A Wall Street New Year's Greeting

In the bustling New York metropolis 

Of moguls, tycoons and monopolists

At the end of the year

The moment is here

For cynics to turn into optimists. 

It's time for us all to examine

The balance of love and of Mammon, 

The better before

We pass through the door

Which after us soon will be slammin'.

This year, may you find a new mission

To better the human condition,

And your stock market plays

Be so good as to raise

Unwarranted federal suspicion. 

*******************************

As a New Year's bonus, I have included a link to yesterday's Marketplace explainer on the concept of "fiscal year," to which I contributed a limerick verse. 

Happy New Year to all,

Dr. Goose

A Bad Trade

The economy once ago sank
From abuses at many a bank,
Which Congress attacked
In a really big act
That went by the name of Dodd-Frank.

As Wall Street perceived a montrosity
Of Congressional excess verbosity
That was bound to constrain
Their potential for gain,
They resisted with extra ferocity.

An especially prominent section
That met with the bankers' objection
Expressly forbade
The derivatives trade
From counting on federal protection.

It's a problem the banks have endured
Since young J.P. Morgan matured:
How to keep the return
The good bets may earn,
While the bad are by others insured.

To safeguard their profits from harm
They launched an offensive of charm;
Contributions were made,
And lobbyists paid
To dazzle, dissuade and disarm.

But none of those flacks could compare
To the JPMorgan Chase chair;
His pockets well-lined,
His manner refined
And silver his tongue and his hair.

Mr. Dimon instinctively knows
How to lobby his friends and his foes
To attach what he will
To an omnibus bill
That few can afford to oppose.

A bill to keep government funded
Not many would like to see undid,
So you plant your revision
Where few can envision,
While quietly hoping that none did.

But for some, there was just no ignorin':
Moral hazard, once out, was once more in,
A setback so bitter
That Sen. Vitter
Admitted he felt just like Warrin'.

So once again Congress was played
To help the derivative trade;
The hazard is moral,
But no one would quarrel
That that's how the sausage is made.

***********

Wall Street has been trying to roll back provisions of the Dodd-Frank Act ever since it was passed in 2010. Now it has partially succeeded with the help of the sausage-making process in our dysfunctional Congress.

Buried in the $1.1 trillion omnibus spending bill passed by the House is a repeal of the “push-out” regulation — a measure to ensure that banks trade their riskiest financial instruments without the protection of the Federal Deposit Insurance Corporation or backing of the Federal Reserve.   Such a repeal brings back some of the financial moral hazard that was removed - or at least reduced - by Dodd-Frank.  In other words, if financial enterprises make risky trades within the insured banking institutions that are part of their corporate groups, they get to keep all of the gains, but taxpayers could be on the hook for losses that exceed the banks' capacity to absorb.

As Senator Elizabeth Warren put it, though neither Democrats nor Republicans like bailouts, "here we are five years after Dodd-Frank with Congress on the verge of ramming through a provision that would do nothing... but raise the risk that taxpayers will have to bail out the biggest banks once again."  Sen. Warren pointed to the revolving door between Citigroup and the Obama Administration as one culprit.  The Guardian's finance and economics editor Heidi Moore asks a more personal question: "Why does Jamie Dimon always get his way?"  The well-connected JPMorgan Chase CEO made direct calls to key lawmakers to assure their support.  Mr. Dimon, whose way with Congress has previously been noted on this site, has the unique talent of persuading legislators that, as Ms. Moore puts it, "bank profits are something every American should fervently hope for."  

Perhaps that is because members of Congress have developed the talent of persuading Americans that more political contributions are something that every American should fervently hope for.

Consumption Be Done About It?

The US has always depended

On a rate of consumption that's splendid,

By consumers for whom

The means to consume 

May soon have them overextended. 

It's best if our various strata

Could recover their income pro rata

To grow GDP,

But as you can see,

It isn't borne out by the data.  

If there's anything that we have learned,

It's consumption that cannot be earned 

Will grow if we let it 

Be funded by credit,

A fact that should have us concerned. 

One may imagine that "the 1%" do not care about stagnating prospects of the other 99, but the Journal's Pedro da Costa has found a notable exception.  In his Real-Time Economics blog post, da Costa says that Wall Street Cares About Inequality. Of course, it's because the U.S. economy depends heavily on the rising tide of consumption to lift all the boats. If an economic recovery does not feature broadly shared rising personal income, then there is no sound basis for greater personal spending. 

