Deumlaokeng

Information as Currency: 'Managed By The Markets,' by Gerald F. Davis

What a load of croc. Problem is that when everything is "converted into information" all you are left with is noise. These financial gurus need to be given a primer on what is information, they need to understand what real information gurus like Claude Shannon had to say. They need to accept the fact that information is not knowledge. Then they can begin to understand how too much information within the financial world did not reshape but destroyed the American dream.

Long Visa: Not All Credit Card Companies Are Created Equal

Most credit card companies are created quite equal, especially Visa and Mastercard as they are simply different sides of the same coin, the same monopoly or maybe now a veneer of a duopoly, formerly a single-sided monopoly, the banker's consortium known amongst us merchants as "Merchant Services". One can not go wrong investing in any monopoly that has the power to raise rates at will, not to mention the power to force merchants to buy airline tickets for the consumer. The only downside is a slide in consumer spending which can easily be offset by raising the discount rates they charge the merchants, even though the cost of processing goes down. And that is exactly what they are currently doing, raising rates to offset the spending slowdown. Resistance is futile.

Discover and Amex are not monopolies but mere secondary players. Many merchants are able to survive without accepting those cards. As the VISA/MC duopoly begins to increase rates to offset decreases in consumer spending, as well as to offset financial losses elsewhere, expect to see more merchants stop accepting AMEX as the cost averaging of the transaction fees no longer allows for the far higher AMEX costs. As for Discover, I have never lost a sale over the past 20 years for not accepting that card, they are not really in the game.

How We Could Let AIG Fail, Sort Of

Finally someone is taking note that the bailout of AIG is not aimed at AIG but to third parties, most specifically European banks who were stupid enough to buy the crap credit default swaps. I think the concept of dealing with these third parties directly to save those who might be worth saving is the correct direction. We need to let AIG fall now and not a moment later.

AIG is, apart from its financial gambling division, simply an insurance company. I would imagine that its customers could find insurance elsewhere. I've certainly had my business insurance company cancel on me and tell me to take a hike, and I have done the same when I found similar business insurance for half the price. The worse that can happen to most of AIG's customers would be to lose some value in their current insurance premiums. And the government might want to temporarily back up some casualty claims up to a limit, akin to FDIC insurance. But all the insurance companies use pretty much the same statistics, the same actuarial data, so some other insurance company should be able to offer up similar insurance at similar prices to those of AIG. In fact, I can't think of many things in the business world that are more easily replaced then insurance. Sure it is a pain in the derriere to shop for insurance, but it is not difficult. Alas, if only the insurance was the problem instead of the debts to the wealthy and powerful who control the strings of our puppets in government.

Depression? Recession? No, It's the Great Restructuring

Reading this new age millennial gobbledygook regarding "fundamental change in our relationships - how we are linked and intertwined and how we act, nothing less than that", a twist on the technology cargo cultists, causes me to want to be able to send a bunker buster bomb into one of the few Internet primary nodes in North America, an ability that will become increasingly wide spread in the years to come, to show how incredibly vulnerable is the oh-so-precious Internet and the associated imagined inter-connectedness of being. What would Google and the twitter brains do if myself and about two dozen fellow Neo-Luddites were to take some bolt cutters out to the bridges where the Internet backbones are visible and exposed and we were to shut it down? Brave New World my derriere. Musings such as this article, if taken seriously, inevitably lead to old school fascism at best, Khmer style Year Zero at worst.

The Free Market Votes: Still No Change We Can Believe In

>Our country is ruled by a caste of lawyers who are almost to a man (or
>woman) economically illiterate. They know how to write laws to redistribute >wealth but don’t understand how that wealth is produced.

Au contraire, ever since Reagan & Regan, the lawyers have very carefully crafted the laws at the behest of those who imagine that they produce the wealth without assistance from the public sector to insure that the wealth percolates upward and out of the reach of the government. They understand all too well that the wealth produced within the private sector is a result of both private and public efforts and they do all they can to prevent the public, the commonwealth, from receiving its fair share. It is a very calculated political strategy that has allowed productivity to increase while allowing median income to decrease. The lawyers are but one professional guild in the service of the elite and they are aligned and co-opted by the elite. Although they are nobody's fools, they are neither in control of the horizontal nor the vertical. Others control those knobs.

