01/01/2014 archive

The Return of Irrational Exuberance

Wall Street had a boomer of a year, everyone else not so much.

Stock Market Has Great Year, You… Not So Much

By Mark Gongloff, Huffington Post

This has been the best year for the U.S. stock market in at least 16 years. But that great news is meaningless for many Americans. [..]

But only about half of Americans own stocks, including those in retirement accounts. Meanwhile, corporate profits are soaring largely because companies have been squeezing costs — especially labor costs. In the chart below, tracking the change in average hourly wages for private-sector workers against corporate profits and stock prices since the stock market bottomed in March 2009, you’ll notice one line is badly lagging.

Aver Hourly Earning v Corp Profits photo original_zps5f9f65e3.jpg

Click on image to enlargew

You guessed it: The lagging line is your sad hourly earnings. They have barely budged since the market bottomed in 2009, while the Dow has skyrocketed 153 percent. Between November 2012 and November 2013, the latest data available, hourly wages for nonsupervisory workers rose just 2.1 percent, just barely ahead of inflation.

Gongloff concludes that Wall Streeters are “bullish on 2014,” others not so much. Our friend David Cay Johnston looks at tech stocks, like FaceBook and Twitter, that essentially have no profits, yet, through speculators and the Federal Reserve policy of nearly zero interest rates, these stock have greatly exaggerated value.

The coming stock market collapse

By David Cay Johnston, Al Jazeera America

Tech stocks have returned to bubble levels, thanks to PR, weak financial journalism and cheap credit

Markets can benefit from speculators, who take risks that prudent people and institutions should avoid, but speculators should represent the edges, not the core of the market.

It’s bad enough that the financial press allows the inflated commentary of tech companies to go unchallenged. But why in the world should Americans tolerate hedge funds and other speculators being subsidized with cheap and easy credit, thanks to the Federal Reserve’s policy of near-zero interest rates?

Only speculators would buy companies with no profits. And only subsidized speculators would bid up prices on companies with a PR in three digits, like Twitter.

Back in 1995, Alan Greenspan, then chairman of the Federal Reserve, asked a rhetorical question about stock prices, “How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions, as they have in Japan over the past decade?”

We now suffer through a prolonged period with high unemployment, flat to falling wages for most workers and unrealized potential for economic growth. But the speculators are making out like bandits, thanks to government suppression of interest rates, allowing massive borrowing by offshore hedge funds, and to lax rules for both accounting and trading.

Given the history of stock markets since 1995 and today’s blinking red indicators, no one can rationally claim they were not warned when the next collapse comes, as surely it will.

Price Earning Ratio photo src_zpsbe35908b.jpg

Click on image to enlarge.

So what will happen to the market when the Fed starts to raise interest rates? 2014 may not be the “boom” that Wall Street expects.

Hippie New Year

Live at the Fillmore East – New Years Eve 1969 going into 1970

Punting the Pundits

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Wednesday is Ladies’ Day.

Follow us on Twitter @StarsHollowGzt

New York Times Editorial Board: Saying ‘I Do’ Amid the Roses

By all accounts, the standout entry in Wednesday’s Tournament of Roses Parade in Pasadena, Calif., will surely be the marriage of two men, Danny Leclair and Aubrey Loots, beaming amid the array of lavishly flowered floats to be viewed on national television and beyond. [..]

Opponents of the single-gender nuptial display in the hallowed parade have dished heavy umbrage in petitions and blogs, calling it “unbiblical” and urging a boycott by onlookers. But the tournament executives have said they are pleased that love will triumph on a day when the tournament theme is “Dreams Come True.” [..]

And now, Danny and Aubrey saying I do. The new couple’s float is titled, “Living the Dream: Love Is the Best Protection.” It is hard to disagree as the new year parades forward.

Robin Hardman: What Really Matters

What is essential to a great culture, as I’ve said before and will say again, is according people respect and allowing them to have control over their time and their work.

