Citigroup (C) trades more than either major traded benchmark, SPY or QQQQ's!
Who would have predicted that?
Monday, November 5, 2007
We live in interesting times ...
Saturday, November 3, 2007
Debt-spending GOP
ONE REFINEMENT, ONE NEW MEASURE
USING MEDIAN INCOMES
Median incomes may not rise as quickly as national income, because new wealth is not distributed proportionately. Therefore, expressing debt-spending burdens as per capita or per household doesn't capture as much one might with a measure of burden expressed in relation to the median income.
The table below has such a measure, using the Census Bureau's median household income figures from is Current Population Survey ("CPS" to them).
BEYOND 'GROSS FEDERAL DEBT'
The prior tables (here) were based on gross federal debt. That can be somewhat unfair for comparisons.
A better gross measure is how much was spent, beyond a balanced budget. An increase in just the debt held by the public, a statistic used by most for-hire economists, is not adequate, because that amount doesn't proxy "excess spending". A better measure includes the amount of debt that was NOT issued to the public because of net inflows from the social security trust (and other trust funds, which as small by comparison).
Adding together an increase in debt held by the public and net inflow from the trust funds, one gets a proxy for what one might call "total debt-spend".
INTERESTING COMPARISON
One criticism is that the economy now is larger and therefore can support more debt.
Scaling the debt loads by nominal growth in GDP, on can see that Reagan spent more than George "The Decider", which is truly astonishing since he did not have the huge tailwind of a large social security inflow.
However, when one looks at the burden by median household income, George "The Decider" is ahead.
In any case, Clinton-42 and Carter as below the others.
| Big Debt Spender | Cumulative Debt-Spend Per President | Per Household | Tax Burden in $2006 per Household | Tax Burden as % of current$ Median Household Income |
|---|---|---|---|---|
| BUSH-43 | 3,786,625,141,392 | 31,636 | 26,941 | 60% |
| FY2008 | 3,372,625,141,392 | 28,545 | 25,646 | 56% |
| FY2007 | 2,977,995,326,832 | 25,534 | 24,203 | 51% |
| FY2006 | 2,506,810,560,098 | 21,775 | 21,775 | 45% |
| FY2005 | 1,986,928,549,967 | 17,485 | 18,555 | 38% |
| FY2004 | 1,467,034,420,814 | 13,078 | 14,767 | 29% |
| FY2003 | 894,779,930,786 | 8,081 | 9,728 | 19% |
| FY2002 | 372,870,071,780 | 3,412 | 4,300 | 8% |
| CLINTON-42 | 894,710,176,095 | 8,362 | 10,894 | 20% |
| FY2000 | 797,703,490,221 | 7,619 | 10,240 | 18% |
| FY1999 | 876,704,594,502 | 8,440 | 12,015 | 21% |
| FY1998 | 849,764,472,164 | 8,288 | 12,502 | 21% |
| FY1997 | 806,167,546,850 | 7,980 | 12,680 | 22% |
| FY1996 | 669,300,000,000 | 6,718 | 11,340 | 19% |
| FY1995 | 473,200,000,000 | 4,780 | 8,526 | 14% |
| FY1994 | 241,500,000,000 | 2,468 | 4,605 | 8% |
| BUSH-41 | 1,266,900,000,000 | 13,102 | 25,968 | 42% |
| FY1992 | 971,400,000,000 | 10,165 | 21,163 | 33% |
| FY1991 | 610,000,000,000 | 6,458 | 14,213 | 21% |
| FY1990 | 279,100,000,000 | 2,990 | 6,798 | 10% |
| REAGAN | 1,473,400,000,000 | 16,016 | 38,532 | 55% |
| FY1988 | 1,295,500,000,000 | 14,289 | 36,940 | 52% |
| FY1987 | 1,114,100,000,000 | 12,468 | 34,711 | 48% |
| FY1986 | 948,200,000,000 | 10,767 | 31,835 | 43% |
| FY1985 | 705,500,000,000 | 8,129 | 25,415 | 34% |
| FY1984 | 504,900,000,000 | 5,902 | 19,798 | 26% |
| FY1983 | 335,000,000,000 | 3,972 | 14,820 | 19% |
| FY1982 | 130,200,000,000 | 1,566 | 6,349 | 8% |
| CARTER | 229,000,000,000 | 2,795 | 11,787 | 15% |
| FY1980 | 152,600,000,000 | 1,889 | 8,936 | 11% |
| FY1979 | 83,000,000,000 | 1,054 | 5,426 | 6% |
| FY1980 | 54,100,000,000 | 705 | 4,052 | 5% |
sources: Treasury, Bureau of the Public Debt; BEA; Census Bureau; CBO and CBO projections for federal debt beyond FY2007.
