dagblog - Comments for "Anthropomorphic Corp. and Mitt"

Let me guess, Richard the

NCD — Sat, 07 Jan 2012 16:28:06 +0000

In reply to Is there any politico that

Let me guess, Richard the Electrician and Joe the Plumber are in synchronous phase, and will take the plunger to flush the middle down the tubes.

I think we're saying the same

Peter Schwartz — Fri, 06 Jan 2012 18:42:17 +0000

In reply to ...if you're in the market at

I think we're saying the same thing actually...

If you're young and have a long horizon before you'll need your money, you can withstand lots of ups and downs--in the "long run," as you say. You can buy and hold.

But the shorter your time horizon until retirement, the less time you have to make up for losses. So at a certain point, as they get older, people switch over to safer investments, like bonds.

This preserves their capital--protects it against losses--and generates an income when they are no longer working or working as much.

The problem is, now, safer investments are paying pitiful amounts. The super low interest rates we have now really hurt people who are depending on interest-based income.

So if you're switching over to bonds now, things aren't looking all that good for you.

On the other hand, if you're staying a good bit in equities, but have a short-ish time horizon, then you end up having to trade to make money and protect your money.

For example, this year, between the end of August and beginning of September, the market, the S&P 500, lost 17% of its value in just a week or so. For the year, the S&P earned zero.

For someone who was planning to retire next year or in two years, this is bad news for his 401k.

So if you're trying to make decent money, you end up in equities and you end up having to watch your stocks closely and trade and hedge to stay out of trouble.

(This is what I meant by "day trading," and I agree, it's very risky. But if the market is very volatile, then you're forced into trading if only to protect your money when the market suddenly plunges. People who were used to glancing at their portfolios, say, once a month, are now looking at them at least once a day and have trailing stops in place in case the market tanks.)

This is true, also, if you're in mutual funds, though the volatility--down and up--is much less. So that's a decent way to go, too, though many funds make almost no money at all.

Of course we don't "pay back"

Michael Maiello — Fri, 06 Jan 2012 17:06:25 +0000

In reply to Krugman, I believe, recently

Of course we don't "pay back" debt. Nobody even really wants us to. They want us to make our timely interest and principal payments, which we do. But, ultimately, we refinance debt. This is not only because we want or need to. Those factors would be irrelevant if there wasn't a public that wants and needs U.S. bonds.

This is why, when the Treasury stopped issuing 30 years in response to the Clinton surplus and when some were projecting the end of all American bond issuance by 2015 -- people freaked out. No other economy offers so large, liquid and (in principal) riskless savings vehicle. The world actually has a great need for that.

...if you're in the market at

Verified Atheist — Fri, 06 Jan 2012 16:46:38 +0000

In reply to Unfortunately, when the

…if you're in the market at all, you know that buy and hold, unless you're very young, is very dangerous right now. You can lose it all in the blink of an eye unless you know how to hedge, etc. Even then, it's very tough. People have ALMOST been forced to become day traders against their wills.

That doesn't sound right to me. I'm no economist, but when talking about gambling, the house always wins. I'd say that not buying into the stock market at all is safest in the short term and "buy and hold" is probably still safest in the long run. Day trading is the riskiest thing you can do unless you really know what you're doing (and even then, it ain't exactly safe).

Probably because the people

Peter Schwartz — Fri, 06 Jan 2012 16:45:37 +0000

In reply to One thing about the financial

Probably because the people you work for really need the best and most reliable IT in the universe and have infinite amounts of money to pay you.

But also--and this just occurred to me--I'm not sure the same economic rules apply to the financial sector as apply to other sectors.

A stock can gap up 100% or more in a minute's worth of trading, or less. Suddenly, if you had $100 before, you now have $200.

Where else in the economy--gold mining or Las Vegas perhaps excepted--does that sort of money making occur routinely? I'd say...nowhere.

Yeah, supply and demand are in there in some fashion, but now in any way that a normal businessperson would recognize, except in concept.

I remember, back when I was a waiter, I was very profligate with my money. I was young and foolish, to be sure--but something else was at play. I worked for tips. Immediate cash which, as a bonus, wasn't taxed.

If I went out and blew my entire day's earning on booze or books or anything, I knew, the next day, my coffers would be replenished. I was wrong, but I felt I didn't have to plan ahead, and in some ways, I didn't.

Something similar is at play here, I think. Lots of funny money floating around.

