a once-in-a-generation shift in U.S. science.

The government’s multibillion-dollar push into energy research is reinvigorating 17 giant U.S.-funded research facilities, from the Oak Ridge National Laboratory here to the Lawrence Berkeley National Laboratory in California. After many years of flat budgets, these labs are ramping up to develop new electricity sources, trying to build more-efficient cars and addressing climate change.

In fiscal 2009, the Obama administration increased the funding by 18%, to $4.76 billion, to the Department of Energy’s Office of Science, which oversees 10 national labs and funds research at another seven. The office will receive $1.6 billion in government stimulus spending, as well, much of which it will also channel to these laboratories.”

We have had a series of incremental gains in various alt.energy technology. What we need is a major breakthrough in Physics — on a fundamental level — in solar energy efficiency, battery storage, transfer technology, wind resources, wave/tide conversion, etc."

TW: These are exactly the programs many Republicans would kill. War spending up, prison spending up, science research not so much.

The Art Of the $20 Greased Palm

TW: This is a vintage 2003 piece on the art of using $20 bill to get one's way in the world. I only clipped a couple of bits, the whole piece is pretty good though.

From Esquire via the Big Picture blog:
"...On the plane, I approached the woman in seat 1A and held out a twenty. She asked if I was serious. I said yes. She took it and ran to 9B like her pants were on fire.

On the next leg--Cleveland to New York--I skipped the ticket counter altogether, walked straight into first class, and announced that I'd give anyone twenty dollars for his seat. There was some laughter, some nervous ass shifting, and just when I figured no one would bite, a big guy with a beltful of pagers and cell phones took the deal. The flight attendant jumped me when I sat down, asked if money had changed hands. The guy next to me nodded, and she jabbed me with her finger. "I could have you removed from the plane for that," she said, but the flight was crowded and soon she moved on. The guy sitting next to me said he'd never seen that trick before, and he was going to try it next time he didn't get an upgrade. "The FAA would shit their pants if everyone could do that," he said. "You could auction first class away if you had enough time...

...I always grease Bobby H., the bellman at my hotel, and on my first night, within minutes of the pass, he suggested that I might request a room upgrade. He even gave me a room number to ask for. Another twenty at the desk and I was out of two queens, snug in my one king. The next day, we ran the same drill, and wham, I was in the minisuite. The twenty after that, I was in a full suite with a view of Times Square. We used a different desk guy each day. When you're passing twenties, Bobby H. told me, you have to spread the wealth. "It's a one-time trick," he said. "You don't want anyone to catch on." Somehow he managed to take a twenty each time, having caught on fully some time ago."
http://www.esquire.com/features/ESQ0303-MAR_20DOLLARS

A Little Sculpture

(click to enlarge)
From the Big Picture blog:
" quoting WSJ-'The artwork is a critique of the global financial crisis, with the bull representing Wall Street and the man pinned to the wall representing Bernard Madoff.'

Three odd things about this Chinese sculpture: 1) It appears that Madoff has horns (wonder what THAT means) and 2) The bull appears to be badly flatulent.
Worst of all, it somehow implies that it was Wall Street captured or uncovered Madoff’s crimes — when in fact it was the Bear market that revealed his sins."

TW: Some Chinese culture I like.

Worship v. Problem Solving

From Barry Ritholz at Big Picture Blog:
"...I'm watching Rudy speak on CNBC about bank bailouts and bank regulation — and I am comforted by the simple fact that he is not in charge. As critical as I have been about the Obama administration’s economic approach, it has been about the policy response, not the understanding of the crisis.

The mayor, on the other hand, is frighteningly clueless in a Phil Gramm kinda way — he clearly does not understand how the crisis occurred, what caused the collapse, and how to fix it. Instead spouts the same discredited meme — that too much regulation was the problem. He is old school, well coached in free market aphorisms and now discredited market worship.

Its a shame that none of the anchors queried him as to what current regulations he would get rid of. (Nothing like letting a hanging curveball pass you by for a called strike)."

TW: Obama and the Dems are criticized for not "fixing financial regulation" in a post-crisis environment. They should be criticized although from what I can tell there is ZERO consensus on what should be done. Wall Street from my view is the best at bitching about regulations (i.e. up until last fall) until they need them (last fall until this spring) when they whine until they feel like they no longer need them (now). Many folks sense we "something" needs to be done, but what?

That said as Ritholz frames, there is a big difference between wrestling with real issues and just throwing out ideological rhetoric. Keep this in mind as we go forward not only with finance reform but all governance.

Deep Space Astronomy

TW: This short piece should put things in perspective. Or not. I find it extremely difficult to get my head wrapped around such massive astronomical concepts. The philosophical implications are obviously immense. I believe Edison said we only know a fraction of a millionth of what is out there. Some chose to rely on deities to soften the sharp edges of the unknown, others not so much, who knows.

This piece came off the Big Picture blog, but ironically Economist had a piece on the role of this project in astronomy as well.
http://www.economist.com/sciencetechnology/displaystory.cfm?story_id=14209662

Real Estate Half Full Or Half Empty

TW: The meme factories have moved from 2nd derivative gains, to green shoots to the recession is just about over. Perhaps all of them are true. But I remain skeptical.

This is the Bloomberg headline on June's existing home sales:
"U.S. Economy: New-Home Sales Climb 11%, Most in Eight Years"

This is Floyd Norris' take at NYT:
"Did new home sales really surge in June? No.

...That calculation is based on seasonally adjusted annual rates, which went from a rate of 346,000 in May to 384,000 in June, for the highest rate since November.

A year ago, when there were headlines about how bad sales were, the annual rate for June was 488,000, which was then the lowest for any month since 1991. Somehow a headline that says “sales fall 21 percent from year-ago levels” would not sound the same as the headlines that are now running.

In actual sales, the preliminary estimate is that 36,000 homes were sold, up 3,000 from May but down 9,000 from last June.

To put it another way, this was the second worst June since they began counting new home sales in 1963. It was not quite as bad as June 1982, when the country was mired in a deep recession and interest rates were sky high. Then 34,000 new homes were sold.

There are twice as many households in America as there were then, so relative to population this was the worst June ever, by far..."
http://norris.blogs.nytimes.com/2009/07/27/homes-sales-up-11-and-down-21/

Then there is this via the Big Picture blog:
“National New Home Sales, on a monthly basis, don’t even add up to half of the total foreclosure activity in California alone in a single month.”
-Mark M Hanson