Friday, November 2, 2007
Larry with another vague proposal
Larry Summers, writing on the dollar decline:
The Clinton administration approach [translate: Bob Rubin's approach] of asserting the desirability of a strong dollar based on strong fundamentals while allowing its value to be set on foreign exchange markets was highly successful in its time and has largely been followed by the Bush Treasury. But it is insufficient in the current world, where the dollar’s trade-weighted exchange rate is to an important extent managed abroad. Some means of engagement must be found with those who have yoked their currencies and so their financial policies to that of the US."Some means"? What means?
It's a good insight to consider those pegging to the U.S. But, if the U.S. fundamentals are deteriorating, then why shouldn't those currencies go down alongside the dollar? They are tied there for a reason, usually because of strong trade with the U.S.
If the dollar is becoming 'unstable' for reasons (other reasons?) that make it a "poor peg choice", then "some means" is for those countries to get off that peg, right? Of course, there might be a policy response to avoid that market response, but I don't see what it is that LS has laid out to do, do you?
NIPA Concepts : Oily or Wiley?
Greg Mankiw defends the NIPA accounting mechanisms as "straightforward and unobjectionable", when looking at the shot-term oil impact on the equation, Y = C + I + G + (X-M), brought up in this MarketWatch article.
What he may not know is that in the 1980s, during the last oil price rise shock, most economic forecasters got it wrong.
I don't have the as-reported figures (what's in the databases are revisions), but there are two things, as best I recall (caveat reader!), at work.
One, the import price index follows a different methodology (or timing - the initial import figures may also be lagged).
The net result - again, going just on recollection of the story - is an counter-intuitive situation in which GDP rises during an "external" oil price shock, due to subtracting a highly negative number for real goods imports (or a greatly reduced, only slightly positive one).
Wednesday, October 31, 2007
Hallowthanksmas: Freemarketing Culture
"The period of time starting in late October and ending on New Year's Eve, so named for the commercial tendency to put up Christmas displays before Halloween. See also Christmahanukwanzakah"
Sunday, October 28, 2007
Just the Numbers: Week 43
THE NUMBERS
The race continues to narrow.
Thompson's numbers finally break to the downside.
Gore's numbers fall off. Huckabee gets a boost, including as VP nominee, from winning so-called "Values Voters" poll from FRC gathering.
Clinton appears to be dominating in Iowa and New Hampshire.
The Senate Republican candidates are showing as favorites, in Alaska, Idaho, New Mexico, Maine, Oregon, and Minnesota. Louisiana and New Hampshire are in a dead heat.
THE STRATEGIES
Not any special insights this week.
Picking the losers has been a sucessful adventure on this blog. With the breakdown in the Thompson and McCain figures, following those strategies would have netted over 20% each. Selling the combo early on of Hagel, Gingrich, Huckabee, Gore, Edwards, Biden, Clark has netted some 12% before trading costs, which is more than the U.S. stock market this year, it seems.