Unfortunately, the data show that this sound basis is precisely lacking.  As depicted in the accompanying chart, wages for the average worker (a non-management employee in the private sector), which fell in the recession, have not quite gotten back up. 

In a report entitled “Inequality and Consumption," Morgan Stanley economists Ellen Zentner and Paula Campbell note: “It has taken more than five years for U.S. households to ‘feel’ like they are in recovery. Before the recession, the expansion of credit simply delayed the day of reckoning from declining incomes and rising inequality.”

The economists go on to say that stronger wage growth would lift spending across the economic spectrum, and the lack of such a broad-based recovery means the Fed will continue its easy-money policies for the foreseeable future.  But, is monetary stimulus the best we can do? 

Fed's Letter to Deutsche Bank

"In reviewing your earnings per annum,
We're less than impressed, and we pan 'em.
The bank may have gains,
But this letter pertains
To the haphazard way that you ran 'em."

The Wall Street Journal reports that the Federal Reserve Bank of New York has vented its frustration with the sloppy reporting of Deutsche Bank's US branches and subsidiaries.  In a December 2013 letter to the bank, senior Fed supervisor Daniel Muccia complained  that the bank's reports "are of low quality, inaccurate and unreliable. The size and breadth of errors strongly suggest that the firm's entire U.S. regulatory reporting structure requires wide-ranging remedial action."  It's a problem long in the making, wrote Mr. Muccia: "Since 2002, the FRBNY has highlighted significant weaknesses in the firm's regulatory reporting framework that have remained outstanding for a decade."

Of course, it's not only the Fed that should be concerned.  Investors too rely on firms' financial reports to value their securities and decide when to buy, sell or hold.  Lest we forget, the feeling that "you can't trust the numbers" was a factor in the global financial meltdown of not so long ago.

New Home Starts and Stops

Housing construction has had

A month that's exceedingly bad

And the drop may be due

To Millenials who

Live at home with their Mother and Dad. 

The trouble of this generation
Finding jobs after their graduation
Has certainly stalled 

The stat that is called

The rate of new household formation. 

It's up to America's young

To climb on the opening rung;

From the nest you must fly

So the housing supply

Will not be so much overhung. 

Two loosely related statistics came out on Thursday: first, that the number of US multigenerational households had climbed to a new high; and second, that the number of housing starts had fallen off dramatically in June.  The first datapoint indicates less demand for homes and the second, less supply.

The Pew Research Center, in an analysis of US census data, determined that 57 million Americans, or 18.1% of the population, are living in households that combine young adults and their parents or even grandparents.  This is the largest proportion of such households since the '50s.  Pew sees the trend thusly: "The declining employment and wages of less-educated young adults may be undercutting their capacity to live independently of their parents."   While such arrangements may serve a few purposes, they do directly reduce the demand for housing.

Meanwhile, the Commerce Department announced that housing starts across the USA had fallen by 9.3% in June; in the South, they fell by 30%.  In spite of my poetic license above, most industry people interview by the Wall Street Journal did not blame stay-at-home Millenials for this development, which actually flies in the face of a more broadly upward trend over the last few years.  Many factors were cited, including the lingering effects of wet winter and spring weather; lack of skilled construction labor in some markets; and persistently weak consumer confidence.

However, the multigenerational household trend is not a flash in the pan; it has been building since the '80s, and over the long term it must impact the housing market in a fundamental way.

High-Frequency Trade-Off

An HFT trader named Cunningham

Remarked on the skeptics confron'ing 'im:

"The spreads I've compressed

Make it cheap to invest,

So it's okay that I am front-running 'em."

The issue of high-frequency trading won't go away, and positions are hardening like the western front in the 1st World War. On the one side are journalists and many investment managers who say that these ultra-fast trades simply skim income off the top of the market; on the other, HFT firms and other market participants who say that such lightning-fast activity is benign and makes markets cheaper and more liquid. Sure, says the first group; HFTs supply all the liquidity you want until you actually need it. 

In the latest salvo, The New York Times and the Guardian's Heidi Moore editorialized yesterday that HFTs have rigged the market, as the exchanges and policy makers have allowed them to do over the last several years. This provoked a furious counterattack, adding a number of industry participants to Ms. Moore's already-formidable list of blocked Twitterers. 

Meanwhile, the US Senate has held inconclusive hearings on the issue, evidently deciding to leave it to the SEC.  The Commission, for its part, is looking into the issue but playing its cards close to the vest. One can only hope that the commissioners keep investor protection uppermost in their minds, even if the harm to investors from HFT is not blindingly obvious. 

