That’s bad business. How long do you think I’d stay in operation if every time I pulled a job, it cost me money? If he’d just pay me what he’s spending to make me stop robbin’ him, I’d stop robbin’ him.
-Butch Cassidy (HT Austin)
People mistakenly assume that Zimbabwenomics is just about Mugabe Efficiency Theory and making supply cheap enough for demand to afford it, thus creating a Mugabe Optimal state. But the field has a lot more to offer whether it be by finding ways to make everyone a millionaire or to win elections you actually lost. Now that the mantle of Zimbabwenomic leadership resides in the US, we are seeing new applications of classic theories as the recent Affaire D’AIG (NYSE: AIG) demonstrated.
When the US was busy trying to rush the passing of a $700bn “stimulus” bill along party lines while selling to the public the fact that the world would end if it wasn’t passed, many wondered how the largest piece of non-budget Government spending in history could go through in a few days with little to no scrutiny. It was unpatriotic to question it or to ask for a time-out, which is exactly what I told my wife when I left work to buy our second mega-yacht (now repossessed) a few years ago.
The solution that the US executive and legislative branches discovered was on a page straight out of Mugabe’s Zimbabwenomic Text Book — fan the flames of populist rage against a rich minority target. Even better, a rich minority target who has nothing to do with the proposed legislation and, at best, represent an infinitesimal fraction of the greater concern. Facing (erroneous) allegations that his vision for Zimbabwe wasn’t working, Mugabe adopted a program of land reform and property reform which pushed out wealthy white farmers and south Asian businessmen. Zimbabewe grew its productivity by alienating (often physically) the rich elite, while its Government continued doing what it had been doing so well, as can be seen in Exhibit A.
In the US, the Government has fanned the flames of populist rage towards $160 million given to certain AIG executives under the terms of their contracts (which we are not privy to and thus cannot ascertain the validity of). At the same time, the stimulus bill calls for the spending of $600 million every day for the next 3 years and has received much less scrutiny, despite the fact that it is historically the single most massive transfer of wealth from the future into the current. Pure genius and we only hope the result to the productivity in the US will be as great as in Zimbabwe.
Recommendation: All things in proportion.
The next target of excessive compensation focus should be congress whose members have each made millions over the last four years, while being responsible for almost taking down the whole financial system. Out of greed and a lust for power, they recklessly misregulated industries and securities of which they had no understanding; the same politicians and officials who got us into this mess continue to take down salaries and overall compensation which is greater than 99% of the country. I’d like to see their contracts, I’d like to take a look at every legal way to stop the payments that are continually made to them by taxpayers, I’d like an excise tax of 95% levied against the salaries of senators and representatives to the extent those salaries exceed the minimum wage. If they had any pride or sense of responsibility, they would refuse their compensation or give it back.
Research by Straight Cash Homie appended to Long Chunky Chick Assets:
This research needs to be augmented with the Lindsey Lohan indicator. When she was a coked out whore doing Disney films and being filmed doing guys in her Disney trailer (or bathroom stall) the bull market was in full effect. Since she has allegedly gone to rehab and sworn off the blow (and the men) the market has grown almost as cold as her career.
I propose the only way to really make the economy take its first big stride forward to recovery is to nationalize her and allow bankers to use her as means to rebuild confidence. This would undoubtedly be a highly controversial step but saving our economy is more important than any supposed “moral hazard.†To satisfy the Bailout Stimulus (or B-S for short) conditions on the population at large benefiting from such an investment she can be “taken public†by resale to Club Jenna by Vivid for a huge profit generator in DVD sales and “Club†appearances. It will take a few years to spin her assets back out for public benefit, by that time the coke habit and confidence (along with closely related cousin: The Bull Market) are back full swing!
(note: the public, like bank equity holders, will in no way experience anywhere near the benefits of those in Finance. They will gladly way over pay for what they are actually getting and by that time her risk level will be WAY more “speculative†than an equity traunch of a CDO. We all know the ensuing bull market will cause the irrelevance of risk controls and due diligence so just remember to get her stamped with the AAA rating and it’s a done deal.)
Following on, he submitted the following by electronic correspondence:
Lohan, 22, went on a bender after a Beverly Hills court issued a $50,000
warrant for her arrest for a probation breach. She partied at JACK NICHOLSON’s Hollywood home until 4.30am.Given my prior posts regarding the correlation for Lohan debauchery to the market, partying with Jack Nicholson has to be a very encouraging sign.
Recommendation: While technical-focused traders are looking for evidence that the recent rally will be sustained, the Lohan indicator is pointing Very Long, an upgrade from Half Mast.. The Lohan indicator is still the red-headed stepchild of indicators, but we recommend hitting that bid.
