• Time May Sell Time Magazine
    Posted by on September 26th, 2009 at 12:42 pm

    Unthinkable.

    Time Warner Inc will eventually sell the Time Inc magazine unit and could buy holdings in its core entertainment category, Gordon Crawford, its largest shareholder, said during a presentation this week.
    “Time Warner just spun off their cable division, they are going to sell their print division, they are going to spin off AOL and they’re just going to be Warner Brothers, HBO and the Turner Networks,” said Crawford, managing director of The Capital Group.
    “Now, they will make acquisitions … but they’re probably going to buy just stuff in their wheel house of those businesses. They’re not going to, I don’t think, go very far afield from their core competency.”

  • Guess What Bank Has Made $33 Billion This Year?
    Posted by on September 26th, 2009 at 12:20 pm

    Give up?

    Read more…

  • Sand Animation
    Posted by on September 26th, 2009 at 11:54 am

  • Museum Day
    Posted by on September 25th, 2009 at 4:01 pm

    Tomorrow is Museum Day! Hundred of museums are letting folks in free of charge.
    You can download an admissions card here, and see what museums are participating.

  • Kevin Warsh In Today’s WSJ
    Posted by on September 25th, 2009 at 3:11 pm

    Kevin M. Warsh of the Federal Reserve wrote an op-ed in today’s Wall Street Journal titled “The Fed’s Job Is Only Half Over.”
    I’ve read the article twice and it’s one of the platitudinal pieces I’ve ever read. I’m not expecting high prose from an economist, but man, this writing is dry. It reads like a committee report, which it may be. All Warsh does is restate the title about a dozen times.
    Here are some choice excerpts:
    “We are at a critical transition period, of still unknown duration, and we must prepare diligently for an uneven road race ahead.”
    “And our policy judgments will ultimately prove worthy of the accolades, and tender the ultimate rejoinder to our critics, if we rise to meet this heightened responsibility. I am confident we will.”
    “That outcome will require that policy makers have equal parts capability, clairvoyance and courage—perhaps the most important of which is courage.”
    “A nimble, even-handed approach toward our risk-management challenges will prove necessary.”
    “Today, even more than usual, we should maintain considerable humility about optimal policy.”
    “Financial market developments bear especially careful watching.”
    “Nonetheless, I would hazard the view that prudent risk management indicates that policy likely will need to begin normalization before it is obvious that it is necessary, possibly with greater force than is customary, and taking proper account of the policies being instituted by other authorities.”

  • The Argument Against HR 1207
    Posted by on September 25th, 2009 at 11:39 am

    You don’t hear it much, but there is principled opposition to Ron Paul’s HR 1207 bill to conduct full audits of the Federal Reserve. This is from Scott G. Alvarez’s testimony today to the House Financial Services Committee:

