The Telegraph reports German and French officials working on a multitrillion-dollar "firebreak." Among the steps is a bank recapitalization going well beyond the laughable €2.5B tagged by the EU stress tests (the IMF puts the figure at €200B, others say €1T). A bump in EFSF firepower to €2T and a "controlled" Greek default giving a 50% haircut to lenders are also in the mix. [View news story]
"As a former Citibank employee who sat enthralled while Walter Wriston spoke to a group of us on the importance of the repeal of Glass–Steagall Act and who saw that repeal take place seventeen years later, I can only hang my head in shame at having bought the thesis way back then."
Why should you? Back in those days banking was regarded as an honorable, profession like medicine or law. Bankers were respected and no one knew how they would irresponsibly abuse the freedoms they were granted.
S&P Downgrades U.S. to AA+ - We're Tied With Belgium! [View article]
´´Who voted for default?
The tea party Republicans voted to live within our means. They voted for 41% spending cuts and balancing the budget this year.´´
In the final House vote on the Sunday many Republicans voted against the bipartisan bill. Had their vote carried, the US would have defaulted, so they were effectively voting for default.
I personally do not watch CNBC nor do I watch any TV at all when I am at home, and haven´t done so for several years.
However, right now I am staying in a rented condo where there is satellite TV and have been watching CNN, CNN Latin America, BBC World News, Al Jazeera every now and again. RIght now the TV is off, because I have had enough.
I think the danger of watching CNBC or ANY TV on a regular basis is that you get overwhelmed with short term data presented with a lack of long term perspective, and ultimately this may skew your thinking.
The other factor is that if a TV station carries commercials, then the commercials are the true message, and the content is incidental or it is skewed towards delivering an audience to the advertiser. Without tuning in to CNBC, I can confidently predict that it is not telling the true story about how NewsCorp has been run for years as a criminal organization and its executives may face prosecution under US antibribery statutes for paying bribes to British police officers.
"Obama will do all he can to keep unemployment and poor people at high levels since they are his strongest voting block. Bizarre isn't it, that the president who makes you poor and keeps you poor receives your vote... There seems to be little reason for optimism for an economic recovery when the dems control govt and do not want a recovery. "
Personally I am not terribly happy with Obama, but remember that he did warn against the Iraq War and its incredible cost at a time when there was hardly any politician prepared to speak out against that war. I don't know if you know about the story of the Emperor's New Clothes, but Obama was the little boy who called out the truth, and that is why he grew up to be President.
The economic crisis came to a climax precisely at the end of 8 years of a Republican administration under Bush the Younger, a weak leader who know very little about the wider world, and did not have enough sense to appoint competent and worldly people to advise him. Obama was left to pick up the pieces of a broken economy. I don't know what he could have done different, but then I am not an economist.
So we have a center right president who has not fulfilled his promises to get out of the debacle in Iraq and Afghanistan or to achieve a decent reform of the health care system comparable to all the other developed economies and whose greatest achievement so far has been killing an unarmed man and dumping his body in the ocean. If you were to compare US presidents to Roman emperors, Bush would be Nero, fiddling while American collapsed, and Obama his close relative Caligula.
Obama was not elected by the poor, because for the most part the poor do not vote, although I will concede you that he probably won a majority of the elderly vote and of course he carried his core constituency of African Americans.
I don't know why you think the Democrats don't want an economic recovery. Obama is the grandson of a successful banker and seems to be very well disposed toward Wall St. Most, if not all, of the Democratic Party legislators are wealthy business people who have a lot of money in investments. Their election campaigns are financed by wealthy individuals and corporations. If there are any lobbyists for the poor on Capitol Hill, they are vastly outnumbered by lobbyists for large corporations.
Why Smart Investors Should Buy Apple and Google, Sell Research In Motion and Nokia [View article]
"Apple sells the iPhone for an average of $638 each..."
So maybe there is a lack of confidence that Apple can continue to sell a phone that probably costs less than $30 to manufacture for these kind of prices in a declining world economy. That is a lot of money to pay for something that will probably be bricked if you drop it in the toilet. Also the battery is difficult to change and beyond the capacity of most users.
The cash is a mystery. I have seen it mentioned in many articles, but no one seems to know what Apple DOING with this cash, or even in what currencies it is held. There is no dividend.
Apple clearly is not concerned about boosting its share price, otherwise it would split the stock 10 for 1.
Maybe things will change when there is a change at the top. Who knows?
On the face of it Apple does look undervalued, but price is just a function of supply and demand. It could remain in a range for years while other stocks move ahead.
When every tipster is recommending a stock, it is often a sign that they want to best possible price so they can unload a postition that is going nowhere.
