to a collapsing economy and crashing stock market;
Thursday, December 11, 2008
Well It's About Freaking Time!
I have said before that the last thing America needs is more debt. That Americans should live within their means or else face the consequences. Of course, Americans aren't going to listen to some lone blogger (no matter how right and dashingly handsome he may be). But they will listen
to a collapsing economy and crashing stock market;
to a collapsing economy and crashing stock market;
Tuesday, December 09, 2008
Monday, December 08, 2008
For Canadians Who Have Bought My Book
To all my Canuck friends,
I got a couple e-mails posts that there were some difficulties in getting your book from Amazon. if this is the case and you're still have problems, e-mail me and I will gladly mail you a signed copy for the cost of the book and shipping (which I don't know how much it costs because it depends on where you live in Canada).
Thanks for letting me know of this problem.
Cpt.
captcapitalism@yahoo.com
I got a couple e-mails posts that there were some difficulties in getting your book from Amazon. if this is the case and you're still have problems, e-mail me and I will gladly mail you a signed copy for the cost of the book and shipping (which I don't know how much it costs because it depends on where you live in Canada).
Thanks for letting me know of this problem.
Cpt.
captcapitalism@yahoo.com
Sunday, December 07, 2008
Saturday, December 06, 2008
Never Move to Rhode Island
Morons.
Complete and utter morons.
Yeah, THAT will help bring business to the state!
This, in combination with primarily liberal states facing huge budget shortfalls is beautiful in that it is ultimately the little state and local socialists realizing not only do they have to pay the piper, but their little socialist ideology is actually failing.
Complete and utter morons.
Yeah, THAT will help bring business to the state!
This, in combination with primarily liberal states facing huge budget shortfalls is beautiful in that it is ultimately the little state and local socialists realizing not only do they have to pay the piper, but their little socialist ideology is actually failing.
Friday, December 05, 2008
Big Oil vs. Big Education
Goldwater's Ghost has a great point. If you look at the price of oil vs. the price of a college education, why is it "Big Oil" is the villain and not the spoiled brat college professors that request more and more money for progressively marginal educations?
He cites a report, which I perused, and poached this great chart which makes his point all that much clearer.
About the only thing I could add to this is beyond a 4 fold increase in the cost and nowhere near a 4 fold increase in quality, it is a pity that more and more students choose worthless majors. This basically makes education nothing as much as a vital tool to help poorer classes escape poverty and achieve wealth, but makes higher education a luxurious hobby for the upper classes. If all sociology majors, political science majors, hyphenated-American studies majors, etc. were wiped out, more resources could be poured into accounting, engineering and computers, bringing the cost down for these vital degrees and enriching many more Americans, particularly the poor.
He cites a report, which I perused, and poached this great chart which makes his point all that much clearer.
About the only thing I could add to this is beyond a 4 fold increase in the cost and nowhere near a 4 fold increase in quality, it is a pity that more and more students choose worthless majors. This basically makes education nothing as much as a vital tool to help poorer classes escape poverty and achieve wealth, but makes higher education a luxurious hobby for the upper classes. If all sociology majors, political science majors, hyphenated-American studies majors, etc. were wiped out, more resources could be poured into accounting, engineering and computers, bringing the cost down for these vital degrees and enriching many more Americans, particularly the poor.
The Problem With Quants
"Quants" as they are called, are basically economists who are mathematicians and think everything can be modeled using math and computers. And while certainly they do amazing work, there is one fundamental flaw with quantitative analysis and that is they're using math to predict social beings called humans.
If humans were robots or planets or something else that operated according to physical laws or principles, then quants would be right 100% of the time. They could predict human behavior, schedule it actually, and predict everything that would ever happen. Quants could also go so far as being able to predict girls and figure out what they want.
Obviously, this is impossible.
And the reason it's impossible is because humans are not robots. We change our minds, and without rhyme or reason half the time. We don't abide by hard and fast laws like gravity and physics, but are inherently chaotic. Ergo, developed the most advanced model in the world, it will still, inevitably be wrong.
This is why I like to approach economics for what it is; an art.
