Paul V. Azzopardi

Investment Banks and Old Partnerships

Thanks, Paul


On Jul 02 09:22 AM Linus Wilson wrote:

> I wrote two papers on capital structure in professional partnerships.
> I did discuss GS in both. See the working paper versions at www.linuswilson.com/Fi...
> and www.linuswilson.com/Hi....

The Search for Safe Assets for Mad Times

Thanks for your contributions: Yellowhoard, Granger, Ling. Land is often a good investment but subject to local conditions and of course not portable (please see penultimate paragraph).


On May 21 12:43 PM Albert Ling wrote:

> I live in Brazil, dont invest in farmland here... there are looters
> who steal your land and government does nothing, because they have
> large numbers and claim "social justice".

Amazon Q1: Beats Expectations, Highlights Kindle 2 Success

Forecast low, come in high, and keep them smiling is nothing new to Apple and Amazon. For example, it has been used by Warren Buffett for ages. I read all his reports, including his early partnership ones, and one of the great lessons from him is how to manage others' expectations.

I used to be a corporate adviser and whenever my clients did not stick to this simple advice they managed to get in trouble (suppliers and unions demanding more) before they even reported the forecasted rosy earnings.

Another twist, often made use of by Buffett, is to attribute last period's good profits to some fluke, that you were blessed by a set of circumstances unlikely to repeat (so how can you pay higher wages?). This will win you another year.

I must confress that as a young man I used to keep my parents happy this way, too, by always making them expect low marks in my exams - in this way average made them smile, while above average got them exhilarated. They both knew I was doing this, of course, but preferred it to the alternative and so they played along.

Why Dividends Should Not Be Taxed

An obvious point which I neglected to mention: the corporate income out of which dividends are paid would already have been taxed. The tax on dividend is therefore a double tax. There would be shareholder gains (eg via mitigating the agency problem) even if corporate taxes are increased to recoup what is lost if the tax on dividends is removed.


On Apr 22 07:27 PM WAKEUP wrote:

> Try to hold that accounting textbook a little farther from your face.
> It's blocking your view of the rest of the world. Dividends are money
> that is paid to the investor. This is profit, spelled, i-n-c-o-m-e.
> Ergo, tax is appropriate.

Why Dividends Should Not Be Taxed

"very active on the passive side - i like that


On Apr 22 09:26 AM Fabien Hug wrote:

> They will never remove taxes on dividends, unfortunately. What I'm
> dreaming of is that would allow to consider active and passive income
> on the same level (so that you can balance your passive losses with
> you active gains). After all, the recent past has proven that you'd
> better be very active on the passive side.

Punishing Bankers' Behavior Could Backfire - Barron's

As investors, we have try and look at the facts and see how best to make things work. Many articles I read seem meant either to condemn or to redeem bankers, or regulators, or Congress, or what have you. I am interested in none of that. I try to look at who is increasing wealth or who is destroying it because I think that, ulitmately, wealth is best for us all.

So, what does a statement like this in the article mean? "The financial services industry accounts for around 20% of U.S. economic output, more than any other business."

Is this before the financial crises or after?

True, the is wired for fairness (when it is the others who are being unfair). It is also true, in my opinion, that some of the solutions being recommended risk throwing out the baby with the bath water.

But doesn't Mr Millman think that it is unfair for bonuses to be paid in cash and for shareholders and taxpayers to be left holding the sick baby?

How well is Wells Fargo? FBR Capital's Paul Miller says WFC's $3.3B loss provision (earnings) is too little, and will come back to haunt the firm. But analyst Dick Bove restarted WFC this morning with a Buy, noting its biggest competitors in the mortgage market are either gone or contracting. WFC -1.8%.

Most people seem to be too keen to be happy too soon. This crises was a stress test on bank accounting, and bank accounting failed. Even the last straw, mark to market, has now been whittled down to near ineffectiveness. Accounting cannot give a good picture in such turbulent times. This is the main point of my article on Seeking Alpha this week, "Inflation Bogey".
(Disclosure: Long WFC bonds but no position in WFC stocks)

In Memory of Greg Newton

My condolences - I read many of his contributions, a very wise man. Rest in peace.

Capitalism and Freedom: Rethinking the Political and Economic System

Again, thanks for this, because it illustrates that the different systems have many things in common and that freedom and individual rights are what distinguishes the West's contribution and what we need protect above all.


