frosty

Report from Europe: Non Farm Payrolls to Bring the Bears Out

I also noticed Colorado's state budget is $19.75B, but a more imaginative use of $20B is the space elevator. See article:

www.cnn.com/2009/TECH/.../

Report from Europe: Non Farm Payrolls to Bring the Bears Out

Dear Mr. Mole

I really enjoy reading your articles . . . and the "and finally's". This one concerning the charity of our bankers is just ok for its sarcasm and/or irony or perhaps I'm reading too much into it. But it did bring to mind that Goldman bonus number ($20B by year-end est.) which I have been trying to put into perspective. So I divided by $50,000, roughly the average American salary, and I get 400,000 average American jobs. I've done this over and over thinking my Intel chip is going whacky, but it alway comes up the same. Am I in error - do you have a chip that gives a different answer? Then I went to the state of Connecticut's web site (I live here) and discovered that our state's budget is $17.5B! Wow! I thought of searching out other states' budgets and nations' budgets to help put that number in perspective - it would be interesting.

Anyone who reads or listens to any of the press is now jaded by talk of billions and even trillions of dollars and no longer has a perspective of what a billion or $20B represents. We're sort of innoculated against understanding it or appropriately reacting to it.

So I was hoping that you, or one of your readers, with more research tools and expertise than I, might do an expose in terms that most people can put in perspective, of what these bonus amounts are worth (in terms other than cars and yachts). It would make for a very interesting article.

Big banks should seek balanced executive pay by "deferral of a substantial portion" of compensation over many years, says Fed Governor Daniel Tarullo at a compensation conference. He emphasized an "extensive horizontal review" in the central bank's supervisory process. The 30-day comment period for the Fed's new pay limit policies ends Nov. 27.

He doesn't get it. Big bank big salaries are transfer payments from customers, taxpayers, and stockholders. Deferring payment of undeserved wealth does not solve the problem of ENDING undeserved wealth.

Why Too-Big-to-Fail Shouldn't Be Codified

Glass-Steagall worked well for 60 years and look what happened after it was repealed. To big to fail legislation is also good as long as it's good legislation.


On Oct 29 10:52 AM frosty wrote:

> Glass-Steagall worked well for 60 years and look what

Why Too-Big-to-Fail Shouldn't Be Codified

Glass-Steagall worked well for 60 years and look what

Why Apple Is Worth $80

Put in a good-till-cancelled buy order at $80. If you get it at any time between now and forever, i will eat your stock certificate and then I will buy some myself because the only way that will happen is if we have another financial implosion, a la October - March.

Why Apple Is Worth $80

Put in a good-till-cancelled buy order at $80. If you get it at any time between now and forever, I

Goldman Sachs (GS) would have you believe that all the government did was inject a little capital, so what's the big deal about $20B in bonuses? Joe Nocera freshens memories and counts the ways that taxpayers helped.

We get kinda jaded when news reports talk about billions of dollars. In terms of many of today's headline stories, $16 Billion doesn't seem like an especially big number compared to the hundreds of billions and trillions that are regularly talked about in other contexts. But divide $14 billion by the average worker's salary of $45,000 and you see it is equavalent to over 350,000 workers' annual salary. I'm not sure any American company has 350,000 workers any more, so this is probably greater than the salary paid by nearly every American company. And Goldman doesn't make any automobiles, or build any houses, or teach any kids how to read and write, arrest any criminals (especially not themselves), put out any fires, etc., etc. They happen to be very good at taking other peoples' money (taxpayers included) to the casino and coming back with more. Some of what they do provides a valuable business service but much of what they do seems only to line their own pockets by tricking others. Fair play you say? Not if the trickery results in losing your investments, your house or your job.

Greed and opulence at the expense of others, especially coupled indifference, bring down dynasties. It can't go on forever.

Harvard business professor Bill George pens a detailed response to the numerous responses to his provocative Tuesday piece, "Let's Stop Vilifying the Bankers."

Nor should we vilify bank robbers. At least they recycle what they steal.

Wall Street Breakfast: Must-Know News

This is the third quarter in a row that the great preponderance of companies 'beat' analysts estimates. In my opinion this says more about the quality of analysts than the quality of results. Statistical expectations would be that the 'average analyst expectation' would be high half the time and low half the time but on the average, across all companies analyzed, would be close to right. Analysts consistently underestimating earnings for the vast majority of companies tells me that they just don't know much about the companies they are supposedly following. Our economy is shrinking, most companies' sales growth is negative as is their profit growth, yet to read through the list above with 80% green and 20% red (59 to 15, a few in-line) one might easily conclude that results are on a tear. I think you do a disservice to readers by making the principal highlight comparison to analysts erroneous expectations rather than making the principal highlighti comparison to companies' last quarter/last year.