***********************

Here is the link to Heidi Moore's column: http://www.theguardian.com/commentisfree/2014/jun/22/wall-street-washington-stock-market-rigged-investors

Here is the link to the Times editorial: http://mobile.nytimes.com/2014/06/23/opinion/best-execution-and-rebates-for-brokers.html

Here is a typical response: http://www.forbes.com/sites/timworstall/2014/06/23/heidi-moore-doesnt-seem-to-understand-high-frequency-trading/

A Cupful of Troubles

As the World Cup begins there are millions
Of poor and disgruntled Brazilians,
Whose new soccer venues

Have certainly been used

In misallocation of billions. 

It's not that there is any shame

In hosting The Beautiful Game,

But if chances were lost

To gain from the cost,

The political class is to blame. 

For fans there is some consolation,

Amidst economic frustration,

That statistics predict -

When the last ball is kicked - 

A victory for the host nation. 

What's more, you should not find it strange

How the World Cup makes sentiment change,

That a home-country win

Makes an up-trend begin

On the Bolsa, the Bourse or Exchange. 

But investors more seasoned than callow

In London, New York or São Paulo 

Never try to fill up

All their hopes in a Cup;

For that, it's a little too shallow. 

Every four years, I join with most of the world in a bout of football fever. Even the hard-working economists at Goldman Sachs get the bug, and publish their statistical analysis predicting the outcome of the World Cup.  As you probably know, Goldman predicts a home-country win this year. They also show how World Cup victory is also correlated with positive investor sentiment and a bullish stock market in the winning country, at least for a few weeks. After that, it's back to the grind. 

Unfortunately, the hosting experience this year is marred by the disappointment felt by many Brazilians that the billions of reais spent on new stadiums and related World Cup infrastructure are over budget, overly late and under-delivering on promised general economic benefits. 

Oh, well. Good luck to the Seleção today in their home opener against Croatia!

[Here is the link to the Goldman Sachs economic report on the 2014 World Cup: http://www.goldmansachs.com/our-thinking/outlook/world-cup-and-economics-2014-folder/world-cup-economics-report.pdf ]

Dreaming of Streaming

Said Timmy to Jimmy & Dre:
"Whether Apples keep Dr.s away,
It sweetens the tones
On iPods & -Phones
If revenue streams when they play."

Said the Dr. & Jimmy to Tim,
On the music they're making with him:
"Without some new Beats,
One's coolness depletes
And the revenue outlook is dim."

Said Timmy: "A streaming solution
May not be the next evolution,
But it's better I blew
3 billion on you
Than a shareholder cash distribution."

In a move that was so long anticipated, many investors forgot about Dre, Apple yesterday confirmed its intention to buy Beats Electronics LLC.  The $3 billion acquisition brings with it Beats co-founders Dr. Dre and Jimmy Iovine.  Though best known for its high-end, sexy headphones, Beats is thought to be more valuable to the provider of iTunes, the leading online music store, for its nascent music streaming service.  As Heidi Moore reports in the Guardian, music downloads have peaked, and actually declined 2% to $3.9 billion last year, while subscription-based revenues rocketed up by 50% to $1.1 billion.

Mr. Iovine, a long-time record industry leader, "was one of the first industry executives to anticipate the download business's decline and advocate for subscription and streaming services as music's future," according to one analyst.  Mr. Iovine has also maintained a long and friendly relationship with Apple and iTunes, going back to the origins of online music sales under Steve Jobs.

Apple CEO Tim Cook must certainly hope that the combination with Beats will once again put the company in the position of knowing what the consumer wants before the consumers themselves do. 

Central Bankers Respond to the Employment Crisis

"Our house is foreclosed on in days,
And we can't find employment that pays; 
Pray what can you do
To carry us through
Our long economic malaise?"

"Central bankers are touched by your trouble,
So our efforts we'll boldly redouble
To keep money soft
And hold you aloft
On a frothier stock-market bubble."

These were my thoughts on reading yet another article on the likelihood of more ECB stimulus to address that continent's deflationary dangers.  Not that I have anything against ECB (or Fed) stimulus  per se; it's just that I'm skeptical that the management of inflation and deflation will do very much to address the serious long-term unemployment problems in the Old World and the New, and I'm not sure that the risk of frothier markets is worth it.

Nothing Is Better Than Something

The Fed stirred up market festivity,
In spite of low business activity,
From the joy that relates
To their keeping the rates
At zero, as is their proclivity.