You can double your money is you bet on Clinton to win the nomination, but think that she will lose the general election.
| 2007 Week 43: Brownback withdraws as Colbert announces; GOP Candidates before "Values Voters Summit"; firestorms in California draw focus;  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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IMPORTANT DISCLAIMER: this is just an informational note and not a solicitation or recommendation to buy or sell securities and there is no guarantee implied and people can lose all money on all investments. Numbers are believed to be correct, but do your own math and make your own conclusions or consult with an advisor before making any decisions.
| Caucus/Candidate | Pr (%) | Chg Wk. | bid-ask |
|---|---|---|---|
| Iowa Caucus | |||
| Democratic | |||
| CLINTON | 66.1 | 15.1 | 13% |
| OBAMA | 20 | 2.5 | 20% |
| EDWARDS | 5 | -5 | 198% |
| FIELD | 0 | 0 | n.m. |
| GORE | 1 | -9 | n.m. |
| Republican | |||
| ROMNEY | 67 | 5 | 6% |
| GIULIANI | 1.5 | -8.5 | n.m. |
| THOMPSON(F) | 5.1 | -5 | 96% |
| FIELD | 3 | -3.2 | 223% |
| MCCAIN | 1.5 | 0.5 | n.m. |
| New Hampshire Primary | |||
| Democratic | |||
| CLINTON | 82 | 8 | 9% |
| OBAMA | 10 | -2 | 50% |
| EDWARDS | 1 | 0.5 | n.m. |
| FIELD | 0.2 | 0 | n.m. |
| GORE | 6 | 4 | 67% |
| Republican | |||
| ROMNEY | 50.3 | 0.3 | 19% |
| GIULIANI | 33 | -2 | 5% |
| THOMPSON(F) | 0.2 | 0.1 | n.m. |
| FIELD | 5.5 | 2 | 76% |
| MCCAIN | 7.5 | 2 | 96% |
| South Carolina Primary | |||
| Democratic | |||
| CLINTON | 71 | 6 | 13% |
| OBAMA | 20 | 0 | 50% |
| EDWARDS | 0.5 | -4.5 | n.m. |
| FIELD | 0.1 | 0 | n.m. |
| GORE | 2 | 1.9 | 400% |
| Republican | |||
| ROMNEY | 10.3 | 1 | 62% |
| GIULIANI | 35.3 | 0 | 27% |
| THOMPSON(F) | 40 | -5 | 3% |
| FIELD | 4.6 | 3.6 | 96% |
| MCCAIN | 2 | -1.3 | 385% |
| Florida Primary | |||
| Democratic | |||
| CLINTON | 80 | 80 | 6% |
| OBAMA | 10 | 0 | 50% |
| EDWARDS | 0.2 | 0 | n.m. |
| FIELD | 0 | 0 | n.m. |
| GORE | 0.1 | -6 | n.m. |
| Republican | |||
| ROMNEY | 2.5 | 1.5 | 240% |
| GIULIANI | 67 | 3 | 4% |
| THOMPSON(F) | 20.1 | -9.9 | 48% |
| FIELD | 3.9 | 2.9 | 28% |
| MCCAIN | 1 | 0 | n.m. |
| Nevada Primary | |||
| Democratic | |||
| CLINTON | 76 | 1 | 5% |
| OBAMA | 5 | 0 | 180% |
| EDWARDS | 5 | 0 | 80% |
| FIELD | 0.1 | 0.1 | n.m. |
| GORE | 5 | 0 | 200% |
| Republican | |||
| ROMNEY | 20.3 | 5 | 46% |
| GIULIANI | 45.3 | 10.3 | 21% |
| THOMPSON(F) | 20 | 20 | 63% |
| MCCAIN | 1 | 0.8 | n.m. |
Thursday, October 25, 2007
Lube Job
OIL Price rise and the impact to oil exporting countries.
