Ha, this guy also says plumbers make more than GPs - doctors who are general practioners over the long run… They work more years, take on less educational debt, and pay lower taxes. Ha, the ironies of our country!
The average time in which you hold a stock is–it’s gone up from 20 seconds to 22 seconds in the last year. Most trades are computerized. Most trades are short-term. The average foreign currency investment lasts–it’s up now to 30 seconds, up from 28 seconds last month.
Michael Hudson: -« naked capitalism
Kind of shocking that so much of the stock market is that speculative!
Shipman and Ferrara: Private Social Security Accounts Are Still a Good Idea - WSJ.com
Suppose a senior citizen—let’s call him “Joe the Plumber”—who retired at the end of 2009, at age 66, had been able to set up a personal account when he entered the work force in 1965, at the age of 21. Suppose that, paying into his personal account what he and his employer would have paid into Social Security, Joe was foolish enough to invest his entire portfolio in the stock market for all 45 years of his working career. How would he have fared in the recent financial crisis?
While working, Joe had earned the average income for full-time male workers. His wife Mary, also age 66, had earned the average income for full-time female workers. They invested together in an indexed portfolio of 90% large-cap stocks and 10% small-cap stocks, which earned the returns reported each year since 1965.
By the time of their retirement in 2009, Joe and Mary would have accumulated account funds, after administrative costs, of $855,175. Indeed, they would have been millionaires a few years earlier, but the financial crisis lost them 37% in 2008. They were unfortunate to retire just one year after the worst 10-year stock market performance since 1926. Yet their account, having earned a 6.75% return annually from 1965 to 2009, would still pay them about 75% more than Social Security would have.
The math is pretty compelling.
The old pay system (era of John Whitehead): you work at an investment bank for 30 years, have a reasonable draw and cash bonus, build up stock in the firm as most of your bonus, and when you decide to retire you request of the partners their permission to go limited. If they assent, you get to withdraw your money over five years, all the while continuing to expose the balance to the risks of the enterprise.
The new pay system post-Donald Lufkin Jenrette’s original I.P.O.: you’re a young 29-year-old punk playing with OPM (Other People’s Money), taking huge risks for which you get huge bonuses, while the outsiders shoulder the losses on your bets. You make all the money you’ll ever need in three years, stay around 15 years to pile up five times as much as you need, and then you retire with your cash hoard, buy a winery in Napa/Sonoma or a huge farm in Connecticut, living above the fray for the rest of your life.
Which system, do you think, makes people consider the downside of their actions?
A Real Worst-Case Scenario for BP: 20m barrels, $560b Damages
Keep in mind that the Exxon Valdez tanker spilled a relatively small 250,000 barrels of oil into Prince William Sound. That disaster cost Exxon around $7 billion, adjusted for inflation. The Gulf disaster could end up being 10-80x larger than Valdez in terms of barrels spilled, based on the scenarios outlined in the table above. That would mean 2.5-20 millon barrels spilled close to the Mississipi Delta. It’s an area which is arguably more important, by an order of magnitude, than Prince William Sound, where the Exxon Valdez ran aground. Thinking about the long-term environmental damage is overwhelming. To summarize: My total economic damage estimate range, based on the Exxon Valdez model multiplied by how much larger this spill/leak, is $70-$560 billion.
Wow…this is one way to think about it….
Q. You first joined Bear Stearns as a 21-year-old clerk and rose to become chief executive and chairman, during which time you took home as much as $20 million a year. Do you think you have any special talents?
A. I’m very good in math, and I’m a logical thinker. I don’t get wrapped up in things or even wrapped up in myself. My son once told me, “You’re really not that smart; you’re just so well organized and have a clear brain.” He was 11 years old.
John Taylor: How to Avoid a 'Bailout Bill' - WSJ.com
Yeah, we need a bankruptcy process for non-bank financial companies (eg Bear Stearns, Lehman), that is orderly and predictable. The one described in this article is chapter 11F, which seems like an aptly chosen name.
In his first official visit to China since becoming Treasury Secretary, Mr Geithner told politicians and academics in Beijing that he still supports a strong US dollar, and insisted that the trillions of dollars of Chinese investments would not be unduly damaged by the economic crisis. Speaking at Peking University, Mr Geithner said: “Chinese assets are very safe.” The comment provoked loud laughter from the audience of students.
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