The Stingy News Weekly (06/13/2010)
Dividends reign as market pours
"But layered against the dourness, earnings have been strong, cash positions are growing and interest rates are extremely low, making other investments look relatively more attractive than bonds and cash."
The strange survival of ink
"The survival of newspapers is by no means guaranteed. They still face big structural obstacles: it remains unclear, for example, whether the young will pay for news in any form. But the recession brought out an impressive and unexpected ability to adapt. If newspapers can keep that up in better times, they may be able to contemplate more than mere survival."
A gambling man
"Is it far-fetched to argue that having cast his main bets Mr Obama can now do nothing except await their result? Of course. He can, for a start, work harder to explain them. The president did not expect health reform to go down like this. Once it was passed, he predicted in the spring, Americans would wise up to the lies of the Republicans and see that 'nobody is pulling the plug on granny'. Now that spring has given way to summer, the White House has embarked on yet another campaign to hasten the voters. understanding. Mr Obama visited an old folks. centre in Maryland to spell out the excellence of the forthcoming changes. But voters, not being stupid, are not so sure. This is complex legislation whose full costs and benefits will take years to be seen. Another thing Mr Obama can do is double down: more stimulus, more troops, more controversial legislation in areas such as energy and immigration. But after the huge decisions he has already taken his stock of money, troops and political capital is severely depleted. For the first term at least, what you see now is probably the bulk of what you are going to get, and success remains uncertain. Much more gripping than an oil spill."
U.S. kickbacks in doctors' conflicts
"In the U.S. in 2010, the average price of a primary artificial hip was $7,200, more than four times the $1,600 in Germany, says Melissa Hussey, a senior analyst on the orthopedic team at Millennium Research Group, based in Toronto. In Germany and other countries, she says, sales representatives have restricted access to surgeons. 'These items are ridiculously expensive, and a lot of the monies in that bucket are to keep the surgeon tied to that product,' Rodine says. He figures about half the price charged for devices can be traced to funds companies pour into persuading doctors to pick their goods."
Poof, there goes the pension
"Gov. David A. Paterson and legislative leaders have tentatively agreed to allow the state and municipalities to borrow nearly $6 billion to help them make their required annual payments to the state pension fund. And, in classic budgetary sleight-of-hand, they will borrow the money to make the payments to the pension fund - from the same pension fund." [Note the 8% return assumption for extra chuckles.]
A breakthrough in China
"For China's thousands of stainless steel producers, the combination of nickel and iron is hugely attractive. They pay NPI producers the same price (or slightly less) as they would pay traditional producers to get the nickel content they need to make stainless steel. They get a bonus of iron - another ingredient needed to make steel - for free."
His own worst enemy
"Terrance Odean, a finance professor at the University of California, Berkeley's Haas School of Business, has spent his career studying a very specific type of investor: the one who is overconfident, shortsighted and far more likely to snap up a stock at the worst possible moment than to make the kind of contrarian bet that pays off in the long run. Odean's specialty, in other words, is the average investor."
When markets go wrong
"The most recent example of markets going wrong was the American housing boom which prompted both ordinary homebuyers and financial institutions to become overexposed to property prices. When the market collapsed attention focused on the shorts - those betting against subprime securities and bank shares' But subprime securities were indeed over-valued and some banks were in effect insolvent. Short-sellers simply accelerated the alignment of prices with reality. It was 'long-buying' in previous years that was the problem. Markets were unfair - unfairly optimistic. Alas, if governments keep punishing short-sellers during busts, as Nicolas Sarkozy of France and Angela Merkel of Germany want to do, there will be fewer shorts around to temper the next boom. You can bet you won't hear leaders complaining about speculators if there is another bubble in equities or property."
The ethanol trap
"The most disgusting aspect of the blowout in the Gulf of Mexico isn't the video images of oil-soaked birds or the incessant blather from pundits about what BP or the Obama administration should be doing to stem the flow of oil. Instead, it's the ugly spectacle of the corn-ethanol scammers doing all they can to capitalize on the disaster so that they can justify an expansion of the longest-running robbery of taxpayers in U.S. history."
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