Why China Can't Dump U.S. Treasuries

" I think the Chinese should first figure out how to build schools that don't collapse on little kids when the earth moves a bit before they start thinking about taking over the world."

Rest assured the Beijing is moving with extreme prejudice in its attempts to remove the pervasive corruption that plagues its development. The death toll of last year's earthquake was far higher than noted in the press, as is the death toll of those who have been given the ultimate punishment for business practices that led to those deaths. If Madoff was Chinese, he would not be under house arrest at this moment.

Bond Expert: The Emperor Has No Clothes

It is amazing to see that otherwise intelligent people still believe in the concept of a mythical immaculate market that will always work in a rational manner despite the recent overwhelming evidence to the contrary. Even that ultimate guru of the myth of the free market Mr. Greenspan, a direct disciple of that ultimate libertarian Ayn Rand, has admitted that his most fundamental belief in rational actions as been proven wrong. Yet here we have yet another writer ascribing to the myth of the all good free market as well as to the myth of the all bad government as counterpoint. Mr. Jansen's religious beliefs prevent him from seeing that his concept of the "market" is nothing other than the realization of the greed in humankind and the two can never be separated. If the problem was greed then the problem is equally the market. Get use to it, your religious ideas failed everyone. Best to stick to bonds Mr. Jansen, and nothing but bonds.

Boeing Heading the Way of GM?

GM and Ford were not torched by their unions but by their management who rested on their predecessor's laurels and refused to innovate and refused to compete with the Japanese automakers. Boeing on the other hand, with the input of it's mechanics and engineers has continued to improvise and to maintain itself globally as the lead designer and builder of commercial aircraft. To compare these companies is to compare apples to oranges. The inevitable and well deserved demise of GM and Ford is the result of bad management and not the result of any union activity.

Death by a Thousand Rate Cuts

Greenspan did not only concede that his models did not work, he was forced to confess that his most fundamental beliefs in the nature of mankind have been disproved, or in his own words "“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief". For an avowed Libertarian and devotee of Ayn Rand as is Greenspan, this confession is akin to the Pope coming out and announcing that there is no Jesus. Yet policy makers in DC are continuing to listen to this man who has clearly lost his way and who no longer has faith, and so as you say, they just keep doing whatever they did before as that is what animists do. Think of Randy Quaid's character in The Last Detail repeating endlessly "Namu Myōhō Renge Kyō".

High U.S. Corporate Taxes Are a Myth

As others have noted, the small closely held privately companies, numerically the vast majority of corporations (C-Corps), will not show much of a profit as the owners will take it out as salary; otherwise, it gets taxed twice, once as profit and then again as income. At least the income will be taxed appropriately.

Large publicly traded companies need to show profit. But they usually find ways, conspiring with their overpaid tax consultants, to screw the populace and avoid paying taxes. These people are referred to in the vernacular as Republicans. For those who refuse to open their eyes, may I suggest reading any of David Cay Johnston's recent books such as 'Perfectly Legal' or 'Free Lunch'.

By the way, I have yet to hear of any banks in the Caymen Islands experiencing financial stress.

Don't Panic

"This catastrophe/(gov) is making capitalism look bad"

I am so sorry, but capitalism, especially of the US cowboy capitalism persuasion favored by Regan, Thatcher and of course the corporate elite, has been looking bad and ineffective to the majority of the world well before this current crisis. One only need look at the decades of failed IMF capitalist "free market" policies foisted upon many countries in the third world, especially in South America, to see the utter failure of the economic model. That same failure is now coming home to roost in the US.

It was interesting this past weekend to watch Zakaria's weekly TV show where the foreign panelists noted this final clear failure of the US economic model as they noted that many leaders will no longer even be looking at the US model as an option. And then the second half of the program is an interview with the originator of the economic model that is now the primary economic model being followed world wide, the model of state guided capitalism of Lee Kuan Yew.

We've Crossed the Line from Capitalism to Socialism

Crikey, since when is it "socialism" when the government uses taxpayer's money to bail out banks and other cowboy capitalists such as your peers in the fund management game for the poor investment decisions they made? Since when is it socialism to bail out those naive, actually just plain stupid enough to accept third party debt as collateral on a loan? Since when is it socialism when the taxpayers bail out all business school grads who graduated with lots of technical knowledge but not with any common sense whatsoever?