With rates so depressingly low,
Fixed income has nowhere to go
So the stock market beckons
To each one who reckons
The chance that their nest egg may grow. 

It highlights how hard to discern it is
To know when the bond market's turn it is,
But with rates to be found
At the null lower bound,
The Dow lacks investment alternatives.

Recovery?

Fed Chairmen (paternal or motherly)
Have made a depressing discovery:
If demand isn't great,
You can lower the rate
But you can't cut your way to recovery.

ABCs of HFTs

Of late we have heard much verbosity

Expressing the Street's animosity

Toward traders who trade

With programs they made

To profit by rapid velocity. 

Indignant stock-pickers confront one

With evidence (and it's a blunt one)

That HFTs aim

To rig the whole game

By trading so fast they can front-run. 

HFTs claim, in defense,

Their volume may lower expense 

And help to enrich

The others from which

They're skimming off fractions of cents. 

My view may be non-analytical

But in this matter tends toward the critical,

For it's hard to ascribe

A positive vibe

To a practice at heart parasitical. 

*************************************************

High-frequency trading represents a sort of "rise of the machines" over Wall Street, in which powerful computer algorithms are dedicated to exploiting market information almost literally at the speed of light. The practice has long been controversial among market professionals, where opinions differ as to whether such machines personify R2D2 or the Terminator. 

Michael Lewis, author of Moneyball and Liar's Poker, has written a new book called Flash Boys, which comes down on the side of "hasta la vista, baby."  In an interview on 60 Minutes, Mr. Lewis brought this Wall Street issue on a perp-walk down Main Street. 

"The stock market is rigged," declares Mr. Lewis, by a combination of HFTs, big banks and the exchanges themselves. The HFTs are allowed to see everyone else's trades a split second before the general market does, giving their lightning-fast algorithms time to get out in front of market-moving order flows. This amounts to small-scale theft, repeated so often and so quickly that it becomes large-scale. 

However, some knowledgeable insiders disagree, and say that HFTs have been good for the small investor. Their big volume of small trades has lowered the bid-ask spread, reducing everyone's cost of execution. Much of the complaining, says Cliff Asness of AQR Capital Management, comes from money managers who can no longer place large orders without moving the market. "Well, sorry," counters Mr. Asness, "but prices responding quickly—and traders not being able to buy or sell a ton without the market moving—is what is supposed to happen in a well-functioning market."

A compelling counterpoint to be sure, but the fact remains that some firms trade with high frequency while losing with rarity, or not at all.  "How is it possible that one of the largest high-frequency trading firms executes millions and millions of orders for four years without ever having a down day?" asks Barry Ritholtz.  "The short answer is what they do is not trading -- it is skimming. I call it legalized theft. High-frequency trading is a tax on investors, encouraged by the exchanges, allowed by the SEC."

Are we ready to prosecute the Terminator for algorithmic inside trading?

March Productivity Madness

Economists show the proclivity
Toward lamenting the lost productivity
When Americans cling,
From the first day of Spring,
To basketball bracket activity. 

At work we may go to extremes
Of collegiate basketball dreams,
And glance in our laps 
At websites and apps
With brackets and video streams. 

Consultants engaged by the boss
To reckon the March Madness cost
Deduce from the gauges
Of hours and wages
That 1.2 billion are lost.

But a national payroll statistic
As a measure is much too simplistic,
As workers are apt
In March to adapt
In a manner that's deft and holistic.

Despite how the experts may warn
That brackets are worthy of scorn,
It's easy to see
For office esprit,
They're better than downloading porn. 

Guinness Taps Out

Guinness could not find a way

Of sponsoring St. Patrick's Day,

Having failed to have swayed

Those who run the parade

To authorize floats that are gay. 

It's a green of a diff'rent complexion

That causes the brewer's objection,

As the times, they have changed

And hence rearranged

The sponsorship fiscal projection. 

It's not that they don't see the profit

In St. Paddy's, and what they make off it;

It's how they appraise

The changing mores

Of the many straight drinkers who quaff it. 

Happy St. Patrick's Day to those who wear the green, as well as all the other colors of the rainbow. 

Financial Fraud Trilogy

There once was a fellow named Chubley

Who mortgaged collateral doubly.

"It's a trick," he confessed,

"I effectuate best

When markets are frothy and bubbly."

_____________

It's fruitless to place one's reliance

On oneself in defrauding one's clients;

Much better to work

With the back-office clerk

And ideally, the head of compliance. 

_______________________

A credit swap trader named Moore

Keeps tickets of trades in his drawer.