Economics is really more like "The Force" than it is some kind of engineering program. Many commentators and economists I've spoken with lament how the profession has more or less become a math degree tailored towards economics, and not a study that accepts there's some aspect of art to it. That so much emphasis is put on statistics, math, econometrics and so forth, the economist loses the forest from the tree and thus develop models that failed miserably to value securities such as CDO's, SIV's and other mortgage related securities.
Now, most quants know that the whole world can't be modeled. They know the limitations of their models, but then you get some die hard quants who never bothered to take an independent thought in their lives and really think that unless it runs through a statistical analysis program and shows a correlation, then it's worthless.
Case in point;
I had a quant berate me for saying housing starts predicted spikes in unemployment 6-18 months in advance. I based it on a chart showing housing starts and unemployment where, reliably, as housing tanked, unemployment would peak 6-18 months later. He, however, ran it through a statisical program (I forget the name of it) and said there was NO statistically significant relationship. That I didn't know what I was talking about and blah blah blah. So naturally when unemployment started its most recent exponential growth upward, the drawbacks of being a head-in-the-sand quant versus a Jedi Master made itself painfully obvious once again.
Now, as regular Cappy Cap readers know, this is one of my favorite charts, but it shows you a very important lesson about economics and life in general; just because you aren't a professional NEVER question your own eyes. The professionals can be wrong and frequently are. And the more you treat something that is indeed an art like a science, the worse you will become at predicting it.
Just ask quants how many models they have that have helped them land dates.
If humans were robots or planets or something else that operated according to physical laws or principles, then quants would be right 100% of the time. They could predict human behavior, schedule it actually, and predict everything that would ever happen. Quants could also go so far as being able to predict girls and figure out what they want.
Obviously, this is impossible.
And the reason it's impossible is because humans are not robots. We change our minds, and without rhyme or reason half the time. We don't abide by hard and fast laws like gravity and physics, but are inherently chaotic. Ergo, developed the most advanced model in the world, it will still, inevitably be wrong.
This is why I like to approach economics for what it is; an art.
Economics is really more like "The Force" than it is some kind of engineering program. Many commentators and economists I've spoken with lament how the profession has more or less become a math degree tailored towards economics, and not a study that accepts there's some aspect of art to it. That so much emphasis is put on statistics, math, econometrics and so forth, the economist loses the forest from the tree and thus develop models that failed miserably to value securities such as CDO's, SIV's and other mortgage related securities.
Now, most quants know that the whole world can't be modeled. They know the limitations of their models, but then you get some die hard quants who never bothered to take an independent thought in their lives and really think that unless it runs through a statistical analysis program and shows a correlation, then it's worthless.
Case in point;
I had a quant berate me for saying housing starts predicted spikes in unemployment 6-18 months in advance. I based it on a chart showing housing starts and unemployment where, reliably, as housing tanked, unemployment would peak 6-18 months later. He, however, ran it through a statisical program (I forget the name of it) and said there was NO statistically significant relationship. That I didn't know what I was talking about and blah blah blah. So naturally when unemployment started its most recent exponential growth upward, the drawbacks of being a head-in-the-sand quant versus a Jedi Master made itself painfully obvious once again.
Now, as regular Cappy Cap readers know, this is one of my favorite charts, but it shows you a very important lesson about economics and life in general; just because you aren't a professional NEVER question your own eyes. The professionals can be wrong and frequently are. And the more you treat something that is indeed an art like a science, the worse you will become at predicting it.
Just ask quants how many models they have that have helped them land dates.
Thursday, December 04, 2008
You Will Sign the Petition
Sorry for all the Non-Minnesotan readers, but this is important for all the locals here.
Sign the petition. Do it! Do it now!!!
Sign the petition. Do it! Do it now!!!
The Collapse of the East Coast Elites
The East Coast has Wall Street and DC. Basically the two centers of financial and political power that would enable them to basically wreak the havoc they have on the country in the past 30 or so years and whose incompetence we are paying for today.
But this got me thinking;
As America's "elite" proves themselves basically to be nothing but a bunch of nepotistic, incompetent boobs who rely on connections and cronyism instead of skill and game to award themselves the best jobs in the US, won't the American public and economy at large start to value these people less and less?
I mean if Harvard for god's sake didn't see this coming, shouldn't this make corporations think twice about hiring from these presumed "elite" schools? Not that there is an immediate and viable alternative readily available, but if I was head of a corporation the LAST people I would be looking to hire is anybody who had anything to do with the Ivy League, now-defunct elite bulge bracket investment banks, and the hopelessly pathetic DC.