On Mar 23 11:30 AM SeekingTruth wrote:

> To those who acknowledge that we have a Republic, and not a Democracy,
> I must agree with them based on the facts at hand.
> What is NOT acknowledged is that a Republic is and remains on an
> ongoing basis , a mere one half step from a Dictatorship.
> This is how and why the Roman Empire shifted so easily between a
> Dictator/Emperor and a Republic throughout its history.
> Since we are a Republic and not a Democracy we should stop telling
> our soldiers that they are fighting for our "Democracy" (or anyone
> else's either for that matter)and tell them the truth, which is that
> they are fighting for our Republic, and for Republicanism.
> It is interesting that we have the Republic of China, the Republic
> of Russia, the Republic of Libya, and many other totalitarian/Republican
> governments all over the world.
> How about the Republic of America? Has a nice ring to it , doesn't
> it?
> When we start to see this happen , and start telling the truth to
> our nation, our youth and our military maybe we can begin to straighten
> out this point of confusion in many peoples minds.

Capitalism and Freedom: Rethinking the Political and Economic System

Definitely, the middle class.


On Mar 22 07:18 PM EMS News wrote:

> Freedom of thought is a wonderful thing. But we are trapped in the
> illusion of free thinking. Since people digest a lifetime of first,
> state-sponsored, in addition to individual family indoctrination,
> the ability to 'think' in any form is greatly stunted by adulthood.
> Watching people struggle to change even one small idea planted in
> their brains, years earlier, is interesting. It is physically painful
> to process a new idea!
>
> The engine of idea change is generational. This is why most new ideas
> come with young people. And any new idea is attacked and is 'revolutionary'.
>
>
> The Middle Class is the hatching ground for 'new ideas.' Not the
> ruling elites or the very rich. Indeed, the richer a person becomes,
> the more enslaved to the status quo they grow. When a status quo
> collapses...like we are seeing today, their ability to think of new
> changes perishes along with everything else. They are helpless, trapped
> in old ideas, old habits.
>
> When the Middle Class is crushed, the engine of revolutionary change
> slows to a crawl or even vanishes entirely. History is quite clear
> about this.

Capitalism and Freedom: Rethinking the Political and Economic System

I like this comment.


On Mar 22 05:30 PM henarl wrote:

> It depends on whether you consider Capitalism to be a moral system
> or a purely economic system. Your altered Golden Rule: “don’t do
> unto others what you don’t want others to do unto you.” is basically
> a moral imperative and needs further alteration to fit the more purely
> economic definition of Capitalism: "Don't do unto others what you
> don't want others to do to you unless you profit thereby and believe
> you can get away with it". A more pragmatic definition of Capitalism.

Capitalism and Freedom: Rethinking the Political and Economic System

Your points perhaps best illustrated by the recent speculative activity in oil, generating a price spikes.


On Mar 22 11:27 AM EMS News wrote:

> There is no such thing as a 'free market'. It is a fiction. Instead,
> you have social systems which have varying degrees of integration
> and sharing. The anti-socialistic beliefs of 'free market' people
> show through all the time. For example, they don't seem to care a
> whit about the US running immense trade deficits due to the outsourcing
> of both jobs and manufacturing. Even much of our banking has been
> off-shored!
>
> And our present system encourages cartels. For example, a number
> of cross-integrated financial systems like Goldman Sachs, just for
> one glaring example, controls many other businesses of all varieties.
> When you go shopping in a grocery store, looking at the labels, you
> would think there is a great variety. But if you look BEHIND the
> labels, you find that 90% of what you see are really all owned by
> two or three mega-corporations.
>
> We get interlocking cartels and monopolies when the government allows
> people with excessive access to credit, to buy up all systems and
> turn them into profit centers by eliminating competition. This is
> why a fully-free market system always degrades into a locked-market
> system run by despotic owners seeking maximum personal profit with
> minimal service.
>
> This is why the US is now very deep in debt and is doubling our national
> debt to bail out a bunch of cartel financial houses that took on
> too much debt, trying to buy up and control all financial systems!

Capitalism and Freedom: Rethinking the Political and Economic System

Thanks. It proves my point that the systems differ only in emphasis.


