GerryB43

How Washington's Policymakers Are Damaging the U.S. Economy

Kimball,
This is an interesting discussion, but framed in the Keynesian mode good policy options are impossible to fashion. Government action to spur or retard consumption tends to create misallocation of resources and extra costs that burden all. Ludwig von Mises advocated what he called an "evenly rotating economy" where prices, output and investment changed in response to individual rather than collective actions. Booms and busts are rooted in governmental interventions, not free markets.

Is Curbing Bank Pay Socialist or Capitalist?

Before the 1999 dissolution of the barriers set up by the Glass Steagall act, banks were not allowed to take the kind of risk that brought down so many "too big to fail" institutions last year. Prior to that banks failed only when "disintermediation" was triggered by Fed action that produced an inverted yield curve. For the most part anyway. The "systemic" risks caused by the collapse of the derivatives market have been growing for nearly ten years and were completely predictable in magnitude if not in exact timing.

Taleb vs Merton, Cont.

The entire Capital Asset Pricing structure rests upon the assumption of continuity of causal factors. Introducing a new factor is the essence of a discontinuous event. Without a mechanism to account for changes in the factor set in a model (an error term?) any model becomes dangerous to use in constructing or managing portfolios of securities.

Even the SEC's study of the effects of mark to market accounting acknowledges the existence of anomalous effects from using the "mixed-attribute model" of valuation. Clearly, the existing models were not ready for this form of new information. We have a long way to go before a new structure for analysis can achieve widespread and confident use.

VIX Withers Down Below Technical Support After Huge Job Loss Catalyst

Actually, there is quite a well developed options market in options on the VIX futures. Check out the following at the CBOE:

www.cboe.com/data/mkts...

The Reagan Counterrevolution

Let us look at the record: economic growth restored, inflation contained, stock market at record levels, huge increase in jobs, all while winning the cold war for freedom-loving people of the world. Pretty good record in spite of not getting the entire growth agenda enacted into law. This legacy of Ronald Reagan has been eroded by two decades of creeping increases in state control of the activities of our daily lives. The number of pages added to the Federal Register each year is a pretty good measure of the level of regulatory interference in the economy and it is now at an all-time high. After a sharp decline in the Reagan years, it has climbed steadily through both the Clinton and the Bush years. It is not just the Federal intrusion - state power has steadily increased too. The myth of the Bush deregulation is just that - a lie told repeatedly by too many politicians and media pundits.

And now we have a new President who clearly promises an acceleration in regulation at rate not seen since Richard Nixon. If you care to check the numbers, just click here: www.mercatus.org/uploa...

So, Peter, you are correct in your prognosis. The end of prosperity is near.

Current Market Conditions and Future Returns

The quality of television commentary on CNBC is uniformly low (at least until 7pm EDT on Kudlow). The blarney gene seems the only requisite for most slots.
Let's review: Investors always price increased perceived risk by increasing expected returns (translation: lower prices). They also create lower expected returns by piling into stocks in anticipation or even reaction to good news (translation: good news means lower future risk).

BTW Bloomberg has its low moments as well.

Pay More, Get Less

Inflation is not the change in the relative price of a good or service; it is the change in the purchasing power of the unit of account. Rising relative prices of food and energy are now, unfortunately, linked thanks to the ethanol lobby. With the Fed still pursuing (mostly) a price rule for monetary policy, that means that other prices must fall.

Don't Follow Wealthy Investors, Part 14

Great observation. Once more you have demonstrated that not even the most brilliant investor is devoid of investing mistakes, you have proven that what appears cheap may have no intrinsic value at all. Buffett regularly and frequently admits when he makes a mistake, but only AFTER he has disposed of it.