Researchers at Toshiba’s Akimu Robotic Research Institute were thrilled ten months ago when they successfully programmed Kenji, a third generation humanoid robot, to convincingly emulate certain human emotions. At the time, they even claimed that Kenji was capable of the robot equivalent of love. Now, however, they fear that his programming has taken an extreme turn for the worst.
…
Kenji was part of an experiment involving several robots loaded with custom software designed to let them react emotionally to external stimuli. After some limited environmental conditioning, Kenji first demonstrated love by bonding with a a stuffed doll in his enclosure, which he would embrace for hours at a time. He would then make simple, but insistent, inquiries about the doll if it were out of sight. Researchers attributed this behavior to his programmed qualities of devotion and empathy and called the experiment a success.
What they didn’t count on were the effects of several months of self-iteration within the complex machine-learning code which gave Kenji his initial tenderness. As of last week, Kenji’s love for the doll, and indeed anybody he sets his ‘eyes’ on, is so intense that Dr. Takahashi and his team now fear to show him to outsiders.
The trouble all started when a young female intern began to spend several hours each day with Kenji, testing his systems and loading new software routines. When it came time to leave one evening, however, Kenji refused to let her out of his lab enclosure and used his bulky mechanical body to block her exit and hug her repeatedly.
…
“Despite our initial enthusiasm, it has become clear that Kenji’s impulses and behavior are not entirely rational or genuine,” conceded Dr. Takahashi.
Ever since that incident, each time Kenji is re-activated, he instantaneously bonds with the first technician to meet his gaze and rushes to embrace them with his two 100kg hydraulic arms. It doesn’t help that Kenji uses only pre-recorded dog and cat noises to communicate and is able to vocalize his love through a 20 watt speaker in his chest.
When it comes to love, so to speak, accept no substitutes, especially robotic ones. Anyone who has ever been in a relationship knows how dangerous love can be, and unlike most assets that are dangerous when alone, love’s risks can’t be mitigated (yet, we are researching the issue) by being securitized and thrown into structures with things like coverage tests and CCC baskets. Love certainly can’t be derisked by automation, as the Tale of Kenji demonstrates with the power of “two 100kg hyrdraulic arms”.
Recommendation: Long human love, short robot love, market weight digital love. The human love asset, like piranha, is a tricky species. But human love assets serve as a great countercyclical investment — they will be there when you need it most, when skies are gray and Skynet has taken over. Rumors of a secular decline in human love assets have been overstated, which is why we continue to find human love assets so attractive.
Some caveats when building a human love asset portfolio:
If you don’t follow these simple rules, you run the risk of a severe diminution in the value of your human love asset portfolio.
HT to Orges
DON’T PANIC.
-The Hitchhiker’s Guide to the Galaxy
Recipe for Money (2006)
Recipe for Money (2009).
Everyone uses the phrase killing it and the bear market version “[fill in the blank return] is the new killing it”. But I have to be honest…when I look at the market, and the S&P 500 is only down say 5 points, my mental accounting puts that in the win column. That’s tantamount to a rally, hell it’s not tantamount, it’s mount to a rally. When I hear “oh the market is up 5 points”, I think in my head “It’s only down -5 points, I barely even understand what that means” and then I freak the hell out.
The turns and spins and dives and rises of this market have been like a baptism in biasfire. I feel every single dumb bias at different points in a day. Loss aversion, mental accounting, regret minimization, anchoring, representativeness, overconfidence, everything, a veritable CFA clinic on biases. I am that clinic.
And I wonder — is this how scientologists are made? They heat up the room, assault you with information overload, starve you, break you, push all your preconceptions, tear them down, question you, make you question yourself, have Paulson or Geithner say something officially vague and stupid, make you agree with them and eventually, with Xenu. Market I agree with you! Tell me what you want! I will do it!
Certain amongst us, specifically species-traitors at the New England Acquarium, are helping octopi enrich themselves in the fields of box survival and daytime infiltration.
Truman, a 7-foot-long, 30-pound octopus at the New England Aquarium squeezed his body into a 14-inch square acrylic box today in pursuit of food, aquarium officials said. The 30-minute performance drew a crowd of staff and guests.
The caretakers for the octopi at the aquarium place food inside locked boxes as an enrichment activity.
…
And rather than undoing the latch on the larger box, he squeezed his legs and large head through a two-inch hole in the larger box.
Recommendation: While this strengthens our long recommendation for the Cephalopod Index, don’t confuse our investment recommendation with any changes of species allegiance implied or otherwise. We refuse aid, comfort, and combat skills training to the enemipods out there.
Know that any object that has a 2 inch opening and is 12 square inches or larger (like a toilet bowl while you sit on it…), is one in which an octopus could be lurking, waiting for you, its tentacles ready to wrap you in seaweed and suck you into their razor sharp beak, a process known as “reverse sushi”.
