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lorddarley's Comments Stream Stats
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Rogoff: 'Adding a Trillion Dollars in Debt Is Quite Manageable'
This is simplistic and dangerously misleading. Any good lender would also analyze the quality of income, and its sustainability.
The US "income" is 70% based on consumption. A good portion (and much more, as we retire in large numbers) is based on recycling government entitlements.
LordDarley
Still Blaming the Market Victims
The reasons people save in China and other third world countries is not always "good."
1. They do not have the safety nets for health and old age pension which we have in the US and Europe. To provide the old age security many do not have, third worlders add to the problem by procreating beyond the planet's capacity.
2. Many third worlders do not have access to individual housing at reasonable prices. So, funds accumulate. Go to Singapore or some other Asian marvel. Everyone rents. Is that the world's prefered model?
I'm not endorsing over the top consumption, but the world will be a better place, in my view, if more people own homes, rather than saving money under a mattress. In addition to fiscal reform, countries like China (and Japan) must loosen the land use restrictions which make home ownership unattainable. We got ahead of the curve in the US, but we still have the world's best statistics for home ownership.
LordD
Better Days in Store for 2009
When you look at fundamentals, at least 80% of our workforce does nothing that the world really needs. We have huge numbers of government workers, unionized government service providers, packagers of debt (aka banks), lawyers, accountants, and clerical types.
Who needs these folks in a global economy? We are at the beginning of a massive repricing of global talent. Our monolingual, poorly educated workforce has excessive expectations.
LordDarley
The Madoff Magnum Opus
Madoff didn't register as an investment advisor until 2006. Anyone investing prior to that date certainly has no right to whine that the government didn't do its job.
Even after 2006, Madoff was not selling Sarbox securities to the public at large. These were limited to "accredited investors." People who got his "insider deals" are belly aching because they weren't protected. Get serious.
When they thought they were making money, these investors were only too happy to keep the general public out of a good thing. To that end, they signed on as "accredited investors", i.e. people who are rich and arrogant enough to warrant that they don't need the protection of government regulation.
The conventional fraud laws will send Madoff to jail. We don't need more laws from the clowns in Congress, which will simply make it more expensive for honest people to do business.
LordDarley
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Buffett Serving Free Lunch? (Part II)
The ultimate result will be a much better return than fixed income treasuries. Warren runs an insurance company, not a casino. He has smart people who have undoubtedly thought through a risk management strategy. Not surprisingly, the financial press has only reported a headline" and not explored further.
LordDarley
Paul Krugman + Al Gore = The Way Forward
We better grow up.
Work and savers made their money in an economy where others borrowed and spent. How else could a thrifty shop owner make money? We all inadvertantly abetted this wastrel lifestyle, even if we were savers.
Objectively, it's just money. How it is processed is more about lifestyle and religious bent, rather than hard facts.
The truth is that because of the contraction in lending -- there are not enough willling lenders, and not enough able borrowers -- our money supply has contracted wildly. We need to expand it again, or we will have a cataclysmic contraction.
Print the money. It will not cause inflation. The printed money will replace the money which is not circulating through the system. Without printed money, we will return to an era where doctors earned $25,000 per year, lawyers earned less, and a good factory worker earned about $7,000. It sounds poetic, but that's a recipe for a 15 year disaster.
Print the money.
LordD
The Shallowest Generation
The boomers were the first to create the politics of youth, which stood up to an older establishment. They resisted the Viet Nam (of Kennedy, Johnson, and Nixon). They bled in Chicago. They were murdered in Ohio. They then grew up, put on suits, and went to work.
Throughout their careers, they have paid vast sums into social security to support their parents, the "great" generation," in comfort well beyond what they had saved. They also support millions of immigrants and people of different ages who can't (or won't) work.
They now are told there is nothing for them, except what they have saved. So they will keep working, because hard work --they should be called the workaholic generation -- is a trait of the boomers. They cannot retire at 62 with a fishing pole like so many of their parents, or like so many of the government workers who are humorously called civil "servants."
No one generation can take credit or be blamed for the present, which is a product of centuries. Nostalgia about the past is silly, and a flaw of every current generation since the beginning of time. We should focus on the present and how to make it better. Whether there is a place in our future for the ideals of the previous "great generation" -- patriotism and love of God-- is a question for Generations X, Y and Z.