Why We're Nowhere Near a Bottom in Housing [View article]
Nice article and the concept of homes being a call option on future earnings is a neat idea.
The trouble with the housing market now is that it is like candlestick charts with too many hanging men left as bagholders.
But surely there is a "natural price" for homes. Take the price of a plot of land, the cost of building materials and transporting them to the site, the cost of permits, of labour, of a general contractor's 20% take, landscaping, closing costs, and you have the cost of a home. Subtract depreciation if the house is already standing, or appreciation if it has unique or irreplaceable qualities and you have the price of a home.
Obviously this will vary hugely from state to state due to different building techniques, cost of labor, cost of getting materials to work site, etc., but there can't be any great mystery.
Of course, while there is an oversupply of foreclosures it will be impossible to build new homes and for the builders to make a profit.
The overall effect of downward pressure on home prices must be regarded as a benefit for the population in general. What is better, to have a surplus of homes that can be bought cheaper than the cost of building them, or being in the situation they have in Haiti where hundreds of thousands are living in tents?
Probably right. One of the issues over BP is that the extent of fines for damages caused by the Gulf of Mexico oil spill has not yet been determined and could be tripled if there is a finding of criminal neglignence.
My feeling is that the worst case scenario won't happen, if only because ultimately this comes down to political issues. BP--I believe it is no longer officially called British Petroleum--is the largest stock in the London FTSE index and comprises a decent size chunk of the index. It is a favorite of pension funds.
Regardless of whether you think BP should be severely punished or not, in the end by massively fining the company you are not punishing the rig engineers and managers who may have been careless because they were greedy for money, so much as you are punishing pension funds. For this reason I suspect that realpolitik will prevail. Britain hasn't has received a lot of benefit from providing military support in Afghanistan and Iraq--quite the reverse--but favorable treatment of BP could be partial payback or a down payment for support in future wars.
I don't know. My wife has a Nokia phone here in the Dominican Republic. It cost $20 per month for 18 months with 250 minutes per month included. She has just finished paying for it. It plays music, movies, connects to the Internet with wi-fi, does Facebook, works as a camera and videorecorder too and is extremely sturdy, with an excellent signal and good voice quality on calls.
Of course she wants an iPhone now because it has touch and no keyboard and she can show it off to her friends, but really for practical, non-cosmetic purposes there is little difference.
Now MY phone is a $10 Alcatel, with calling, messaging, and games, but I can live without the games.
Although smart phone functionality is nice, mostly people buy them for a status symbol, and I suspect the number of people who really need all the functions for business purposes is relatively small.
The trouble with status symbols is that they may lose their cachet very rapidly as fashions change and it is much harder for them to penetrate more cost conscious markets.
Interesting theory. Perhaps it could be used for advertising as a voice from beneath the hood would whisper "Tesla, Tesla". Alternatively it could broadcast the sound of a V8 engine at idle speed that would be discernible only outside the car.
Given American ingenuity, I am sure they will find a way around this one, even if they have to pay off a few politicians.
Considering that the Galaxy has the larger screen, plus microSD slot, USB port, and removable battery, which the iPhone does not have, it is not hard to see why it might be more popular than the iPhone as a computer replacement.
"Apple is still the world's most dominant and most valuable brand name that generates loads of cash while posting growth and beating estimates quarter after quarter."
The recent fall in the stock is because it seems likely that growth is slowing and that APPL will not be able to continue to post growth and beat estimates. The spread of the iPhone to carriers other than AT&T in the US and the release of the iPad and iPad mini led to explosive growth, but whether this will continue is a moot point.
The field for potential new products is somewhat limited. While AAPL might be able to parlay its brand name into more products such as the iWatch, iToothbrush, iLightbulb, iToaster, iCoffeeMaker, and iCanOpener, the huge profits and margins realized with earlier products will not be there.
The Better Burger Threat To McDonald's [View article]
In the 20 years I lived in the US, I always enjoyed discovering cheap places with good food. I ate at McDonalds a few times and always found their offerings absolutely execrable whether hamburger or coffee.
But if there was any demand for a good hamburger in mainstream America, McDonalds would have been bankrupt years ago.
Manhattan is atypical, with a large contingent of tourists and foreign residents and an affluent population that buys a lot of ready-cooked food in various different outlets.
Is Ackman's Hatchet Job On Herbalife Justified? [View article]
The essence of the beef against the company is that new distributors have to buy about $2000 worth of substantially overpriced goods and supplies, but rarely or never make a profit from selling on the items, despite lavish pitches that suggest they can start a profitable business. No doubt some top level people in new markets do make money, but ultimately it is all based on a fraud as there is no real market for the products at the suggested prices.