HT Adam
What goes down will come up — unless destructive policies interfere with the sources of potential recovery.
–WSJ Opinion Journal (HT SCH)
Whether you are a Sangalese warlord, the head of Hydra or a Bond villain, the base of your operation is your henchmen, the nameless legion who are willing to die in order to execute your bold plans for a new world order, global destruction or real ultimate power. Despite being integral as an aggregate, on an individual level, henchmen are completely fungible. They can expect to be beaten to a pulp, or thoughtlessly killed by either their boss’s heroic enemies or, as is often the case, their employer himself. Note that the latter situation is in violation of labor laws in most jurisdictions, which is only the beginning of what looks like a raw deal for henchmen. What economic rationale do these henchmen have to seek this line of work?
Based on their number, and the low income generated by most criminal enterprises for anyone but those at the top, henchmen can’t be compensated monetarily in a way that is commensurate with their shortened expected lifespan and overall reduced quality of life. Generous healthcare plans would at best allow them to offset the debilitating injuries they receive. Other fringe benefits such as company flying cars and teleportation belts sound great…until you realize that those are really just expensive high-tech tethers used to guarantee that the hench are available to their masters at all times and from all places. Maybe really great daycare and good local schools? Probably not.
And the trim is not impressive. The average arch-villain is swimming in spectacular exotic strange, but that is due to their ample riches and their alpha male status. Henchmen are a dime a dozen commodity. They are indisguishable and unexceptional to such an extent that they often sport garb which is identical to their colleagues and rarely ever even have actual names. Attraction issues aside, there is also an female asset supply shortage. Our research indicates that super-hotties list mountain lairs, sewer bases, and submarines lower than Miami, Los Angeles and London as desirable places to live.
Doing something you love only goes so far, and it’s unlike they actually love what they do that much. It’s hard work, if frequently mindless. Go here. Engage Batman in hand to hand combat (Good luck with that btw). Steal this mystical ruby crystal. Test this unstable mutagenic growth formula I’m developing. Delay Jack Bauer while I try and break into the White House’s panic room. Kidnap Sally-Sue. Invest in this pool of 2007 vintage MBS and see what happens to our investors’ money. Et cetera, et cetera.
Even if you are wiling to assume that they do it for the love of the hench, consider that there are a lot of passionate employees out there in other professions, but none willing to risk death, imprisonment or debilitation at anywhere near the rates that the typical henchmen face. Per this 2006 survey from CNN, the mortality rates are the highest for fisherman at 118 out of 100,000, or about 0.1%. Henchmen die or are seriously wounded at a rate 500 times as high as that. It’s tenuous at best to think they love being bad enough not only to die for it but also to be dramatically undercompensated as well.
A fair amount of henchmen were at one point incarcerated, and find gainful employment at unavailable to them. But surely there are alternatives that don’t involve a 50% mortality rate??? Venture Criminalism (VC) has a lack of ethical prerequisites, similar financial upside, but lower risk to life and limb. Practically anyone can sell stuff on eBay, even those with no helpful skills; I know this because I have seen a wealthy baby boomer perform a successful eBay auction sale. And Piratery is still open to highly-motivated nautically inclined go-getters.
Recommendation: There seems to be no economic rationale for the typical henchmen volunteer, and this will correct itself over time. But markets, especially ones involving evil organizations seeking world destruction, may be able to stay irrational longer than you can stay solvent, so shorting typical henchmen assets is an untenable risk. We do see an opportunity to start nibbling at brainwashing assets, mystical loyalty curse assets, and zombie making assets. All beneft from solid fundamentals, and stand to gain long term from henchmen markets becoming more rational, as the labor supply dries up and evil firms seek to find ways to effect impressment.
But here’s my advice to the rest of you: Take dead aim on the rich boys. Get them in the crosshairs and take them down. Just remember, they can buy anything but they can’t buy backbone. Don’t let them forget it. Thank you.
–Herman Blume in Rushmore
Obama’s total budget is $3.6 trillion, which works out at $34,000 per household; median household income is about $50,000. Which basically means that for every dollar that a US household earns, the US government plans to spend 68 cents next year. And the ten-year T-bond still yields less than 3%. Extraordinary.
-Excerpt from Market Movers
So far, Obama has taken aim at the rich boys. He has taken them to task for their profligate greed. His party has introduced their corporate masters to the Frankonian Inquisition, flailing on them until they have confessed their sins and repented their evil ways. His budget punished their success, reined in their charity, all while giving each of their serfs their very own kingdom. More or less.
While this seems to indicate the rise of a new age of internecine class warfare in America, we’d argue instead that these moves will lead to a new age of productive age warfare in America. What the second quote demonstrates is that this country is not going to be Rich vs Poor. No, the war being fought is Now vs the Future, or more aptly, Baby Boomers vs Everyone Younger.
