The Day the Music Died

The truth about the economy, from The Onion.

Gift Cards are Broken

The industry term is actually "breakage." Just send cash.

More from Matt Taibbi

Taibbi writes like an in-line six hurling down the highway. He's got guts that just don't quit. Moreover, who needs "thrillers" like The International with Goldman Sachs out there?

$100 million

What exactly is a depression?

It is an excellent question, and there really isn't a well-defined answer.

Some combination of negative economic growth, greater than 10% unemployment, and widespread destruction of durable assets for survival, ie, burning furniture for warmth, desperately selling the family land for cash, eating the milk cow--what else? And how to quantify?

There Is Nothing New Under the Sun

Other People's Money--And How the Bankers Use It, published in 1914. Via.

More with Less

Espousing the idea that frequent flier miles add up.

Auto Bailout, Suckers

Picture credit.

Let's Say I Don't Have Enough Money to Buy Something. Should I Buy It Anyway?

IOUSA: The Movie.

Last Word on Microsoft v. Yahoo!

So Ballmer and friends did a poor job of wooing Yang and friends. Both should probably be fired for failing to serve their shareholders and looking like idiots while wasting money. But they won't be.

Ritholtz mocks the whole thing:

Why doesn't the Fed kick in the additional $8 billion or so to make this happen? I mean, isn't that the role of the central bank?

Funniest Book Review Ever

On The Bush Boom, Alice writes:

Finally! A book that proves the existence of an alternate universe. Obviously, a rip in the space/time continuum between this universe and the other universe where Bush is presiding over a 'boom economy opened up and this book fell through. Can there be ANY other explanation?

Wow. Just wow. via Big Picture.

Hey Buddy, Can You Spare 10p?

The new British coins, designed by a 26 year old by breaking up the image of the Royal Arms of England--very cool. Compare with the new $5 bill, which pushes the familiar greenback imagery aside to make room for a big purple 5--very dumb.

Why We De-regulated the Banks in the First Place

From Andrew Leonard's archives at How the World Works:

The next time we have a Black Monday... Congress can stand around and wring its hands and give speeches about how awful it is that these bankers violated the spirit of the law, but once again, the money will be gone, the bill will have come due, and taxpayers will again be required to cough it up.

--Stephen Pizzo, in 1995. Why, it is like he saw the future!

"Negative Seigniorage"

According to The New Yorker, "Breaking stride to pick up a penny, if it takes more than 6.15 seconds, pays less than the federal minimum wage."

How the Fed is like FEMA

Off-the-cuff interview with Barry Ritholtz at Esquire.

US (Junk) Bonds

In a follow-up to an earlier post about Bush's fiscal policy, the WSJ (in one of their rare free articles) projects that the Bush legacy may be exactly what you'd expect from the first MBA-in-chief: Moody's may soon downgrade US bond status from triple-A to whatever junk bonds are called.

Ludwig von Mises on Bush's Fiscal Policy

Rumor has it Bush crudely ordered Bernanke to lower interest rates ("Some people call it cussin'. In Texas, we call it talkin'.") last week.

About a hundred years ago, Ludwig von Mises anticipated this:

No emergency can justify a return to inflation. Inflation can provide neither the weapons a nation needs to defend its independence nor the capital goods required for any project. It does not cure unsatisfactory conditions. It merely helps the rulers whose policies brought about the catastrophe to exculpate themselves.

From The Big Picture.

QotD: Hey, It Worked for Hoover, So It Will Work for Me!

Keith Olbermann took Bush to task for the current recession but did the usual pundits one better by suggesting some real ways to restore economic prosperity.

In the same segment, Rachel Maddow praises John Edwards:

…Not only was he the first on talking about the stimulus package, as you mentioned, but he’s also been the populist guy on economics. He’s the guy whose been most willing from the very beginning to actually identify bad guys in the economy. To say, let’s be patriotic about something other than war, let’s be moralistic about something other than sex, let’s talk about corporate irresponsibility and corporations that don’t serve the people who work for them, or the consumers. Let’s actually identify un-American bad behavior in the economy and, that kind of, I think, real forceful approach to the issue, is going to place him in good stead right now.

Dennis Gartman's Rules of Trading

True of the Stock Market, also applicable to Dating.

1. Never, Ever, Ever, Under Any Circumstance, Add to a Losing Position... not ever, not never! Adding to losing positions is trading's carcinogen; it is trading's driving while intoxicated. It will lead to ruin. Count on it!

2. Trade Like a Wizened Mercenary Soldier: We must fight on the winning side, not on the side we may believe to be correct economically.

3. Mental Capital Trumps Real Capital: Capital comes in two types, mental and real, and the former is far more valuable than the latter. Holding losing positions costs measurable real capital, but it costs immeasurable mental capital.

4. This Is Not a Business of Buying Low and Selling High; it is, however, a business of buying high and selling higher. Strength tends to beget strength, and weakness, weakness.

5. In Bull Markets One Can Only Be Long or Neutral, and in bear markets, one can only be short or neutral. This may seem self-evident; few understand it however, and fewer still embrace it.

6. "Markets Can Remain Illogical Far Longer Than You or I Can Remain Solvent." These are Keynes' words, and illogic does often reign, despite what the academics would have us believe.

7. Buy Markets That Show the Greatest Strength; Sell Markets That Show the Greatest Weakness: Metaphorically, when bearish we need to throw rocks into the wettest paper sacks, for they break most easily. When bullish we need to sail the strongest winds, for they carry the farthest.

8. Think Like a Fundamentalist; Trade Like a Simple Technician: The fundamentals may drive a market and we need to understand them, but if the chart is not bullish, why be bullish? Be bullish when the technicals and fundamentals, as you understand them, run in tandem.

9. Trading Runs in Cycles, Some Good, Most Bad: Trade large and aggressively when trading well; trade small and ever smaller when trading poorly. In "good times," even errors turn to profits; in "bad times," the most well-researched trade will go awry. This is the nature of trading; accept it and move on.

10. Keep Your Technical Systems Simple: Complicated systems breed confusion; simplicity breeds elegance. The great traders we've known have the simplest methods of trading. There is a correlation here!

11. In Trading/Investing, An Understanding of Mass Psychology Is Often More Important Than an Understanding of Economics: Simply put, "When they are cryin', you should be buyin'! And when they are yellin', you should be sellin'!"

12. Bear Market Corrections Are More Violent and Far Swifter Than Bull Market Corrections: Why they are is still a mystery to us, but they are; we accept it as fact and we move on.

13. There Is Never Just One Cockroach: The lesson of bad news on most stocks is that more shall follow... usually hard upon and always with detrimental effect upon price, until such time as panic prevails and the weakest hands finally exit their positions.

14. Be Patient with Winning Trades; Be Enormously Impatient with Losing Trades: The older we get, the more small losses we take each year... and our profits grow accordingly.

15. Do More of That Which Is Working and Less of That Which Is Not: This works in life as well as trading. Do the things that have been proven of merit. Add to winning trades; cut back or eliminate losing ones. If there is a "secret" to trading (and of life), this is it.

16. All Rules Are Meant To Be Broken.... but only very, very infrequently. Genius comes in knowing how truly infrequently one can do so and still prosper.

from The Big Picture

Freakonomics in Practice

Leavitt and Dubner wrote a great little book, but they did not venture into the possibilities of making use of the freaky knowledge found by mining economic data. a.wholelottanothing.org put the real estate chapter to use and made a killing on the sale of their home. Way to go!