Though transactions all post

By an e-trading host,

It's a throwback to dealing room lore. 

________________________________

Today's idle limerick musings, unlike most of the verses in this space, do not describe any particular incident or people.  However, I was prompted to reflect on financial fraud by events at the Citigroup subsidiary Banamex, which has just suffered a $400 million loss from nefarious goings-on at one of its customers. The Mexican oil field services company Oceanografía, a supplier to the national oil company Pemex, had been selling their Pemex receivables to Banamex to raise funds - a routine trade finance transaction - and apparently were so pleased at their funding success that they decided to sell another $400 million of receivables that they didn't have. 

It's another reminder that financial fraud may be detectable and even, in our too-big-to-jail era, punishable; in the hands of a determined practitioner, however, it is rarely preventable. 

Here is a link to the latest background on this case from the Wall Street Journal:

http://m.us.wsj.com/articles/SB10001424052702304585004579419371032316620

Ukraine & Putin's Reign, Explained

Said Putin, regarding Crimea:
"Don't get the mistaken idea.
I may not contain
The western Ukraine,
But the east is a part of my spheah."

On the Rocks of Mt. Gox

A guy takes it into his head
To eschew dollar bills and the Fed,
And throws in his lot

With a currency wrought 

By anonymous hackers instead. 

Though treasured by crooks and by cranks,

It constantly surges & tanks,

While hackers purloin

The internet coin

That's issued without central banks.

While enjoying the untraceability

And capital gain volatility

Our guy never saw

A programming flaw
Referred to as "malleability."

It's a ruse by the hackers that blocks

The appearance of trades on Mt. Gox,

So it's not noticed when

They "spend" it again,

Invisibly fleecing the flocks. 

So our bitcoin investor's been lacquered

By a shadowy internet blackguard. 

With no restitution,

The only solution's

A sad, little protesting placard. 

*****************************

The world of virtual currency was dealt a blow this week, when it came out that the Tokyo-based bitcoin exchange known as Mt. Gox had a technical flaw that had enabled hackers to steal bitcoins for months without anyone realizing it. Missing were 750,000 virtual coins worth about $400 million at the time of the revelation. 

My. Gox then shut down in both the physical and online worlds, with no apparent recourse for those who held bitcoins through the exchange. If that was you, you're out of luck. 

However, as Heidi Moore opines in the Guardian, this scandal may be a blessing in disguise, by shaking the amateurish players out of the nascent virtual currency business. The link to her column is below. 

http://www.theguardian.com/money/us-money-blog/2014/feb/25/bitcoin-mt-gox-scandal-reputation-crime

(Thanks to my friend Art Dawson for the inspiration!)

#FedValentine

Dear Janet, this valentine's for you,

We economists simply adore you;

If to growth you respond 

By tap'ring our bond,

Please measure your steps, we implore you. 

There are blogs which the Hawks are condemnin' in,

As sour as a mouth with a lemon in,

'Cause they've had enough of

The Sign of the Dove

From the Head of the Fed, who is feminine. 

But we hope that the Fed's intervenin'

May get more employers to lean in,

So the new Madam Chair,

(The  dovish one there)

May proceed with the stimulus weanin'. 

Until the economy's hot,

You're bound to hear Yellen a lot,

As it falls to the Fed

To goose it instead,

As the GOP Congress is not. 

We hope in your heart there is room

To let the economy bloom,

And kindly deplete 

The Fed's balance sheet

To let normal markets resume. 

Nothing to Tweet About

The outlook for Twitter is blah;

Is it having its final hurrah?

They're losing morale

With a growth rationale

That is premised on je ne sais quoi.

The secret to growing more revenue

Is something the company never knew,

But it's more of a feat

Getting newbies to tweet

Than skeptical analysts ever knew. 

*******************

Twitter (NASDAQ: $TWTR) held its first earnings call as a public company, and investor reaction showed just how high the expectations are for this company. Although quarterly revenues of $243 million exceeded the $218 million consensus forecast, participants in the call were spooked at how few new users had signed up to send their first tweets. The 241 million users in December were only 4% more than those in the previous quarter. Apparently, the new-user experience is not as friendly as it ought to be. 

This perhaps explains the lackluster growth in the number of followers for @DrGooseEcon?

Bowled in the Cold

By now everyone and his mother heard 

All the hype, and will not want another word

Of the Super Bowl game

And the way that it came

To be played in a swamp in East Rutherford. 