From Wikipedia:
"Ackman's case centers on a number of well-detailed assertions that remain to be factually contested by Herbalife. Among the most damning allegations are that: (i) the products Herbalife sells are commodity in nature and do not warrant the significant premium price it charges, (ii) most of the company's products are sold to distributors looking to go up the chain of the company's royalty pyramid and not to arms-length customers, (iii) financial accounting of distributor royalties is deliberately muddled to misrepresent its true cost to the company, (iv) the company conducts minimal research and development despite advertising the contrary to consumers and distributors, (v) inflated shipping and handling fees charged to distributors represent the bulk of the company's earnings."
"The most damning allegation remains however that low-income members of society are being sold a business opportunity with very low odds of any success, (potentially lower than 1 in 5,000), to service the royalty streams of a very small group of senior distributors at the top of the pyramid. This would explain why Herbalife increasingly needs to expand in countries, where weight loss is not a major health concern (e.g. recent forays into Ghana and Zambia)."
The Telegraph reports German and French officials working on a multitrillion-dollar "firebreak." Among the steps is a bank recapitalization going well beyond the laughable €2.5B tagged by the EU stress tests (the IMF puts the figure at €200B, others say €1T). A bump in EFSF firepower to €2T and a "controlled" Greek default giving a 50% haircut to lenders are also in the mix. [View news story]
Why should you? Back in those days banking was regarded as an honorable, profession like medicine or law. Bankers were respected and no one knew how they would irresponsibly abuse the freedoms they were granted.
S&P Downgrades U.S. to AA+ - We're Tied With Belgium! [View article]
The tea party Republicans voted to live within our means. They voted for 41% spending cuts and balancing the budget this year.´´
In the final House vote on the Sunday many Republicans voted against the bipartisan bill. Had their vote carried, the US would have defaulted, so they were effectively voting for default.
Why I Don't Watch CNBC [View article]
However, right now I am staying in a rented condo where there is satellite TV and have been watching CNN, CNN Latin America, BBC World News, Al Jazeera every now and again. RIght now the TV is off, because I have had enough.
I think the danger of watching CNBC or ANY TV on a regular basis is that you get overwhelmed with short term data presented with a lack of long term perspective, and ultimately this may skew your thinking.
The other factor is that if a TV station carries commercials, then the commercials are the true message, and the content is incidental or it is skewed towards delivering an audience to the advertiser. Without tuning in to CNBC, I can confidently predict that it is not telling the true story about how NewsCorp has been run for years as a criminal organization and its executives may face prosecution under US antibribery statutes for paying bribes to British police officers.
Just How Sick Is This Market? [View article]
Personally I am not terribly happy with Obama, but remember that he did warn against the Iraq War and its incredible cost at a time when there was hardly any politician prepared to speak out against that war. I don't know if you know about the story of the Emperor's New Clothes, but Obama was the little boy who called out the truth, and that is why he grew up to be President.
The economic crisis came to a climax precisely at the end of 8 years of a Republican administration under Bush the Younger, a weak leader who know very little about the wider world, and did not have enough sense to appoint competent and worldly people to advise him. Obama was left to pick up the pieces of a broken economy. I don't know what he could have done different, but then I am not an economist.
So we have a center right president who has not fulfilled his promises to get out of the debacle in Iraq and Afghanistan or to achieve a decent reform of the health care system comparable to all the other developed economies and whose greatest achievement so far has been killing an unarmed man and dumping his body in the ocean. If you were to compare US presidents to Roman emperors, Bush would be Nero, fiddling while American collapsed, and Obama his close relative Caligula.
Obama was not elected by the poor, because for the most part the poor do not vote, although I will concede you that he probably won a majority of the elderly vote and of course he carried his core constituency of African Americans.
I don't know why you think the Democrats don't want an economic recovery. Obama is the grandson of a successful banker and seems to be very well disposed toward Wall St. Most, if not all, of the Democratic Party legislators are wealthy business people who have a lot of money in investments. Their election campaigns are financed by wealthy individuals and corporations. If there are any lobbyists for the poor on Capitol Hill, they are vastly outnumbered by lobbyists for large corporations.
Is Pandora Worth $2 Billion? [View article]
Why Smart Investors Should Buy Apple and Google, Sell Research In Motion and Nokia [View article]
So maybe there is a lack of confidence that Apple can continue to sell a phone that probably costs less than $30 to manufacture for these kind of prices in a declining world economy. That is a lot of money to pay for something that will probably be bricked if you drop it in the toilet. Also the battery is difficult to change and beyond the capacity of most users.
The cash is a mystery. I have seen it mentioned in many articles, but no one seems to know what Apple DOING with this cash, or even in what currencies it is held. There is no dividend.
Apple clearly is not concerned about boosting its share price, otherwise it would split the stock 10 for 1.
