The Education of Ben Bernanke
Posted by Eddy Elfenbein on January 17th, 2008 at 8:07 am

Behold! Roger Lowestein’s 8,000 word article on Ben Bernanke. Here’s a very small sample:

Bernanke grew up in the small town of Dillon, S.C., at the tail end of the segregation era (in high school he wrote a schoolboy’s novel about whites and blacks coming together on the basketball team). His father and his uncle ran a local drug store. Folks trustingly called them Dr. Phil and Dr. Mort. Ben, who skipped first grade, was obviously smart from the get-go. He played the saxophone, just as Greenspan did, and waited tables two summers and worked construction another. The Bernankes were observant Jews, and Ben’s folks fretted when he got into Harvard that if he strayed from home he might wander from his religious teachings. It was never a risk. Judaism is important to Bernanke, though, as with other personal subjects, he does not discuss it. As a doctoral candidate at M.I.T., he blossomed into a star, and at the tender age of 31 he received a tenured position in the economics department at Princeton.
His academic research was steeped in the increasingly sophisticated discipline of econometrics, which uses computer models to simulate (and predict) the economy. By contrast, Greenspan often relied on his hunches. The difference is partly generational, but Bernanke is clearly more comfortable working with mathematical formulas than with anecdotal examples. (One looks in vain in his Depression writings for stories of banks that failed or of workers who lost their jobs.)

“The first thing we do, let’s kill all the lawyers”
Posted by Eddy Elfenbein on January 17th, 2008 at 7:14 am

Retirees claim Morgan Stanley broker gave bad advice
ROCHESTER, N.Y. (AP) – A group of investors is suing Morgan Stanley, claiming a broker gave them bad financial advice when he persuaded them to retire early from Eastman Kodak Company and Xerox Corporation.
In a lawsuit filed today in state court, seven former employees maintain that they were promised ample savings for early retirement by broker Michael James Kazacos. They say the savings never materialized and many of them are now almost broke.
The lawsuit seeks more than $$140 million in compensatory damages and class-action status. It claims the retirees were persuaded to retire beginning in the late 1990s and told they could live off the returns their money would generate if invested with Morgan Stanley.

Market Hits New Low
Posted by Eddy Elfenbein on January 16th, 2008 at 4:24 pm

The S&P 500 closed today at 1373.20, the lowest close since November 3, 2006 which was the Friday before the mid-term election.
July 1, 1999 was the first time the S&P 500 closed above this level.

You Know It’s a Gold Rally When….
Posted by Eddy Elfenbein on January 16th, 2008 at 11:51 am

People sell their fillings.

Down the street at First National Pawn, customers have walked in carrying jewelry, coins and other items scrounged up to take advantage of the bullish prices, said manager Ryan Johnson.
“People have been digging around,” he said.
Some have even rummaged up their old teeth with gold fillings. Johnson said they often drop the teeth into soda pop to separate out the gold fillings. That gold can then be smelted and used later for jewelry or other products.
Gold business picked up at the pawnshop about three weeks ago and has been brisk as the price continued climbing.
“It’s skyrocketing, but we expect it to go higher,” Johnson said.

The Real Total Return of the S&P 500
Posted by Eddy Elfenbein on January 16th, 2008 at 10:32 am

Here’s a look at the real total return of the S&P 500, meaning adjusting for inflation and dividends:

We’re up a lot, but we still have a long way to go. Those are monthly numbers so it only goes through the end of 2007. It doesn’t reflect our little swoon at the beginning of the year.
The long-term real rate return for commons stocks has been about 7% (notice I said “long-term”). Over the last twelve years, stocks have returned an average of 6.92% a year.

This Can’t Be Good….
Posted by Eddy Elfenbein on January 16th, 2008 at 9:31 am

Katie Holmes is ringing the opening bell.
My gut says sell. My thetans say buy!

At 92, Anna Schwarz Blames the Fed
Posted by Eddy Elfenbein on January 16th, 2008 at 6:43 am

Still going strong at 92, Anna Schwartz lays into the Federal Reserve:

“They need to speak frankly to the market and acknowledge how bad the problems are, and acknowledge their own failures in letting this happen. This is what is needed to restore confidence,” she told The Sunday Telegraph. “There never would have been a sub-prime mortgage crisis if the Fed had been alert. This is something Alan Greenspan must answer for,” she says.

The Subpime Crisis Graphs
Posted by Eddy Elfenbein on January 15th, 2008 at 2:32 pm

If you’re completely confused, the BBC has an excellent explanation of subprime crisis. Lots of graphs. Here’s one of the U.S. housing market:

The S&P Nears a 14-Month Low
Posted by Eddy Elfenbein on January 15th, 2008 at 1:34 pm

The S&P 500 is back below 1390 again. We’re over 11% off the October 9 closing high of 1565.15.
We’re very close to the lowest close of 2007, which was 1386.95 (March 16). Before that, we’d have to go back to November 2006.

2008 Index of Economic Freedom
Posted by Eddy Elfenbein on January 15th, 2008 at 11:13 am

From the Wall Street Journal:

The nearby table shows the 2008 rankings but doesn’t tell the whole story. The Index also reports that the freest 20% of the world’s economies have twice the per capita income of those in the second quintile and five times that of the least-free 20%. In other words, freedom and prosperity are highly correlated.
The 2008 Index finds that while global economic liberty did not expand this year, it also did not contract. The average freedom score for the 157 countries ranked is nearly the same as last year, which was the second highest since the Index’s inception. This is somewhat of an achievement considering the rising protectionist and anti-immigration sentiment in the U.S., the uncertainty created by spiking global energy prices, Al Gore’s highly effective fear mongering about global warming, and the continuing threat of the Islamic jihad.