Oh, yes, and a couple more things: a living wage and — for all but the very smallest companies — access to decent healthcare. In fact, both Maslow’s hierarchy of needs and plain old common sense would suggest that being able to afford to eat, pay rent and see a doctor are surely the most important building blocks of a great company culture.

Yet, the year that’s just ended was rich with news about employers that would seem to have put a lot of energy into denying their employees these basic rights. While it can be tough to sort out facts from “truthiness” when news is filtered through politics on both the left and the right — especially news related to the Affordable Care Act — a few things can be said: [..]

Heather Linebaugh: I Worked on the US Drone Program. The Public Should Know What Really Goes On

Few of the politicians who so brazenly proclaim the benefits of drones have a real clue how it actually works (and doesn’t)

The US and British militaries insist that this is such an expert program, but it’s curious that they feel the need to deliver faulty information, few or no statistics about civilian deaths and twisted technology reports on the capabilities of our UAVs. These specific incidents are not isolated, and the civilian casualty rate has not changed, despite what our defense representatives might like to tell us.

What the public needs to understand is that the video provided by a drone is a far cry from clear enough to detect someone carrying a weapon, even on a crystal-clear day with limited clouds and perfect light. This makes it incredibly difficult for the best analysts to identify if someone has weapons for sure. One example comes to mind: “The feed is so pixelated, what if it’s a shovel, and not a weapon?” I felt this confusion constantly, as did my fellow UAV analysts. We always wonder if we killed the right people, if we endangered the wrong people, if we destroyed an innocent civilian’s life all because of a bad image or angle.

Madeline Ostrander: Can the Stuck-in-Place Economy Help Us Face Climate Change?

New studies show that people with deep roots in the place where they live are better equipped to handle upheavals of the type that come with climate change.

After I finished high school in the flat, square corn country of central Illinois, I fled-along with many of my fellow classmates. We chased jobs or graduate school in places like San Francisco, New York, or Washington, D.C. I settled in Seattle. It wasn’t until I hit my 30s that I became aware of the social costs of this mobility. [..]

According to recent environmental research, this could also mean that I am less equipped to cope-if, say, an emergency strikes-than someone who’s better connected to Seattle. Sense of place, community, and rootedness aren’t just poetic ideas. They are survival mechanisms. [..]

The most foreboding trends now and in the decades ahead may stem from climate change-disasters like drought and flooding that devastate some places and force people to move. As we face this kind of world, some communities might endure precisely because people have dug in, rooted themselves, and developed the kinds of generosity, adaptiveness, and foresight that come from knowing where they are.

Joyde Walker: The Choice is Ours: Austerity or Shared Bounty

For all I have gained as the result of my financial struggles, I consider myself blessed. You might wonder how I can say that, when, at the end of December, I’m still working with my winterizing kit, consisting of staple gun, duct tape, and cardboard, trying to insulate against the air leaks that drive my heating bill up. But because of my hardships, I have become more sensitive to the hard times many around me are facing, and feel compelled to share what little I have.

Because of incessant increases in the cost of living, I sometimes have a hard time meeting my expenses. Still, I am more fortunate than some lacking adequate food or shelter because the people setting standards don’t consider them deserving or needy enough to receive help. But thanks partly to the fidelity of family and friends, I am able to keep food enough to share with a few others also struggling to make ends meet.

Nell Minow: Before Academics Complain About Conflicts of Interest, They Should Disclose Their Own

Academics who study business love to talk about the power of incentives and the importance of full information to enable the most effective and efficient decisions. Unless it applies to them.

As David Kocieniewski reported in the New York Times on December 27, 2013, “academic experts” who testify and make filings in favor of business-friendly regulations and rulings often fail to disclose the corporate sources of funding for their research. While they appear to represent the ivory tower virtues of scholarly integrity, with fidelity to nothing but the truth, they are in fact advocates who are paid to take the positions they promote. [..]