| Wealth Transfer to Top World Oil Net Exporters, 2005*, $ Billion | |||||||
| Country | Net Oil Exports | 2004 | 2005 | 2006 | 2007 | Total | |
|---|---|---|---|---|---|---|---|
| 1) | Saudi Arabia | 9.1 | 36 | 79 | 113 | 136 | 364 |
| 2) | Russia | 6.7 | 27 | 58 | 83 | 100 | 268 |
| 3) | Norway | 2.7 | 11 | 24 | 33 | 40 | 108 |
| 4) | Iran | 2.6 | 10 | 23 | 32 | 39 | 104 |
| 5) | United Arab Emirates | 2.4 | 10 | 21 | 30 | 36 | 96 |
| 6) | Nigeria | 2.3 | 9 | 20 | 28 | 34 | 92 |
| 7) | Kuwait | 2.3 | 9 | 20 | 28 | 34 | 92 |
| 8) | Venezuela | 2.2 | 9 | 19 | 27 | 33 | 88 |
| 9) | Algeria | 1.8 | 7 | 16 | 22 | 27 | 72 |
| 10) | Mexico | 1.7 | 7 | 15 | 21 | 25 | 68 |
| 11) | Libya | 1.5 | 6 | 13 | 19 | 22 | 60 |
| 12) | Iraq | 1.3 | 5 | 11 | 16 | 19 | 52 |
| 13) | Angola | 1.2 | 5 | 10 | 15 | 18 | 48 |
| 14) | Kazakhstan | 1.1 | 4 | 10 | 14 | 16 | 44 |
| 15) | Qatar | 1 | 4 | 9 | 12 | 15 | 40 |
| Grand Total: | 1,595 | ||||||
| *Table includes all countries with net exports exceeding 1 million barrels per day in 2005. Price rise is increase from an assumed $25/bbl refiner's acquisition cost in 2002, which is a conservative estimate. | |||||||
Tuesday, October 16, 2007
Oscar Wilde - Britain's Top Wit By Vote
And the popular plurality goes to:
LONDON (Reuters) - Playwright Oscar Wilde, who even managed to mutter on his death bed "Either those curtains go or I do," was named in a poll on Monday as Britain's greatest wit.
He captured 20 percent of the vote, just two points ahead of comedian Spike Milligan, who had engraved on his tombstone the epitaph "I told you I was ill."
Winston Churchill said: "Bessie, you're ugly. And tomorrow morning I will be sober but you will still be ugly."
Noel Coward: "Wit ought to be a glorious treat like caviar. Never spread it about like marmalade."
Margaret Thatcher, once quipped: "Being powerful is like being a lady. If you have to tell people you are, you aren't."
Sunday, October 14, 2007
Apple Cider Doughnuts
Some lovelies from yesterday's escapades.
The best time of year!
(if you need a bit of the country, click on pic for drooling priviledges)
More:
Just the Numbers: Week 41
THE NUMBERS
Edwards is slipping. Huckabee looks topped out, but remains strongly bid for VP. McCain is flat.
The race has narrowed more on democratic side.
Because of his strong organization in Iowa, one wonders how the existence of the Edwards campaign will affect the results, if he keeps Obama, who appears to be the main rival stil, from building any momentum in that state.
The contracts continue to suggest four senate seats in play, two because of resignations: Colorado, Virginia, New Hampshire, and Nebraska. So far, the markets are deeply confused about a replacement for Senator Pete Domenici.
THE STRATEGIES
Nothing new. Bets against Thompson and, now, Gore, as his contract ticks up to 11%, look like reasonably profitable for the risk.
The race narrows. The joint probability of any combo in the "finals" of Clinton, Romney, Giuliani, or Obama rises to the highest yet (just over 70%), lowering payoffs (to below 30%).
| 2007 Week 41: Gingrich finds no money and says he will not run; GOP debate economics in Michigan; Ads make Romney look ever more contradictory; Senate battles heat up as the Collins campaign in Maine gets called on nastiness; President vetos health bill for kids; Non-candidate Gore wins Nobel Peace Prize, sending Reaganites into a tailspin (and probably Bill Clinton, too). | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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IMPORTANT DISCLAIMER: this is just an informational note and not a solicitation or recommendation to buy or sell securities and there is no guarantee implied and people can lose all money on all investments. Numbers are believed to be correct, but do your own math and make your own conclusions or consult with an advisor before making any decisions.
