Category Archives: Other People’s Money

The Most Important Financial Story You Haven’t Read Today

Imagine a United States economy with a finance sector only 25% of its current size. Followed to its logical extreme, the currency exchange agreement announced yesterday between China and Japan is the beginning of the end of U.S. financial services hegemony.

Currency Agreement for Japan and China
Published: December 26, 2011

Progressive taxation, social peace, and Her Royal Highness, The Duchess of Cornwall

I have long argued — it seems once to have been a canon of American political belief — that what the wealthy “buy” with their taxes is social peace.

I hope our fellow Americans will take away at least some of the right lessons from the “unexpected” and “unprovoked” attack on Prince Charles and his wife, as they rode in their Rolls, swathed in their £10,000 topcoats, on their way to the theater through the midst of mass student protests over the overnight TRIPLING of English university tuition fees.

Oh yes — tuition must be TRIPLED — we have no choice say the Tories and their coalition partners the Lib Dems — because, because, well… because the rich and their bankers and the occasional lucky footballer have made off with simply everything — all the money! Poof, gone! Well fancy that. How’d that ever happen? Guess we’ll never know. And now we simply have no choice but to make it back somehow. No more university for you, Mr. Chav, or you, Ms. Brown. “Peaceful protests only, please,” they say, “we’re civilized people.” Well, one of the first rules of civilization is that the criminal should be held accountable for his crime. And if the typical English university student sees the Prince of York and his wife the Duchess of Cornwall as perfect symbols of the new haute bourgeois master thieves who have succeeded in turning the Western world into the best semblance of their banana republic dreams — where them’s thats got deserve everything and the rest deserve their lot — who can blame them?

So as the fasco-Marxist GOP — those mealy mouthed southern gentlemen of true faith who reduce all succor to the measure of “the economy” and its rightful domain over all — who daily practice their distinctive style of “class warfare” (for the “other” side, of course, but isn’t that just as their G*d ordains?) — continue their project of dismantling the petit-bourgeois state that was the economic and political glory of 20th century America — well we certainly can’t do anything about this Treasury problem until we dismantle Social Security, Medicare, public education and all these other “luxuries” (after all, we got rid of welfare during the Clinton administration, so the really low hanging fruit’s been picked) — they should ask themselves this question:

Would you rather give up a few more dollars in taxes on your ill-gotten gains, or stop driving your Bentley to that hip show downtown? ‘Cause the lesson of Charles and Camilla is, in the end, that you can’t have it both ways. Your choice, boys. Seems the rest of us don’t really have much say in the matter.

Prince Charles and Camilla caught up in London violence after student fees vote

Attack on royal car as tumult grips capital city’s centre following MPs’ vote for measure trebling English university fees

Patrick Wintour and Nicholas Watt
The Guardian, Friday 10 December 2010

Comments (1075)

Extending the Bush Tax Cuts.

We’ve come to the point in this country where we seem to be very comfortable talking, economically, about “the bottom 90%.”

And here’s the kind of bargain the ruling 10% and their Republican allies call fair: $10 billion in unemployment insurance in exchange for $600 billion+ in tax cuts for the already wealthy.

Until such day as these seem once again, on the one hand, an absurd formulation, and on the other, a ridiculous bargain, the Democratic response to Boner’s demands should be simply and unequivocally, “over my dead body!”

Picture of the Day

Change in National Debt under different Presidential administrations

Courtesy of James Fallows, The Atlantic.

The best introductory investing article I’ve read in ages

Ten Stock Market Myths that Just Won’t Die on the Wall Street Journal Digital Network.

Myth 8 is particularly important to novice investors:

8 “We recommend a diversified portfolio of mutual funds.”

If your broker means you should diversify across things like cash, bonds, stocks, alternative strategies, commodities and precious metals, then that’s good advice.

But too many brokers mean mutual funds with different names and “styles” like large-cap value, small-cap growth, midcap blend, international small-cap value, and so on. These are marketing gimmicks. There is, for example, no such thing as “midcap blend.” These funds are typically 100% invested all the time, and all in stocks. In this global economy even “international” offers less diversification than it did, because everything’s getting tied together.

Especially in light of this chestnut from Myth #9:

…the lion’s share of investment returns — for good or ill — has typically come from the asset classes (see No. 8, above) they’ve chosen rather than the individual investments.

Learning to love your inner short, part 3(?)

The Big Short, by Michael Lewis

Only someone who has Asperger’s would read a subprime-mortgage-bond prospectus,” he said.

Michael Burry, President, Scion Capital, in Michael Lewis’s  “Betting on the Blind Side,” in this month’s Vanity Fair, an excerpt from his indispensable forthcoming book, The Big Short.

For all the terrible things I say about Apple…

…this terrific video shows an upcoming New Yorker cover being created exclusively on an iPhone, using the Brushes app.

…when you cross an iPod with Depends?

Introducing! The iPad!

Other People’s Money 5 — Sell, sell, sell your financial stocks

All for one, and one for all -- if you're a major bank or brokerage employee.

The New York Times’ Eric Dash has an excellent story today on the outrageous compensation ratios at the biggest banks and brokerages. $1.50 in employee compensation for every $1.00 of profit, for instance, at Citigroup. At the expense, especially, of shareholders.

Guys and gals — there’s only one answer if you’re mad at these banks. Sell any shares you hold in them. Call your mutual fund company, your 401(k) or pension manager, and urge them to sell. If they won’t, sell your funds and invest in China.

Shareholders are getting the short end of the stick every day, and this is the most egregious example. But hey, it’s your wealth, your retirement. Do what you like.

Time to sell Apple?

I hate to sound so cynical — you would be too if you lived through the bursting of the original “tech and internet bubble,” the first of our great asset inflations — but when I hear a Morgan Stanley analyst compare today’s Apple to late 90s AOL and Microsoft, my instinct would be to run in the opposite direction, as quickly as possible. (Such a strategy would have made you a rich and happy camper in the Spring of 2000.)

“Apple changed the view of what you can do with that small phone in your back pocket,” says Katy Huberty, a Morgan Stanley analyst. “Applications make the smartphone trend a revolutionary trend — one we haven’t seen in consumer technology for many years.”

Ms. Huberty likens the advent of the App Store and the iPhone to AOL’s pioneering role in driving broad-based consumer adoption of the Internet in the 1990s. She also draws comparisons to ways in which laptops have upended industry assumptions about consumer preferences and desktop computing. But, she notes, something even more profound may now be afoot.

“The iPhone is something different. It’s changing our behavior,” she says. “The game that Apple is playing is to become the Microsoft of the smartphone market.”

Edit: By the way, who in world has ever carried a cell phone “in their back pocket?”