Don't get me wrong, I understand that this bailout was necessary, although I doubt it is sufficient.

We have certainly crossed some sort of line, perhaps a bit closer to classic fascism, but we will have to await how this plays out before coming to such a conclusion. The preposterous Orwellian claims that the bailout or the temporary limiting of shorting is a move towards socialism, coming not just from Mr. Ehrenberg, actually bolsters the idea that many prefer the fascist model. And the chants of "USA, USA, USA" at the recent Republican convention, the subtle implication that the opposing side is not American but some sort of Soviet hockey team, should give pause, at least to those of us with a bit more historical experience or education than Mr. Ehrenberg.

And who are you kidding, the game has always been rigged.

eBay Is a Losing Bid - Barron's

I have run a successful brick and mortar retail operation for over 35 years, a self-anointed prince of Jurassic retailing. I have been selling, as well as buying a little, on Ebay since 1999. I will be ending my selling on October 1st as I am unable to accept the risks and expenses that would come with having to accept Paypal. It is one thing to be scammed by customers, and rest assured that after 35 years I have seen most scams more than a few times. But when you can't trust your business partner, in this case Paypal, then it is time to exit stage right.

A First Look Inside the Fannie / Freddie Bailout Plan

"...., do you have any idea how many foreign banks and gov'ts. own the debt of these 2 companies, do you have any idea how much of this debt is owned by institutions like pension funds, and municipalities that would be insolvent if the debt went to 50 cents and the interest payments were defaulted on, what do you think would happen to small investors that own gov't agency bond funds that would drop by 50% and would force those elderly and conservative investors to become bankrupt and cut their income streams, it's not about helping the "Rich funds" it's about keeping the financial system solvent, look at the big picture and stop lamenting how "rich folks" are helped, thinking like that will never allow you to become one of "them" the rich folks."

First there was Chrysler, then the Savings and Loans fiasco, Bear Sterns, now the bastard Mae & Mac siblings, and GM is currently on its knees begging for a public bailout. Pathetic. Just more and more examples of private profits and public debts. And who was being named one of the new heads, a Merrill Lynch exec, the same company that foisted Don Regan upon the public, one of the men who begat the S&L crisis. Just another example of the criminal financial elite circling their wagons behind their walls and their gated communities.

Ya know, I don't really care about foreign banks that made bad investment decisions, something I have done myself a few times. I have never been part of a pension plan so I don't care about those who have relied upon a third party to cover their retirement. But again, I too have lost money in some investments in my retirement account and I take full responsibility and ask for no bailout. If my municipality would default on a single investment blunder than we deserve what we elect, and that which is proffered up for elections is overwhelmingly doggy doo doo. And as hard as I try, I can't think of a single fellow blue collar working class schmuck like myself who owns a government agency bond fund. But again, although I would feel sorry for a small investor who owned such investments, it is not like I haven't also made some poor investment choices. But I take sole responsibility for my mistakes and don't ask or expect any bailouts. If a single investment represents financial ruin then I have little sympathy.

So from the perspective of a fairly typical middle class worker who has been honest with his taxes and has stayed out of debt by not subscribing to rampant consumerism, yea it looks to me it is all about protecting the wealthiest by covering their losses, due to their own mistaken judgments, with public funds and then trying to scare the masses by having them think that if the public does not bail out the wealthy then they will be the ones to suffer. I don't buy it!

I really doubt that the entire system will collapse, but I am sure that those whose welfare and fortune are tied to "the system" are indeed in fear that their little profit puppy might die. And I understand that for some of you, it is impossible to understand that there are those of us who do not aspire to be like "them".

Where Will the 'Commodity Currencies' Head Next?

I can't find any secular reason for commodity prices to be falling. All of the upward pressures remain unchanged from a week ago. Asking the always worthy question "Cui bono", who benefits, I suspect that the powers that be at the ultimate top level have showed their willingness to swing the axe against a sacrificial "bear" and have told all the others in the penultimate levels (e.g. hedge funds) that they had better shore up their cash reserves and would you please do that by selling a portion of your commodity positions so as we all get some public goodwill less the masses revolt.