You know that story about Meriwether and Gutfreund betting $1 million. Lewis tells it in Liar's Poker.

Krugman, I believe, recently

Peter Schwartz — Fri, 06 Jan 2012 16:32:47 +0000

In reply to I think a couple of very

Krugman, I believe, recently said that we NEVER paid back the debt from WWII. It just became irrelevant as the economy burgeoned.

Somewhere else I read that we still have $55,000 in debt left over from the Revolutionary War. I'll have to find that citation.

One thing about the financial

Michael Maiello — Fri, 06 Jan 2012 16:28:38 +0000

In reply to Unfortunately, when the

One thing about the financial sector employing "highly trained" people is that pay at financial firms tends to be higher up and down the line than it is in other industries. So, if you're an IT person and you can choose between doing the job at a media company or doing it at an investment bank -- pick the investment bank, unless you really can't stand the culture. The bonus culture does apply to those who do the support work. Same is true for personal assistants, secretaries, office managers and the like. You can have the same training you would need for the job elsewhere but would make far more money doing the job for a bank or hedge fund than you would, say, working at a hospital. It's a cultural thing.

Of course, you will be making thousands more than you would elsewhere but would be surrounded, day in and day out, by people who have made millions. So you will feel poorer. Until you go grocery shopping (which is something the people you work for don't do).

I think a couple of very

Peter Schwartz — Fri, 06 Jan 2012 16:27:33 +0000

In reply to a former community organizer

I think a couple of very natural things are happening with this:

• There is a big number, $15 trillion, that they just can't beyond. It's like Godzilla, or an army of Godzillas, bearing down on them. They have a visceral, daily feel for their own debt. They feel it weighing on them, threatening to sink them, or it has sunk them in the past. It's scary and overwhelming. Too much of it, and you can't get out from under it. It rules your life.

So the number scares the bejeesus out of them.

• The second, related point is that it is easy to think that federal debt is analogous to, even the same as, household debt (or even corporate or state debt). There's an easy, straight, and highly emotion-laden line running from that $15 trillion to the balance showing on their monthly credit card bills or home mortgages. This equation or analogy isn't true in very important ways. But it's much easier to believe, to feel, that debt is debt is debt. Anyone would find it easier.

The Republicans have capitalized on both these points, and it is, as far as I can see, the only reason why they've been able to rehabilitate their brand after the Bush years. Yeah, Iraq was a mess and I don't like wiretapping or torture--BUT LOOK! GODZILLA AND THE BRIDE OF GODZILLA AND ALL GODZILLA'S KIDS ARE COMING OVER THE HILL!

Unfortunately, when the

Peter Schwartz — Fri, 06 Jan 2012 16:16:04 +0000

In reply to More specifically on topic, I

Unfortunately, when the conversation boils down to slogans, a lot of detail gets excluded and weird "anomalies" like this pop up.

• First, I think AA is right in making a distinction between the financial sector and the rest of the corporate/manufacturing/service sector. Many stories need to be written about how the financial sector ate the economy, even the country or, less partisanally, why the former mushroomed and the latter melted.

• The financial sector makes massive sums, but doesn't employ THAT many people. It also employs HIGHLY trained people, regardless of what you might think of their training or their work. That won't solve the problem of employment for most Americans.

• So naturally, people like almost ANYONE who comes to town bringing jobs. But when that isn't happening AND you have this small (in numbers) sector that is making a kings ransom and, arguably, has supplanted companies that provide jobs for "ordinary" Americans, you have trouble.

• Somehow, the financial sector has to return to its role as handmaiden or midwife of industry--as a place where capital is formed to finance companies that DO provide jobs for Americans--and less as a place where money is used just to make more money. Put another way, Wall Street needs to right the balance between investment and trading. Right now, it's all about trading. Betting, really. And if you're in the market at all, you know that buy and hold, unless you're very young, is very dangerous right now. You can lose it all in the blink of an eye unless you know how to hedge, etc. Even then, it's very tough. People have ALMOST been forced to become day traders against their wills.

• Prior to the 1980s, investing was mostly about collecting dividends and compounding them and also getting some decent growth. Since then, it's been about finding the next Apple or Microsoft. And it's only gotten worse.

Is there any politico that

Aunt Sam — Fri, 06 Jan 2012 04:24:48 +0000

In reply to Romney is just another Obama.

Is there any politico that you respect? Just curious.