If a Wall Streeter gets in his Maybach,

To drive to the game it's a way back

Through traffic so bad,

You'd think that it had

To do with political payback. 

We wanted a "cold-weather Bowl"

- If we're honest - to further the goal

That the Jets or the Giants

Could have more reliance

To play in a championship role. 

But the outcome of all of our schemes

Was not the result of our dreams;

Though the Bowl's in our venue,

It's not as fun when you

Are watching two out-of-town teams. 

*************

Regardless, good luck to the Denver Broncos and Seattle Seahawks today, and may the better team win!

Expert Opinion

The experts' opinions diverge

On whether to taper or surge;

You may go to your death

While holding your breath

For consensus to fin'lly emerge. 

*****************

Over the last day I read a couple of thought-provoking essays on the nature of economic expertise, and how to take the expert opinions we are constantly reading. The Guardian's US finance & economics editor Heidi Moore reminds us that it's as much of an art as a science.  Says Ms. Moore: "Here's the problem: Even the experts don't agree on where the economy has gone. Some believe it's improving. Some believe the evidence is thin."  Of course, "the economy" is big and complex, so it's no wonder. 

Economist Chris House, in his Order Statistics blog, points out that even Nobel laureates may have true expertise in only a narrow field, so one must keep that in mind when listening to an international trade expert expounding on, say, behavioral finance. 

Let the reader beware!

Heidi Moore (The Guardian): Rumors, the US Economy & 2014: What You Need to Know http://www.theguardian.com/money/us-money-blog/2014/jan/29/us-economy-state-rumors-federal-reserve

Chris House (Order Statistic blog): The Wisdom of Laureates  http://orderstatistic.wordpress.com/2014/01/30/the-wisdom-of-laureates/?utm_content=buffer82a4d&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

Paranoid Plutocrats

At times one encounters the views

Of a few with a billion to lose,

Who imagine a threat 

From the left-leaning set

Like the Nazi pursuit of the Jews. 

Despite holding fast to the reins
Of the Congress and capital gains,

"Our wealth," they will say,
"May be taken away,"
Which reality scarcely explains.

The proportion of income that went

To the point oh oh oh one percent

Has been higher in fact

In the age of Barack 

Than the last GOP president. 

If you're rich and you fear persecution
To compare to the Final Solution,
A more accurate view

May classify you

As a bag that is suited for douchin'.

****************

Retired billionaire venture capitalist Tom Perkins provoked scorn and derision this week with his comments that the rich in this country face a potential wave of persecution comparable to the Nazi Kristallnacht. This was the opening act of the Holocaust in 1938, when uniformed thugs smashed, burned and looted Jewish businesses and institutions in Germany. 

In a letter to the Wall Street Journal, Mr. Perkins sought to "call attention to the parallels of fascist Nazi Germany's war on its 'one percent,' namely its Jews, to the progressive war on the American one percent, namely the 'rich.'"

Many institutions of capitalist success rushed to distance themselves from Mr. Perkins, including his old venture capital firm Kleiner Perkins Caufield & Byers, which appeared ready to excise the name of one of its founders. 

However, before dismissing Perkins' words as the rant of some crank, it may be appropriate to recall some of the almost-as-paranoid remarks made by American billionaires before and during the 2012 election. For more perspective on the persecution complex of the plutocracy, see the thoughtful essay by Josh Marshall in Talking  Points Memo. 

******************

Here, until I learn how to embed links in the mobile version of Blogger, are the links referenced above:

Steven Schwartzman's comparison of higher taxes on private equity with Hitler's  invasion of Poland: http://www.businessinsider.com/steve-schwarzman-taxes-hitler-invaded-poland-2010-8

Josh Marshall's attempt to explain Tom Perkins' paranoia: http://talkingpointsmemo.com/edblog/the-brittle-grip-part-2

Mr. Perkins' letter: http://m.us.wsj.com/articles/SB10001424052702304549504579316913982034286?mobile=y

Tweet from Kleiner Perkins in response: https://twitter.com/kpcb/status/427185213261623297

En (La)Garde Against Deflation

Said Lagarde, of a threat that dismayed 'er:
"There's a danger that prices may crater. 
We're conditioned to fear
That things become dear
But deflation's the risk that is greater."

"With deflation, the instinct is human
To save and cut back on consumin',
But though disciplined ways
Are worthy of praise,
They prevent the economy's boomin'."

"To all of those countries who plan
To avoid the malaise of Japan:
Forget all the rules
Of conventional tools,
And stimulate now, while you can!"