The effective tax rate for a Baby Boomer is still likely ~30-35%, so say $17,000 out of the $50,000 median income figure. But for younger tax-payers? If there is a deficit, or if what you pay directly in taxes as a national aggregate is lower than what the government plans to spend on whatever the hell they plan to spend it on, rest assured, they are taxing you further in some way. It’s just that instead of current year taxes, the other 30-35% of income that we owe is going to come in the form of debt, and currency depreciation (at some point in the future), and it won’t be a pro-rata distribution based on who benefits from the spending now…it will be based on who happens to be alive when the bill comes due. More or less. That point in the future will likely be well after the Baby Boomers have ensured that their generation has soaked up a higher quality of living — at the expense of younger generations — than any other generation in world history. All the while, they’ll continue assailing the younger generations about how much harder they worked and how kids today blah blah blah…
You know what kids today aren’t responsible for? This mess. This is all you, Baby Boomer Bob and Baby Boomer Betty. You put US here with your wanton spending on cars, houses and erections, with your hubristic manipulation of interest rates and free markets, your sense of entitlement, the way in which you transformed politics and Government into a galvanized arena of Us vs Them. Your cohort’s giant ego has consumed the future.
Rich and poor have more in common than young and old, because in 40 years, rich and poor will still be on this Earth, in this country, having to work together to fix everything the Baby Boomers did. This could mean the inability of the US to get financing because the debt burden has become too onerous, a crashing dollar, entitlement spending that requires more than taxes generate, a change in climate change change (sometimes known as Second Derivative Climate Change Panic Syndrome, or SDCCPC) or any number of structural disasters that lurk in the future and have been put off so that we, the young, are stuck with the buck.
Recommendation: Here’s my advice for the rest of my cohort. Take dead aim on the boomers. Get them in the crosshairs and take them down. Just remember, they may be buying everything with your money, but they can’t buy backbone. The sooner we, rich, poor and everyone in-between, come together and shake the Baby Boom death grip off both power and purse, the better.
Just asking but will Exxon Mobil (NYSE: XOM) receive windloss (windrise?) tax rebates? It’s absurd that any company should be allowed to lose so drastically simply because they have exposure to commodities. Oil is not the property of any company, it is our shared inheritance from Mother Gaia. Exxon is simply responsible for taking care of this precious resource and getting it into both our tank (it handles like a dream off-road, has room for my family of four, has 6 cupholders and 2 dozen 120mm anti-tank round holders) and our tanks. They and their shareholders shouldn’t be forced to bear the brunt of such a terrible decline in prices!
I’m just asking….
If I had six hours to chop down a tree, I’d spend the first four hours sharpening the axe.
-Abraham Lincoln
Even discounting for the impact of global recession, the most populous state’s ills are unique and self-inflicted — and avoidable. In the last three decades, California expanded the public sector and regulation to Europe-like dimensions. Schools, state employees, health care, even dog kennels, benefited from largesse in flush times. Government workers got 16 official holidays, everyone else six. The state dabbled with universal health care and adopted strict environmental standards. In short, California went where our new president and Nancy Pelosi of San Francisco want America to go.
–How California Became France, WSJ
California is the canary in the US coal mine and it’s likely too late for Johnny Debacle’s Debacle Plan for California. Instead of isolating abject failure by pushing it into the ocean, the intention now seems to be to replicate many epic fails that plague California and apply them to the rest of the country. What are the differences between the state of CA and the US? First, the US is a couple years behind the west coast’s expansion into liberal fantasy. Second, the US can borrow to finance its deficits while CA is tapped out and on the staring down at a true fiscal crisis that awaits them below.
Don’t fret, Dear Taxpayer. The US will catch up with California soon enough. And then, when inflation has picked up and our growth rate is structurally slower due to the expansion of government as a % of GDP, the increase in regulations on all businesses, and higher tax rates on individuals and corporations, our foreign lenders will finally pull the plug. We will look a lot like California does now, or more aptly, a lot like like a pre-op France.
There is a argent doublure here. France is a pretty good place to live, with only a few caveats. That you are wealthy, that you have connections throughout the ruling class, and most importantly, that you are not an immigrant. Oh and make sure you are white too, just so there’s no confusion. To be clear, there is no upwards mobility but that’s great when you are already on top! Furthermore, the French have amazing cheese, put on exquisite union strikes and were responsible for Man on Wire, one of the best documentaries I have ever seen.
Recommendation: Quickly accumulate a large fortune, if you haven’t already. Punitive tax rates, prevalence of government jobs, and a stagnant business climate will prevent upward mobility so it’s critical to start on top. Second, acquire a taste for fine cheeses and wine. Third, begin practicing your strike routine; this will be critical to maintaining your benefits. Fourth, be cautious that you are not slowly being boiled without realizing it.