| President Parley | Pr (%) | Chg Wk. | bid-ask |
|---|---|---|---|
| CLINTON-GIULIAN | 25 | -3 | 52% |
| CLINTON-ROMNEY | 15 | -1 | 30% |
| CLINTON-THOMP | 15 | 0 | 17% |
| OBAMA-GIULIANI | 7 | 0 | 43% |
| GORE-GIULIANI | 3.9 | 0.9 | 79% |
| OBAMA-THOMP | 3 | 0 | 167% |
| CLINTON-McCAIN | 3 | 0 | 167% |
| GORE-ROMNEY | 2 | 2 | 100% |
| Caucus/Candidate | Pr (%) | Chg Wk. | bid-ask |
|---|---|---|---|
| Iowa Caucus | |||
| Democratic | |||
| CLINTON | 51 | -9 | 16% |
| OBAMA | 17.5 | 0.8 | 14% |
| EDWARDS | 10 | -5 | 30% |
| FIELD | 0 | 0 | n.m. |
| GORE | 10 | 4.9 | 100% |
| Republican | |||
| ROMNEY | 62 | 2 | 12% |
| GIULIANI | 10 | 0 | 88% |
| THOMPSON(F) | 10.1 | 0.1 | 45% |
| FIELD | 6.2 | 0.2 | 56% |
| MCCAIN | 1 | 0 | n.m. |
| New Hampshire Primary | |||
| Democratic | |||
| CLINTON | 74 | -1 | 19% |
| OBAMA | 12 | 2 | 66% |
| EDWARDS | 0.5 | 0.4 | n.m. |
| FIELD | 0.2 | 0 | n.m. |
| GORE | 2 | -7.7 | 1405% |
| Republican | |||
| ROMNEY | 50 | 7 | 15% |
| GIULIANI | 35 | 7 | 13% |
| THOMPSON(F) | 0.1 | -9.9 | n.m. |
| FIELD | 3.5 | -3.7 | 149% |
| MCCAIN | 5.5 | 0.5 | 58% |
| South Carolina Primary | |||
| Democratic | |||
| CLINTON | 65 | 5 | 15% |
| OBAMA | 20 | -5 | 49% |
| EDWARDS | 5 | 0 | 194% |
| FIELD | 0.1 | 0.1 | n.m. |
| GORE | 0.1 | -5 | n.m. |
| Republican | |||
| ROMNEY | 9.3 | 0.3 | 58% |
| GIULIANI | 35.3 | 10.3 | 27% |
| THOMPSON(F) | 45 | -3 | 10% |
| FIELD | 1 | 0 | n.m. |
| MCCAIN | 3.3 | -1.7 | 194% |
| Florida Primary | |||
| Democratic | |||
| CLINTON | 0 | -80 | n.m. |
| OBAMA | 10 | -0.1 | 50% |
| EDWARDS | 0.2 | 0.2 | n.m. |
| FIELD | 0 | 0 | n.m. |
| GORE | 6.1 | 1 | 884% |
| Republican | |||
| ROMNEY | 1 | 0.9 | n.m. |
| GIULIANI | 64 | 9 | 7% |
| THOMPSON(F) | 30 | -5 | 32% |
| FIELD | 1 | 0.9 | n.m. |
| MCCAIN | 1 | 0.2 | n.m. |
| Nevada Primary | |||
| Democratic | |||
| CLINTON | 75 | 5 | 7% |
| OBAMA | 5 | 0 | 200% |
| EDWARDS | 5 | 0 | 200% |
| FIELD | 0 | 0 | n.m. |
| GORE | 5 | 0 | 200% |
| Republican | |||
| ROMNEY | 15.3 | 3.3 | 552% |
| GIULIANI | 35 | 0 | 28% |
| THOMPSON(F) | 0 | -40 | n.m. |
| MCCAIN | 0.2 | 0 | n.m. |
Wednesday, October 10, 2007
Working Class Stiffs
As the President lauds those who work 2+ jobs, just to make ends meet, as "uniquely American", comes this that those in his own party simply are too tuckered out for that:
GOP congressmen quit because of five-day work week.
