frosty

Preview from Europe: What's This Week's Catalyst?

Capitalism only benefits capitalists. And when you discover that you are not one of them, well that's an epiphany. You're not one even though you think you are. Just as the European nobility of past centuries tolerated the merchant class and abhorred the poor and unfortunate, today's capitalists will do whatever they can to take what they want, e.g., 50% of our 401K's and IRA's plus all tax revenues for the next several generations.

Americans confuse 'capitalism' (an unrestrained self-correcting economic system) with 'market based economy' (where rules apply to try to level some playing fields). Capitalism is a text book theory just as socialism is a text book theory. Neither can work without a strong and smart government behind it (which is to say pure capitalism cannot be). People are just not uniformly anything (intelligent, altruistic, aggressive, generous, educated, hard working, caring, money oriented, etc.) to allow any system to work without constant tending by government. Think of us all as sheep. Unfortunately, government has allowed the capitalists tend the herd and look at what has happened!

Chatter that hedge fund manager John Paulson has taken as much as a $3B long position in the dollar.

How about United Goldmen of America?


On Aug 20 11:53 AM Mayascribe wrote:

> I agree, Ari. Dollar's likely strengthening is only temporary. <br/>
>
> What's going on these days is the greatest hoax of all time. Two
> years from now, our country will be renamed the United States of
> Goldman Sachs!

Can Americans Save Their Economy?

It is also well known that many Americans go to Mexico to be treated. Americans have also died due to inaccessible treatment (40 - 55 million uninsured). Can you compare numbers? No you can't. Again, you are dealing with anecdotes not facts. Many U.S. Surgeons General have criticized health care in America. The AMA has also been critical. It is their job to help make it better as they see it. In Canada also, the incoming president of CMA is, hopefully, trying to help make their system better. That doesn't mean it is bad. As in America where the AMA is only one authoritative voice, the CMA is not the only or most decisive authority on the subject.


On Aug 20 09:26 AM Speakeasy wrote:

> Frosty, according to Dr. Anne Doig, the incoming president of the
> Canadian Medical Association, "Our Universal Health Care Is 'Sick',
> and 'imploding'". It is common knowledge that many Canadians cross
> our borders to be treated in the U.S. Furthermore, if you get out
> of your bubble and read some of the U.K. you will occasionally read
> articles referencing individuals who have died due to inaccessible
> treatment.

Can Americans Save Their Economy?

Condemning other countries' health care system without factual evidence or even broad based anecdotal evidence is pure ideological bs. If you can cite Canadian, British, German, Japanese, or French public opinion surveys that condemn their health care services then you speak with authority. Otherwise, like many others who may hear a few Canadians complain, you speak merely as sophomore. Many people complain about America's health care system too. Why not listen to them.

As far as Americans resenting big government--they only resent the big government they don't agree with. Big government spends big on defense, big government spends big on agricultural support/welfare, big government spends big on public education, big government gives generous tax incentives to many big businesses, big government does a lot of big things that people other than "socialists" agree with. Self-reliance, even in the business world, is theory that works only with big government behind it.

P.S. America has the biggest government in the world and every administration I can remember (even those that promised smaller gevernment) increased its size.

Inflation vs. Deflation: A Matter of Money Supply and Demand

Your analysis is Lafferable.

Will the Efficient Markets Hypothesis Survive This Crisis?

An "hypothesis" is a statement or problem subject to rigorous proof. It seems EMH cannot be proven or disproven. It has believers and disbelievers. Godel addressed this dilemma with his proof that "in any logic, there are true statements that cannot be proven." What is the solution? EMH is an axiom not an hypothesis. You can either accept it as part of your logic or you can reject and substitute an alternative. Do you believe people act irrationally? Some physicists and philosophers believe that there is no such thing as 'free choice' - that we are ruled deterministically by the laws of the universe set in motion 13 billion years ago. Can this be proven or disproven? No, but as an axiom, it is part of the foundation for some interesting physical theories.

GM and eBay (EBAY) join up on a pilot program to let consumers buy new cars by negotiating with dealers online. Currently limited to California, GM is 'predisposed' to a nationwide rollout as it tries to drum up vehicle demand.

The extreme condition of this is interesting to comtemplate. No new car dealers, no new car lots, no distributed inventory, perhaps no inventory at all as deals are negotiated online and the auto you order is custom made within days and delivered to your door. Former new car salespeople are retrained as car delivery people by Fedex, UPS, and USPS.

