» Posted by Martin Weil on October 29, 2009

I heard a story the other day from an old French lady who was in her 100's when she died. In the 1920's she remembers the U.S. being an emerging market very much like China is today. The 19th century was the European century, the 20th was the American century and the 21st will be China's century.

Ben Watson, RBS Group, quoted in a Bloomberg article on current investor sentiment.

Let's not forget that, if the parallels continue, during the 1920's the US stock market soared, only to crash horribly in 1929, ushering in the Great Depression and ultimately WWII. The "American Century" was not only Henry Ford, Leave it to Beaver and a man on the moon.

» Posted by Martin Weil on October 27, 2009

I can imagine the company representatives on the Titanic II design committee repeatedly pointing out that the Titanic I tragedy was a "black swan" event: utterly unpredictable and completely, emphatically, not caused by any failures of the ship's construction, of the company's policy, or of the captain's competence. "No one could have seen this coming," would have been their constant refrain.

So begins Jeremy Grantham's (GMO) impassioned plea, Lesson Not Learned, to the Obama Administration to stop defending the failed status quo and move forward with substantive financial reform.

» Posted by Martin Weil on October 19, 2009

"We didn't truly know the dangers of the market, because it was a dark market," says Brooksley Born, the head of an obscure federal regulatory agency - the Commodity Futures Trading Commission (CFTC) - who not only warned of the potential for economic meltdown in the late 1990s, but also tried to convince the country's key economic powerbrokers to take actions that could have helped avert the crisis. "They were totally opposed to it," Born says. "That puzzled me. What was it that was in this market that had to be hidden?"

The Warning, PBS Frontline, Tuesday October 20. Check your local listings. h/t The Big Picture

» Posted by Martin Weil on October 18, 2009

When I went to business school (way back when), one of my classmates was an actuary whose main complaint was that public policy, by encouraging a move from guaranteed pensions to IRAs and 401ks, had transferred too much risk to individuals and that many would end up losing. Now come Time magazine and Doug Short on the same bandwagon.

Says Short, "Unfortunately, a substantial portion of the population isn't dealing effectively with this transfer. ... I see the IRA, 401(k) and the like as a social experiment of staggering proportions. A few decades from now history will tell us whether these plans generally succeeded or failed. Unfortunately, failure will not be limited to the households living in poverty. It will impact the entire economy. Thus, regardless of our personal values, beliefs and politics, the risk is indeed a shared risk."

» Posted by Martin Weil on October 18, 2009

Harrods Gold Bullion
Sign of the times? Or sign of a top?

» Posted by Martin Weil on October 17, 2009

So says Mick Watson, chair of Brandeis University's Department of Psychology, in this Planet Money Podcast. According to Watson, children were once (and in many places, still are) considered economic contributors to the financial security of the family. With the rise of industrialization in the west, child labor became superfluous. Thus, economically speaking says Watson, "we no longer need children. They have become luxury items."

Median total cost of raising a child on the west or east coast, last I checked, was north of $250,000, not including a private university education that can easily add another $150,000. Seems like at least a mass luxury item to me.

» Posted by Martin Weil on October 09, 2009

Charlie Brooker vents in the Guardian (UK). Very funny.

As a joined-at-the-hip-from-birth-to-Microsoft kinda guy, I will confess to similar occasional feelings of unrestrained hatred of everything Apple. The Stockholm Syndrome it appears.

» Posted by Martin Weil on October 09, 2009

In spite of the strength of the recent market rally, looking at this chart of inflation-adjusted market returns from dshort, one realizes that Goldilocks has definitely left the building.

» Posted by Martin Weil on October 07, 2009

"... Americans now pay more in overdraft fees every year than they do for books, cereal, or fresh vegetables," said CRL senior researcher Leslie Parrish.

» Posted by Martin Weil on October 01, 2009