Nine Republican congressmen have so far announced that they will not be running for re-election. One of those lawmakers, Rep. Ray LaHood (R-IL), complained “that the Democrats’ new five-day workweek” is part of the reason they’re all retiring:
“I do think the schedule and the flying is a huge pain for people, particularly those who are from the Midwest or even further West,” he said, adding that it’s “probably the worst part of the job.”
“I think that has played into these retirement announcements,” said the seven-term congressman from Peoria.
In Dec. 2006, Rep. Jack Kingston (R-GA) also griped about having to work five days each week, stating, “Marriages suffer. The Democrats could care less about families — that’s what this says.”
Look Ma, a Nobel
Nobel Prize for applied physics. Gosh, pretty soon anyone will be able to win.
Just kidding. Basically, they figured out how to wave little magnetic wands to cast big spells and became the fathers of nanotechnology. One could have a worse fate.
Monday, October 8, 2007
Financial Crises: Over-reacting to Over-reactions
Scanning through uber financial historian Harold James recent piece, at least two thoughts come to mind.
NO OUNCE OF PREVENTION, NO PRUDENCE SUFFICIENT?
In most cases, history's lesson is that the risks that are not watched are the ones that get out of hand.
I don't think all financial crises are 'unknowable'. It may simply be that they are unpreventable. This seems to me the conclusion that Alan Greenspan came to following his 'irrational exuberance' speech, following which he was severely browbeaten by Wall Street.Most financial crises are happening in plain sight. The ability of Wall Street to manufacture junk credit may be put under the rubric of "financial innovation", or one could find a more descriptive name. It doesn't seem to fall in line with something like checking accounts or consumer credit cards. Ranking CDO's as investment grade when maybe they weren't doesn't seem to count as "innovation" or "innovation related", does it?
HIDDEN RISKS, NOT UNKNOWN RISKS
In many cases, history's lesson is that the risks that are not watched are the ones that get out of hand. The most telling tidbit from Greenspan's recent testimony isn't that the Board didn't know about the risks of sub-prime. Clearly, they did (even by admission). Theoretically, one approves of such things (I do). But the sub-prime market, as an innovation, had been through 'tough times' before, with so-called "manufactured home" defaults, among at least two cycles (that I know).
No, the most telling tidbit is that they didn't realize the magnitude of the lending that was going on. This was partly because those doing the lending were outside the ambit of those doing the watching. In other words, Q.E.D.
DOING NOTHING
Many, if not most, crises involve some sort of panic, which one might describe as "accelerating risk aversion".
It's important that the financial systems themselves do not contribute. Orderly markets should be maintained, if they can be. There are things 'to do' to make that possible.
Fear feeds on lack of transparency, which lends itself to rumor and exaggeration. Efforts to put a floor under the market, to make key variables transparent (like coming clean on the size of problems or the details of risk-burden sharing, etc.) are things to do.
Betting on one side, as many central banks have tried to do during currency crises, for example, might be a waste. Same for maintaining artificial (non-economic) restraints or props, like the gold standard.
Sometimes shutting down the markets has proved to be workable. The redux of the Asian financial crisis smiled favorably on Malyasia, who shut down currency speculation in a anti-liberal way. In Hong Kong, they monetized the market in order to protect values from panic. That might seem like medicine that would kill you, but one can see positive effects. Which suggest that savvy is part of the equation, as much as some would like an on-balance assessment for ... being impervious to crisis.
Theoretical Biology: Your Appendix is Now Referenced
Did you know that there was a Journal of Theoretical Biology?
An article they've published suggests that the vestigial appendix is not ... not vestigial.
Billions of bacteria apparently feel that justice has been served.
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