On Mar 22 11:17 AM fireball wrote:

> it seems you focus on the abuses of power and call these the weaknesses
> of the free market/ free society system of the republic formed by
> our founders. the system we now have is a mutated/ corrupted degenerative
> form of socialism under a facade, democratic socialism. from a laymans
> view i might guess it is moving into corporate fascism, another form
> of socialism. which ever convoluted route it takes the end result
> of the failure socialism is tyranny. relabel it and try it again
> so we can prove one more time that centralised power is oppresive.
>
> the legal form of the constitutional republic looks to me like the
> most ingenius form ever devised by man. if we had insisted that our
> public servants abide by its' limitations we would not be in this
> quagmire of socialism and the welfare state.
> the only acceptable remedy is restoration and adherence to our founding
> documents. freedom requires vigilance. this course would be painful
> as there is so much to be undone. the alternative is opression which
> in time will be much more painful.

Capitalism and Freedom: Rethinking the Political and Economic System

I agree fully. Everyone just let the amount of credit mushroom out of all proportion with the excuse that it was not his or her job to halt the mad rush - indeed, people who abdicated their responsibilities were seen as heroes.


On Mar 22 12:57 AM EMS News wrote:

> The only wealth the very rich have been 'multiplying' lately has
> been DEBT. The huge stock market rises we had this last 20 years,
> the huge real estate bubbles, etc, were all debt-built systems, not
> capitalism.
>
>
> Now that it is collapsing due to too much debt driving up the value
> of assets to unrealistic levels, we see SOCIALISM FOR BANKERS as
> they pile on even more debt on top of all of us by having our governments
> bankroll the entire mess!
>
> I want this to stop. If these clowns are all 'capitalists' then they
> can capitalize themselves the old-fashioned way: adding labor to
> commodities to produce goods that can be traded. Then, if their costs
> are less than their sales price, they have this magical thing called
> 'profits' which is CAPITAL.
>
> Banks get capital via making deals for people to share money with
> them via 'savings'. Then, they get to make 'loans'. What we had this
> last 20 years has been banks making loans with little to no 'savings'
> as its basis. And when people defaulted, the banks were not capitalized
> so they are now collapsing.
>
> Socialism only for the very rich is the most disgusting form of socialism.
> So why aren't all the 'libertarians' going nuts, screaming to stop
> this sort of socialism? All the welfare mothers in America for the
> last 100 years can't equal one year's worth of banking bail outs
> for the richest people on earth! I want them all arrested.

Capitalism and Freedom: Rethinking the Political and Economic System

America is not a democracy, you say, and now not even a republic. OK, you win, I am really confused now. All the four systems I mentioned share some of the characteristics I listed but in a capitalistic system there is a greater emphasis on individual rights and freedoms. Good quote from Rogers.


On Mar 21 11:40 PM mikesa69 wrote:

> Wow. Your article is neither factually accurate nor overtly manipulative,
> so the only logical conclusion I can reach is that you've chosen
> a topic that you're utterly confused about. What's more, you've done
> so while purporting to be an expert (based on the forum and the fact
> that your work was published here, it carries the implied guise of
> expertise).
>
> First off, your list of capitalist traits includes democracy, but
> true democracies always end in mob rule, which leads to oligarchy.
> Which is government ownership and control. Which is NOT capitalism.
> America is NOT a democracy and never was intended to be one. We have
> a republic. At least we used to at one time.
>
> Then you go and include wealth distribution on your list of capatilistic
> qualities! Now I must ask the question user 380426 alluded to...
> what have you been smoking?? Wealth distribution is a basic tenet
> of socialism my Canadian friend, which is the antithesis to private
> ownership and capitalism.
>
> Also, feudalism, communism and fascism do NOT have much in common
> with true capitalism. The basic definitions are polar opposites.
> The socialistic systems can all be recognized by their high levels
> of government ownership, with various levels of government control
> left as the remaining distinguishing factor between each of them.
> Capitalism promotes the exact opposite; private and secure ownership
> in both business and personal property. And to think I had such high
> hopes for your article based on the title.... Oh well.
>
> I'll leave you with a quote that might help enlighten you:
>
> The late Dr. Adrian Rogers (1931-2005) offered the following observation
> several years ago and it bears poignant significance today: "You
> cannot legislate the poor into freedom by legislating the rich out
> of freedom. What one person receives without working for, another
> person must work for without receiving. The government cannot give
> to anybody anything the government does not first take from somebody
> else. When half of the people get the idea that they do not have
> to work because the other half is going to take care of them, and
> when the other half gets the idea that it does no good to work because
> somebody else is going to get what they work for, that my dear friend
> is about the end of any nation. You cannot multiply the wealth by
> dividing it."