You see, I want production. I want competence. I want profit. I don't want wheeling and dealing and a bunch of blue bloods talking about Skull and Crossbones while they refer to each other by their initials;
"Hey JB!"
"Why hello BW! Say, nice suit, JB! Where did you get it?"
"Well I got it from Saks 5th Avenue. I don't much like slumming, if you get my drift, ehhhh BW?"
"Ha ha ha! I know just what you're saying JB! How about we award ourselves some stock options while we hire your nephew for that new VP position?!"
"I like you're thinking BW!"
Of course, it's going to be more of an issue of these people running the institutions they control into the ground and newer, better, faster and less corrupt companies replacing them. Lord knows normal, working schleps like us will never get into these old guard companies, let alone would have the patience to fight the internal political battles against the entrenched old guard to slowly turn them around. Regardless, I'm just wondering if corporate America and society at large are realizing the "wizards of Wall Street" they ain't and people like my mother could do a better job managing America's "corporate crown jewels" than the current lot.
But this got me thinking;
As America's "elite" proves themselves basically to be nothing but a bunch of nepotistic, incompetent boobs who rely on connections and cronyism instead of skill and game to award themselves the best jobs in the US, won't the American public and economy at large start to value these people less and less?
I mean if Harvard for god's sake didn't see this coming, shouldn't this make corporations think twice about hiring from these presumed "elite" schools? Not that there is an immediate and viable alternative readily available, but if I was head of a corporation the LAST people I would be looking to hire is anybody who had anything to do with the Ivy League, now-defunct elite bulge bracket investment banks, and the hopelessly pathetic DC.
You see, I want production. I want competence. I want profit. I don't want wheeling and dealing and a bunch of blue bloods talking about Skull and Crossbones while they refer to each other by their initials;
"Hey JB!"
"Why hello BW! Say, nice suit, JB! Where did you get it?"
"Well I got it from Saks 5th Avenue. I don't much like slumming, if you get my drift, ehhhh BW?"
"Ha ha ha! I know just what you're saying JB! How about we award ourselves some stock options while we hire your nephew for that new VP position?!"
"I like you're thinking BW!"
Of course, it's going to be more of an issue of these people running the institutions they control into the ground and newer, better, faster and less corrupt companies replacing them. Lord knows normal, working schleps like us will never get into these old guard companies, let alone would have the patience to fight the internal political battles against the entrenched old guard to slowly turn them around. Regardless, I'm just wondering if corporate America and society at large are realizing the "wizards of Wall Street" they ain't and people like my mother could do a better job managing America's "corporate crown jewels" than the current lot.
Wednesday, December 03, 2008
Is It Time to Buy?
With the collapse in stock prices the question turns to "is it the time to buy or should I wait."
In the past I said the DJIA at around 8,000 is accurately valued. Understand this is ACCURATELY valued, meaning not a deal, nor over priced. It's about where it should be. And the way I base this is on the S&P 500 P/E ratio.
Historically the S&P 500 P/E ratio trades around 15 - ie- you pay $15 in stock price for $1 in earnings. The hope is, with the recent drop in stock prices, stocks are now below this average, perhaps even as low as a P/E of 7 which it was back in the early 80's and for most of the 70's. The problem is, even with the drop in stock prices, it is not;
Currently the stock market is trading around a P/E of 14. A bit lower than the historical average, but not a "steal" by any means.
Furthermore, this says nothing about future earnings which are bound to be lower as the economy continues its trudging through a recession. If earnings drop, which I'm betting they will, this will only provide less E for the P that you're paying, and thusly P will have to drop.
Sorry to be the bearer of bad news, but good or bad, truth is truth.
However, there is some solace, because Obama will fix everything.
In the past I said the DJIA at around 8,000 is accurately valued. Understand this is ACCURATELY valued, meaning not a deal, nor over priced. It's about where it should be. And the way I base this is on the S&P 500 P/E ratio.