"You have to make sure that in addition to carrots, there are sticks." - Warren Buffett, who makes $100,000 in salary a year, on the "downside" that Wall Street pay needs. "And it can’t be a one-way street where they are making ungodly amounts of money when things are good and then they move on to someplace else for a while when things are bad."

Goldman, so far this year, has set aside $16.7 BILLION for bonuses. The average annual wage in America is about $45,000 per year. Do the math - Goldman's bonuses could pay over 370,000 average annual salaries. And they don't invent new phones, discover new drugs, lift a hammer, dig a hole, put out a fire, arrest crooks (themselves especially), or teach kids how to read and write. They just siphon money from taxpayers and investors who have no knowledge of what they're doing. The whole wall street machine just begs the conscience of what's fair and reasonable. Where is Teddy Roosevelt when we need him? He took care of the oil, rail, and steel barons a century ago. Will Obama have the guts to do it to Wall Street today?

Just a week after a floor-mat flaw caused Toyota's (TM) biggest U.S. recall, the company's Tundra truck is drawing an investigation by U.S. regulators over "severe" frame corrosion that might cause brake failure - more bad news for a company that's at least a little off track.

Who makes the frames? My son's 2 Hyundais had exactly the same problem. I wonder if there is a connection? My wife's Subaru has the floor mat problem - it creeps up under the gas pedal and can cause it to stick.

Buy Ford/Chevy!

US Dollar: "I'm Not Dead Yet!"

I'm not sure that anyone understands the implications of dollar devaluation or even if it's relevant. One blogger says the dollar has lost 95% of its value since 1913. Are we 95% poorer than we were in 1913? I think not. Has ANY world currency NOT devalued since 1913? I think not. Devaluation is always a relative matter. I remember back in the 60's the pound was worth $1.60 - today it's worth $1.60. What has happened? In the intervening years, the exchange rate has fluctuated between roughly $1.25 and $2.00 leaving us today back where we were. And all we can say is, compared to the 60's, neither trading partner has a currency advantage over the other, although there were certainly periods of time when one or the other did.

So, is devaluation bad? It depends on what you have to sell. If you want sell Chevys to foreigners, it's good. If you're selling BMW imports to Americans, it's not good. As the author suggests, consider all the world's currencies structured in a matrix. For periods of time you will see some currencies relative to others with + trends and during other periods with - trends. Recently the dollar has been in a minus trend against some currencies. It has happened before - during the 70's oil crisis when news reports feared that the Saudi's were going to buy everything of value in America (dollar cheap compared to riad), and in the 80's when the Japanese business model threatened to conquer the commercial (they even bought Rockerfeller Center!).

So once again we're in a pretty deep funk. However, there is still no economically significant country on earth with a political system that fosters freedom of intellect, invention, and enterprise and with an educational outreach system that reaches the vast majority of its residents. In the end, when people decide to hold dollars, they're betting on the future of America relative to others and that it's safer to hold dollars than holding bolivars, or pesos, or Euros. You may want to bet on the euro or yen in the short run, but in the long run the dollar will still prove a safer bet.

Jobs Report: Early Analyst Responses

"About 824,000 more jobs may be subtracted from the payroll count for the 12 months through last March when the figures are officially revised early next year, a Labor Department report showed today."

Also, "“We are probably still underestimating job losses,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “There could be another 30,000 to 40,000” that the data isn’t picking up."

Both from a Bloomberg article found at bloomberg.com/apps...

Try to find good news in the bad and others find even worse news in the bad. The labor department model for job losses has likely led to a serious understatement of the unemployment figures for the last year and a half.

Workforce Disruption: Weekly Claims Update

"About 824,000 more jobs may be subtracted from the payroll count for the 12 months through last March when the figures are officially revised early next year, a Labor Department report showed today."

Also, "“We are probably still underestimating job losses,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “There could be another 30,000 to 40,000” that the data isn’t picking up."

Both from a Bloomberg article found at www.bloomberg.com/apps...

Unemployment is terribly high but is likely even much worse. Add to this that more severe measure which includes those forced to part-time work and those who have given up looking is nearly double the official unemployment rate, it is quite possible that the actual rate of formerly full time workers who are not now working full time is 20% of the workforce.

People who work spend money; people who work own homes; people who work drive our economy. This seems pretty simple to me. People who don't work don't spend money; people who don't work lose their homes; people who don't work are a drag on the economy. This also seems pretty simple to me.

Mr. Calafia is a great cheerleader but cheerleaders don't win games. We need to get the players back on the field for the economy to get back in the game.