Inside Job, the superb documentary about the financial meltdown, has a devastating scene with Glenn Hubbard, the Dean of Columbia’s Graduate School of Business, refusing to discuss the payments he receives from the financial services industry. As one commenter on the Times article noted, “Nothing is funnier than watching people who study economics declare that money can’t possibly have any influence on their work.”

The Rose Parade

Perhaps I shall write more later.

In the meantime this is sufficient.

On This Day In History January 1

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

Happy New Year 2014 photo AnimationPicturesHappyNew2011Year_zps855ffb36.gif

January 1 is the first day of the year in the Gregorian calendar. There are 364 days remaining until the end of the year (365 in leap years).

During the Middle Ages under the influence of the Christian Church, many countries moved the start of the year to one of several important Christian festivals – December 25 (the Nativity of Jesus), March 1, March 25 (the Annunciation), or even Easter. Eastern European countries (most of them with populations showing allegiance to the Orthodox Church) began their numbered year on September 1 from about 988.

In England, January 1 was celebrated as the New Year festival, but from the 12th century to 1752 the year in England began on March 25 (Lady Day). So, for example, the Parliamentary record records the execution of Charles I occurring in 1648 (as the year did not end until March 24), although modern histories adjust the start of the year to January 1 and record the execution as occurring in 1649.

Most western European countries changed the start of the year to January 1 before they adopted the Gregorian calendar. For example, Scotland changed the start of the Scottish New Year to January 1 in 1600. England, Ireland and the British colonies changed the start of the year to January 1 in 1752. Later that year in September, the Gregorian calendar was introduced throughout Britain and the British colonies. These two reforms were implemented by the Calendar (New Style) Act 1750.

New Year’s Day

Probably observed on March 1 in the old Roman Calendar, The World Book Encyclopedia of 1984, volume 14, page 237 states: “The Roman ruler Julius Caesar established January 1 as New Year’s Day in 46 BC. The Romans dedicated this day to Janus, the god of gates, doors, and beginnings. The month of January was named after Janus, who had two faces – one looking forward and the other looking backward.” This suggests that New Year’s celebrations are founded on pagan traditions. Some have suggested this occurred in 153 BC, when it was stipulated that the two annual consuls (after whose names the years were identified) entered into office on that day, though no consensus exists on the matter. Dates in March, coinciding with the spring equinox, or commemorating the Annunciation of Jesus, along with a variety of Christian feast dates were used throughout the Middle Ages, though calendars often continued to display the months in columns running from January to December.

Among the 7th century pagans of Flanders and the Netherlands, it was the custom to exchange gifts at the New Year. This was a pagan custom deplored by Saint Eligius (died 659 or 660), who warned the Flemings and Dutchmen, “(Do not) make vetulas, [little figures of the Old Woman], little deer or iotticos or set tables [for the house-elf, compare Puck] at night or exchange New Year gifts or supply superfluous drinks [another Yule custom].” The quote is from the vita of Eligius written by his companion, Ouen.

Most countries in Western Europe officially adopted January 1 as New Year’s Day somewhat before they adopted the Gregorian calendar. In England, the Feast of the Annunciation on March 25, was the first day of the new year until the adoption of the Gregorian Calendar in 1752. The March 25 date was known as Annunciation Style; the January 1 date was known as Circumcision Style, because this was the date of the Feast of the Circumcision, being the eighth day counting from December 25 when Christ was believed to be born. This day was christened as the beginning of the New Year by Pope Gregory as he designed the Liturgical Calender.

As you can see there were a lot of events that happened on this day over the centuries. Some of them significant, even momentous, some not so much but interesting as a kind of trivia. I am not even going to attempt to edit that list today.

Thank you all so much for your work and contributions to this site. We at The Stars Hollow Gazette and Docudharma wish you and yours a Happy, Healthy and Prosperous New Year.  

Happy New Year 2014

To all of our readers may you and your s have an happy, healthy and prosperous new year.

Nine Inch Nails

So glad you asked.

You want to know my secret?  I’m angry all the time. – Bruce Banner

Yeah, Happy New Year’s Rocking Eve

Lyrics below so you sing along.