Historically the S&P 500 P/E ratio trades around 15 - ie- you pay $15 in stock price for $1 in earnings. The hope is, with the recent drop in stock prices, stocks are now below this average, perhaps even as low as a P/E of 7 which it was back in the early 80's and for most of the 70's. The problem is, even with the drop in stock prices, it is not;
Currently the stock market is trading around a P/E of 14. A bit lower than the historical average, but not a "steal" by any means.
Furthermore, this says nothing about future earnings which are bound to be lower as the economy continues its trudging through a recession. If earnings drop, which I'm betting they will, this will only provide less E for the P that you're paying, and thusly P will have to drop.
Sorry to be the bearer of bad news, but good or bad, truth is truth.
However, there is some solace, because Obama will fix everything.
You Will Visit 9 Cents
One thing I regret is not being able to pay proper homage to all the readers out there kind enough to link to Cappy Cap.
Nine Cents is one of them.
Many thanks to Mike for his review, and nice photo job in recreating my credit union face.
Nine Cents is one of them.
Many thanks to Mike for his review, and nice photo job in recreating my credit union face.
Tuesday, December 02, 2008
Slowing Long Term Economic Growth
GDP growth is volatile and chaotic;
But if you smooth it out a bit, a disturbing trend is showing and that is, over time, our long term economic growth rate has been decreasing;
People ask me what I think is going to happen in the future, and then when I tell them, they all poo poo me saying, "Oh Captain, you're so pessimistic." "Oh Captain, why do you have to be cynical."
So allow me some of my insights.
One, I'm rarely wrong. Matter of fact (and arrogant as this may sound, it's true) if the blue blood Ivy League loser ilk had listened to this dumb fly-over country hick graduate, they wouldn't be going to the taxpayer with a cup in their hand, let alone be looking for a job today. I predicted this housing market crash (along with a million other people), the stock market bubble, the Asian currency crisis, and the collapse of the Suharto regime (never mind, long story, back in my youth). So when I predict a slow degradation of the US into essentially an English speaking version of France and an utter financial and economic collapse under the weight of the baby boomers retiring/social security/medicare, maybe, just maybe this once you ought to listen to me.
Two, without economic growth, let alone the hope for future increases in economic growth, the present value of today's assets are going to drop or at least not go up. I know people on Wall Street and people who rely on increasing asset values for retirement like to hunt or look for reasons for their assets to perpetually go up aside from profit, but with the backdrop of slowing economic growth, it is unlikely, assets as a whole, are going to go up, unless you have some kind of phenomenon contributing to an asset bubble (lower interest rates, the trend to throw trillions into 401k's, tulip bulbs, etc.).
Three, recessions are a good thing, damnit. I don't know why we try to avoid them all the time at the expense of compromising our future economic growth. Not only did we have higher average economic growth in the 40's and 50's, it was more volatile, resulting in more, but briefer recessions. This was due to the government not trying to impose a Keynesian interventionist fiscal policy every time the economy got a sniffle. Now bailout this, bailout that, Fed Funds rate lowered here, loan package there, Stimulus Plan I, II and III. Instead of letting resources reallocate efficiently and rapidly, we now prefer long, dragged out, dulling recessions or periods of lackluster economic growth. Anything, ANYTHING to avoid two successive quarters of economic decline, because we know that is just an unacceptable economic fate.
In any case, there's more economic data suggesting a collapse in the US. I have tons of it. And I doubt I'm going to be proven wrong. But if it's anything like the housing crash (or the stock market bubble, or telling a large bank here in America Indonesia would fall) getting the morons in the financial markets and financial industry to listen will be an impossible task and, ergo, why I'm simply just going to be recording it here for anybody willing to pull their heads out of the sand.
But if you smooth it out a bit, a disturbing trend is showing and that is, over time, our long term economic growth rate has been decreasing;
People ask me what I think is going to happen in the future, and then when I tell them, they all poo poo me saying, "Oh Captain, you're so pessimistic." "Oh Captain, why do you have to be cynical."
So allow me some of my insights.
One, I'm rarely wrong. Matter of fact (and arrogant as this may sound, it's true) if the blue blood Ivy League loser ilk had listened to this dumb fly-over country hick graduate, they wouldn't be going to the taxpayer with a cup in their hand, let alone be looking for a job today. I predicted this housing market crash (along with a million other people), the stock market bubble, the Asian currency crisis, and the collapse of the Suharto regime (never mind, long story, back in my youth). So when I predict a slow degradation of the US into essentially an English speaking version of France and an utter financial and economic collapse under the weight of the baby boomers retiring/social security/medicare, maybe, just maybe this once you ought to listen to me.