LordD
Raw Data Report: Quiksilver, American Eagle Outfitters, Macy's
In Defense of the U.S. Taxpayer: End Deferred Compensation and Its Tax Subsidy
The tax "subsidy" of deferred compensation is a chimera. Corporate and individual rates are essentially the same. A corporation cannot deduct deferred compensation until it is paid. In the year of deferal, the executive des not pay tax (but the corporation pays tax on the deferred amoutn). It's a wash for the Treasury.
I'm in favor of eliminating deferred compensation, but it's more for "fairness" rather than Treasury collections. Under Dept. of Labor rules, it's not allowed to defer compensation unless you are a "top hat" employee. Theoretically, that prevents average people from subjecting deferred compensation to the risk of corporate bankruptcy. In the real world, it gives the "top hats" exclusive rights to a tax planning technique not available to the masses.
LordDarley
The suggestion that equity grants be
America Needs a Turnaround Plan
Which politician has the nerve to tell voters:
1./ the sacred cow of Medicare must require larger co-pays from the middle class. No one has paid enough into the system to justify 2-3 decades of transplants, implants, and obscene waste to prolong a the final months of life.
2/ tort recovery for medical malpractice must be eliminated, and replaced by an arbitrated system without recourse to the courts. Getting the lawyers out guaranties a less safe (but more affordable) system. It will still be better than any other country's system.
3/ candidates must be taxed on political contributions in excess of federal limits, and the excess in political warchests must be refunded after applicable elections. Elected office should not be big business. That leads to a corrupt decision-making process that is at the heart of our problems.
4/ elected service should not be credited towards federal or state pensions. (See # 3.) Elected office should not be a career.
Hell, I (and you) have got a long list of "untouchables.&qu...
The right president would get us started on a path of announcing a program of fiscal and political reform that would convince the world (and our citizens) that we can be the masters of our destiny.
We won't do that, of course, so the world's marketplaces will decide instead. That won't be pretty.
LordDarley
2./
Fannie and Freddie Did Not Cause This Crisis
I'd lay much of the blame with the SEC and the 2004 decision to permit investment banks with brokerage units to borrow more than permitted. That is the cause of 30:1 leverage and obscene risk-taking.
I would also fault the total lack of regulation of insurance company parents, who seem to have skipped state and federal regulation altogether in a rush to issue "insured" products that were technically not "insurance." It's those products, with swaps and instruments originally intended to limit risk ($40 trillion, or so, give or take), that are causing the meltdown concern, not the few trillion we may expect from defaulted ALT-A and subprime mortgages.
The total failure of the regulators to have seen this coming means that we will now have a lot of well-meaning regulation in future which will stifle economic growth.
And I doubt that new regulators will be any smarter than their predecessors in addressing the next crisis: the default of municipal and state governments on issued debt. Just as with Fanny and Freddie, the politicians will be afraid to touch this until it explodes.
LordDarley
9 Reasons Why We Are Close to, If Not Past, the Bottom
Assuming that credit starts flowing again, interest rates will have to go up or we will have serious inflation.
Ask yourself. If interest rates were at 8%, where would the market be?
LordDarley
Friday's Employment Report: A Sobering Dose of Reality
There is always movement among classes. Some folks go up; some go down. Those on the way down always speak loudest that the system is broken.
The problem is that interest rates were kept too low, too long, and people who were not middle class got to spend as if they were. And people who were only middle class spent as if they had rich uncles.
Maybe the government should have forced people not to spend beyond their means?? Who would want that?
Economic cycles, and ups and downs are a normal part of life.
LordDarley
Real Estate Bubble Is Only in 4 States: CA, FL, NV, AZ
Who is the culprit? Is it the financial "genius" who developed these products and securitization? Is it Madison Avenue, that induced people to swap equity for silly things made in China? Is it a college faculty, that insists on tenure and small teaching loads, and which inflated the cost of tuition?
It's all of them, and all of us, that are to blame. We lived too high; we must atone. It's much more than a 4 state housing binge.
LordDarley
Bill Miller on This Tough Market
That's absolutely right. The problem for financials is that the core business -- good loans to good credits -- does not justify their multiples. And there is the copetition of the bond market. Good credits just go there. Why bother with a bank?
The result is that banks, to achieve returns, have to go to risky areas (unsecured credit card, investment banking, etc.) where they do not have a competitive edge and where they face inordinate risk.
Buying a bank for a little more than book (and after being comfortable that book is for real) is about all that I would spend to invest in this sctor.
Miller has it all wrong, and is a stopped clock.
LordDarley