Maybe things will change when there is a change at the top. Who knows?
On the face of it Apple does look undervalued, but price is just a function of supply and demand. It could remain in a range for years while other stocks move ahead.
When every tipster is recommending a stock, it is often a sign that they want to best possible price so they can unload a postition that is going nowhere.
Why We're Nowhere Near a Bottom in Housing [View article]
The trouble with the housing market now is that it is like candlestick charts with too many hanging men left as bagholders.
But surely there is a "natural price" for homes. Take the price of a plot of land, the cost of building materials and transporting them to the site, the cost of permits, of labour, of a general contractor's 20% take, landscaping, closing costs, and you have the cost of a home. Subtract depreciation if the house is already standing, or appreciation if it has unique or irreplaceable qualities and you have the price of a home.
Obviously this will vary hugely from state to state due to different building techniques, cost of labor, cost of getting materials to work site, etc., but there can't be any great mystery.
Of course, while there is an oversupply of foreclosures it will be impossible to build new homes and for the builders to make a profit.
The overall effect of downward pressure on home prices must be regarded as a benefit for the population in general. What is better, to have a surplus of homes that can be bought cheaper than the cost of building them, or being in the situation they have in Haiti where hundreds of thousands are living in tents?
BP to See 30% Upside [View article]
My feeling is that the worst case scenario won't happen, if only because ultimately this comes down to political issues. BP--I believe it is no longer officially called British Petroleum--is the largest stock in the London FTSE index and comprises a decent size chunk of the index. It is a favorite of pension funds.
Regardless of whether you think BP should be severely punished or not, in the end by massively fining the company you are not punishing the rig engineers and managers who may have been careless because they were greedy for money, so much as you are punishing pension funds. For this reason I suspect that realpolitik will prevail. Britain hasn't has received a lot of benefit from providing military support in Afghanistan and Iraq--quite the reverse--but favorable treatment of BP could be partial payback or a down payment for support in future wars.
Apple: Desperately Seeking Capitulation (Part 2) [View article]
Of course she wants an iPhone now because it has touch and no keyboard and she can show it off to her friends, but really for practical, non-cosmetic purposes there is little difference.
Now MY phone is a $10 Alcatel, with calling, messaging, and games, but I can live without the games.
Although smart phone functionality is nice, mostly people buy them for a status symbol, and I suspect the number of people who really need all the functions for business purposes is relatively small.
The trouble with status symbols is that they may lose their cachet very rapidly as fashions change and it is much harder for them to penetrate more cost conscious markets.
Could This One Thing Derail Tesla? [View article]
Given American ingenuity, I am sure they will find a way around this one, even if they have to pay off a few politicians.
Has Samsung Dethroned Apple? [View article]
Apple Is Still Cool [View article]
The recent fall in the stock is because it seems likely that growth is slowing and that APPL will not be able to continue to post growth and beat estimates. The spread of the iPhone to carriers other than AT&T in the US and the release of the iPad and iPad mini led to explosive growth, but whether this will continue is a moot point.
The field for potential new products is somewhat limited. While AAPL might be able to parlay its brand name into more products such as the iWatch, iToothbrush, iLightbulb, iToaster, iCoffeeMaker, and iCanOpener, the huge profits and margins realized with earlier products will not be there.
Nokia Finds The Niche Between Cool And Commodity [View article]
The Better Burger Threat To McDonald's [View article]
But if there was any demand for a good hamburger in mainstream America, McDonalds would have been bankrupt years ago.
Manhattan is atypical, with a large contingent of tourists and foreign residents and an affluent population that buys a lot of ready-cooked food in various different outlets.
Is Ackman's Hatchet Job On Herbalife Justified? [View article]
From Wikipedia:
"Ackman's case centers on a number of well-detailed assertions that remain to be factually contested by Herbalife. Among the most damning allegations are that: (i) the products Herbalife sells are commodity in nature and do not warrant the significant premium price it charges, (ii) most of the company's products are sold to distributors looking to go up the chain of the company's royalty pyramid and not to arms-length customers, (iii) financial accounting of distributor royalties is deliberately muddled to misrepresent its true cost to the company, (iv) the company conducts minimal research and development despite advertising the contrary to consumers and distributors, (v) inflated shipping and handling fees charged to distributors represent the bulk of the company's earnings."
"The most damning allegation remains however that low-income members of society are being sold a business opportunity with very low odds of any success, (potentially lower than 1 in 5,000), to service the royalty streams of a very small group of senior distributors at the top of the pyramid. This would explain why Herbalife increasingly needs to expand in countries, where weight loss is not a major health concern (e.g. recent forays into Ghana and Zambia)."
Does anyone have any real proof to the contrary?