    Through its investigations and audits, the GAO typically makes its own judgments about policy actions and the manner in which they are implemented and makes recommendations to the audited agency and to the Congress for policy changes or future policy actions. Accordingly, financial markets likely would see the grant of audit authority to the GAO with respect to monetary policy as undermining the Federal Reserve’s independence in this crucial area, particularly because GAO audits or the threat of a GAO audit could be used both to second-guess the Federal Reserve’s monetary policy judgments and to try to influence subsequent monetary policy decisions.
    Permitting GAO audits of monetary policy also would likely cast a chill on monetary policy deliberations if policymakers believed that GAO audits would result in early publication and analyses of their policy discussions. Unfettered and wide-ranging internal debates are essential to identifying the best possible policy options for achieving maximum employment and stable prices in light of data that may be conflicting or, at best, ambiguous as to the optimum policy path.
    Moreover, publication of the results of GAO audits related to monetary policy actions and deliberations would complicate and interfere with the FOMC’s communications to the markets and the public about current economic conditions and the appropriate stance of monetary policy. Households, businesses, and financial market participants would understandably be uncertain about the implications of the GAO’s findings for future decisions of the FOMC, thereby increasing market volatility and weakening the ability of monetary policy actions to achieve their desired effects.
    The exception from GAO audit for monetary policy matters rightfully extends to the Federal Reserve’s use of market credit and liquidity programs to support the functioning of financial markets, stimulate the economy, and unfreeze credit markets. During the crisis, as use of the federal funds rate and discount rate to achieve policy objectives became constrained by the zero bound, the Federal Reserve established several broadly available market credit facilities.8 These broad-based facilities are fundamentally different from the institution-specific loans that the Federal Reserve has made and that are already subject to GAO audit. These broader market facilities are designed to unfreeze credit markets and lower interest rate spreads and are a natural extension of the traditional central bank responsibility to serve as a backup source of liquidity during periods of financial strain.9 In this way, these facilities represent an essential part of the Federal Reserve’s efforts to promote financial stability and its monetary policy objectives.
    Permitting GAO audits of discount window lending and the broad liquidity facilities that the Federal Reserve uses to affect credit conditions generally could reduce the effectiveness of these facilities in promoting financial stability, maximum employment, and price stability. Experience, including during the current financial crisis, shows that banks’ unwillingness to use the discount window can result in high and volatile short-term interest rates and greatly limit the effectiveness of the discount window as a tool to enhance financial stability. Indeed, one of the important difficulties that hampered the effectiveness of the Federal Reserve’s early response to the crisis was the unwillingness of many banks to draw discount window credit because of concerns about stigma; institutions were concerned that, if their discount window borrowing from the Federal Reserve became known, they would be subject to adverse reactions from the market or other sources. Authorizing the GAO to audit the discount window and other broad-based lending programs could significantly increase potential borrowers’ fears of stigma and adverse reactions.
    H.R. 1207 would completely remove the exceptions from GAO audit in current law for monetary policy and discount window deliberations and operations, thereby allowing frequent and ongoing audits in these areas. Financial market participants likely would see passage of H.R. 1207 as a substantial erosion of the Federal Reserve’s monetary policy independence. Accordingly, enactment of the bill would tend to undermine public and investor confidence in monetary policy by raising concerns that monetary policy judgments in pursuit of our legislated objectives would become subject to political considerations.

    (Via: Alea)

  • Tall Paul
    Posted by on September 24th, 2009 at 2:20 pm

    At 82, Paul Volcker is well worth listening to.

  • Peter Schiff: Gold to Hit $5,000
    Posted by on September 24th, 2009 at 12:23 pm

    Here’s a bold prediction:

    Unlike the “legitimate bull markets” of many foreign markets, Peter Schiff believes the U.S. is merely experiencing a “rally in a bear market,” and is lagging the rest of the world “for a reason.”
    The worst is not over, according to Euro Pacific Capital’s Schiff, who predicts the Dow will fall another 90% from current levels when measured against gold.
    A longtime dollar bear and gold bull, he foresees gold hitting $5000 per ounce “in the next couple of years,” and predicts the Dow and gold will trade on a one-to-one ratio vs. the current level of around 9.7-to-1.
    Schiff believes gold is currently “climbing a wall of worry” but will eventually become as hot as tech stocks in 1999 and start moving up $100 per day.
    Schiff’s forecast is based on his view the U.S. dollar is going to collapse under the weight of our massive deficit and reckless policies of the Obama administration, which he compares to the massive spending programs of the 1960s, which paved the way for gold’s ascent in the 1970s. “Obama is making the same mistakes as Bush, but he’s doing them on a grander scale,” says Schiff, who is running for U.S. Senate in Connecticut as a Republican.

    I wish Peter will in his Senate bid,, however I have a feeling this prediction won’t be remembered in a few years.

  • For Valuations, You Need to Look Forward
    Posted by on September 24th, 2009 at 11:48 am

    David Rosenberg writes in the Financial Times:

    An unprecedented eight-point price/earnings multiple expansion during a six-month faith-based rally has left the market at its most expensive (26 times operating profit, 180 times reported profit) in seven years. On a reported basis, this market is nearly four times overvalued, as it was during the tech bubble!

    The problem is Rosenberg is looking backward not forward. The S&P500’s earnings for the fourth quarter of last year were dismal. In fact, they weren’t even earnings, it was a slight loss. Once that weight is off the trailing four quarters, things will look much better.
    The latest estimates say that the S&P 500’s operating earnings will hit $54 for 2009, and nearly $73 for 2010. A multiple of 15 gives the market a fair value of roughly 1100. Discounted back to today means the market is fairly accurately priced.
    Of course, the underlying assumptions may be wrong, but I don’t see any current disconnect between today’s outlook and prices.

  • BBBY Is Down Today
    Posted by on September 24th, 2009 at 11:27 am

    Just a quick note. I’m not sure why BBBY is down today. I thought it was a good earnings report.
    Oh well. A wiser feller than myself once said, “Sometimes you eat the bar and sometimes the bar, well, he eats you.”