Two, without economic growth, let alone the hope for future increases in economic growth, the present value of today's assets are going to drop or at least not go up. I know people on Wall Street and people who rely on increasing asset values for retirement like to hunt or look for reasons for their assets to perpetually go up aside from profit, but with the backdrop of slowing economic growth, it is unlikely, assets as a whole, are going to go up, unless you have some kind of phenomenon contributing to an asset bubble (lower interest rates, the trend to throw trillions into 401k's, tulip bulbs, etc.).
Three, recessions are a good thing, damnit. I don't know why we try to avoid them all the time at the expense of compromising our future economic growth. Not only did we have higher average economic growth in the 40's and 50's, it was more volatile, resulting in more, but briefer recessions. This was due to the government not trying to impose a Keynesian interventionist fiscal policy every time the economy got a sniffle. Now bailout this, bailout that, Fed Funds rate lowered here, loan package there, Stimulus Plan I, II and III. Instead of letting resources reallocate efficiently and rapidly, we now prefer long, dragged out, dulling recessions or periods of lackluster economic growth. Anything, ANYTHING to avoid two successive quarters of economic decline, because we know that is just an unacceptable economic fate.
In any case, there's more economic data suggesting a collapse in the US. I have tons of it. And I doubt I'm going to be proven wrong. But if it's anything like the housing crash (or the stock market bubble, or telling a large bank here in America Indonesia would fall) getting the morons in the financial markets and financial industry to listen will be an impossible task and, ergo, why I'm simply just going to be recording it here for anybody willing to pull their heads out of the sand.
Monday, December 01, 2008
The Al Franken Translation
Ef you, my political career is more important than the country. And if the country doesn't have a functioning senate, so be it. My career is more important that you 300 million American schleps.
A true statesman would never do such a thing as it is the people he truly cares about.
A true statesman would never do such a thing as it is the people he truly cares about.
Consumer Spending Online Drops
There is much ballyhoo and hoopla about the 3% increase in year over year spending from last year's Black Friday weekend. "Perma-bulls," analysts who forever think stock markets always go up no matter what, are heralding this as proof the recession is not as bad as most think and is reason to start buying stocks and get that perma-bull market going again.
I ask stupid, elementary questions like "does that 3% even exceed inflation?"
or
"Well who cares about sales if they had to discount their products so much they weren't making any profit anyway?"
But I found this chart interesting in that it's the first chart showing a decrease in consumer spending online.
The problem I have with Black Friday (aside from soccer moms causing traffic jams as they stop in the middle of road to contemplate which way to turn) is that it is more of a holiday event than a genuine economic event. That shopping is "just what you do" after Thanksgiving, not to mention you need to get out as your family is driving you crazy. Ergo, yes, traditional sales may be up 3%, but that is due to a social phenomenon, whereas online sales are down and online purchases are purely more of one of an economic nature.
I will say it before, and I'll say it again, the stock market was accurately valued around 7,500-8,000. And this does NOT consider the potential drop in corporate earnings in the future which may be well worse than I expect.
So enjoy the sucker's rally. I'm saving up a little bit o' cash.
I ask stupid, elementary questions like "does that 3% even exceed inflation?"
or
"Well who cares about sales if they had to discount their products so much they weren't making any profit anyway?"
But I found this chart interesting in that it's the first chart showing a decrease in consumer spending online.
The problem I have with Black Friday (aside from soccer moms causing traffic jams as they stop in the middle of road to contemplate which way to turn) is that it is more of a holiday event than a genuine economic event. That shopping is "just what you do" after Thanksgiving, not to mention you need to get out as your family is driving you crazy. Ergo, yes, traditional sales may be up 3%, but that is due to a social phenomenon, whereas online sales are down and online purchases are purely more of one of an economic nature.
I will say it before, and I'll say it again, the stock market was accurately valued around 7,500-8,000. And this does NOT consider the potential drop in corporate earnings in the future which may be well worse than I expect.
So enjoy the sucker's rally. I'm saving up a little bit o' cash.
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