Tuesday Outlook: Commodities, Global Markets

OOPS! I had a senior moment. My references above to sales-to-earnings should have been price-to-sales, some analysts were claiming that the p/s ratio should replace the p/e ratio since the dot.com companies hadn't had a chance to get any earnings up to that point.

Tuesday Outlook: Commodities, Global Markets

I remember in the frothy days of 2000 when the old rules no longer applied in the "new economy". Primarily, some analysts said it was no longer relevant to judge p/e's in relation to history (especially for sprouting dot.com's) but what we should be evaluating is the sales-to-earnings ratio. Funny thing happened - not that many months after the p/e's went into the stratospere - the whole thing imploded (we now call this the dot.com bubble). Many of us now look back and wonder, "how could we have been so dumb?".

So now some analysts are telling us that volume is no longer relevant. Indeed, it appears that for this recent stretch of gains since March, that has been true, since volume has been light and upwards of half of that has been millisecond trading systems trading with each other. If David and I (or Goldman and Morgan) could command half the trading on Wall Street, there is a lot we could do for each other. Could we do it forever? Only if we know when to go short (and then everyone else needs to watch out) because at some point, p/e's come into play again.

Some of us believe that, relative to business prospects over the next year, p/e's are close to the stratosphere right now. As David recommends caution, you may notice me next to him on the loading dock, not on the tracks lookin for the train.

Ben Graham Portfolio: Snazzy Returns from a Vintage Strategy

"Finally, about those single-digit P/Es I mentioned: it's normal to see them if EPS are expected to fall off a cliff." - Actually, some of these companies have long histories of single digit P/E's (TDW and OLN in particular). That's not necessarily important however. The prospect of P/E improvement from the present is what's important, assuming that earnings will increase, of course. So if TDW moves from its 6.3 P/E (where it was last year) up to 8 or 10 (where it was in prior years) there will be a 33% to 67% appreciation in stock price if earnings remain flat. If earnings increase, there will be a multiplier effect. This is probably the secret that Graham discovered - that temporarily low P/E quality stocks have a multiplier edge over "growth" stocks. It seems less of a challenge for TDW to go from 6.3 to 10, than for GOOG to go from 30 to 50. Admittedly, GOOG has been there, but that was in the go-go days.

Um, what's going on at Capco? The NYT reports the quiet Vermont firm - owned by major brokerages, to insure major brokerages - may be massively insolvent if it ends up facing $11B in claims from the Lehman collapse, with just $150M to pay them. Its main number tells callers they've reached a "nonworking number at Morgan Stanley" and 185 businesses are run out of its Burlington suite.

A sham "insurance company"? One more way Wall Street picked our pockets through a marketing ploy. Clearly banking has become a criminal enterprise and all should be prosecuted under RICO and then nationalized.

Weekly Unemployment Claims Continue to Be Encouraging

good news on the unemployment front - only one thing is worse this week. good news on the weather front the tornado brought much needed rain.

Car Allowance Rebate System: Ford Bounces Back

What a fantastically successful program that takes taxpayer money to give to other taxpayers to buy cars from companies that are owned by taxpayers. (OK, it's true, companies other than GM and Chrysler can sell also.) Six days and the money is all gone!

Already congress thinks we need another couple of billion. If the program gets any more successful, Goldman Sachs will figure out a way to buy up all CARS credits, securitize them for resale, and give their people another nifty way to enhance their bonuses. Then we'll know for sure that the program has been successful.

Not surprisingly, Goldman Sachs (GS) opposes proposed limits on commodities trading. "We believe that some of the courses of action that have been proposed not only will fail to address the perceived harms, but also will have unintended consequences that may be disruptive to liquidity and the markets generally."

The original intent of futures markets was to allow the producers of commodities and buyers of commodities to agree on future prices. With most of them meeting on and exchange, sufficient supply and demand would serve to stabilize markets for these goods. Enter speculators who have no production or consumption stake but only a profit stake and the markets go haywire. Inject a series of speculators in any market, like automobiles, and the same will happen if they can grab a sufficient share of production to drive the market. Not all speculation is bad as it gives an outside opinion to the direction of the market. But when speculation becomes the driver of the market, then it is counterproductive for both producers and consumers of commodities.

Wall Street Breakfast: Must-Know News

I thought shareholders were the owners. It's the compensation committee and board of directors who should have non-binding authority, not the owners. Even in congress' eyes, shareholders are mere lackeys.