virtual performance or reanimation of any performance by me by the use of any technique, technology or medium now in existence or which may be known or created in the future anywhere in the universe.The universe is a pretty big place, but Newman was a big guy.
Our nomination for best illustration of the season goes to Teresa Fasolino's vegetarian turkey in The New York Times. You can see other examples of her work here.
Citi's sleepless nights – and now its bailout – resulted from nightmares about Collateralized Debt Obligations. Yesterday's New York Times tells the story in depth.
After an Off-Broadway run last year, Horton Foote's "Dividing the Estate" has been tuned up and shined up as a Broadway production. NY Times drama critic Ben Brantley applauds the result. He finds Foote's portrayal of a haute-bourgeois Texas clan squabbling over an estate to be dead on:Literature is filled with people who find greatness in crisis. Mr. Foote’s strength lies in drawing characters, with a gaze as clear and fresh as spring water, who remain as doggedly small as they always were.By serendipitous coincidence, the family turmoil has been intensified by . . . a real-estate bust.* * *[Hallie] Foote, the playwright’s daughter and frequent interpreter, makes Mary Jo a figure worthy of Molière, a small-boned, ineffective though tenacious bird of prey with ravenous eyes and a jutting neck. When it comes to dividing the estate, leave it to Mary Jo to say bluntly what’s really on everyone’s mind: “I want everything — what about you?”
Back in the Depression era, economist Irving Fisher coined the phrase "debt deflation," to refer to a period when many debtors are trying to reduce their liabilities, or leverage. When borrowers are de-leveraging all at once, prices for assets such as homes or stocks can fall below what would ordinarily be their fair value.Long term, inflation seems inevitable. As this educational chart from Wikipedia shows, deflation was mainly a feature of the hard-money era. Ever since the Great Depression, paper money has been printed fast enough to keep inflation alive and well.
Moreover, if deflation becomes a broad-based trend that consumers expect to see in everyday goods, they may delay purchases in the hope of getting an even better price later.
Easily overlooked amid the crisis of big banks today, small-scale financial institutions are, for the most part, holding steady—and sometimes even better than steady. According to FDIC data, the failure rate among big banks (those with assets of $1 billion or more) is seven times greater than among small banks. Moreover, banks with less than $1 billion in assets—what are typically called community banks—are outperforming larger banks on most key measures, such as return on assets, charge-offs for bad loans, and net profit margin.How will these banks be affected as the giants are bailed out? Wouldn't we be better off with thousands of strong small banks than a handful of powerhouses? An analogy to chain mail comes to mind.
The New York Post has published excerpts from Meryl Gordon's Mrs. Astor Regrets. The new book seems unlikely to gladden the heart of Mrs. Astor's son and daughter-in-law:Secret journals kept by Brooke Russell Astor's staff reveal tragic scenes, including one in which the society doyenne was literally dragged into a meeting against her will to sign over $60 million to her only son after she slammed her cane against the floor shouting, "Do you hear me?"Meanwhile, the estate struggles to dispose of Brooke Astor's homes in a down market. Her palatial New York apartment is now offered at $34 million, down from $46 million.
When they weren't caring for her in person, Astor's maids, nurses and butlers were listening to her private meetings via a baby monitor. They filled 30 journals over four years…
Edward Zelinsky, the professor Jim Gust mentions in the preceding post, authored The Origins of the Ownership Society: How the Defined Contribution Paradigm Changed America. The ownership society seeks to help people build wealth through 401(k) plans, HSAs, etc. (The Ownership Society is not to be confused with the late and unlamented Buyership Society, which encouraged people to buy homes on credit, then borrow again on any increase in value.)We save for retirement, health care and educational savings through IRAs, 401(k) accounts, 529 programs, FSAs, HRAs, HSAs and other individual accounts which did not exist a generation ago. In its own way, the emergence of these accounts has been a revolution…. The Origins of the Ownership Society describes the defined contribution revolution, its causes, and implications. For lawyers, the book provides useful insights into the network of individual accounts which are now central features of the U.S. income tax….Nobody but a tax lawyer understands all the variations, limits and withdrawal requirements of all those accounts. Why not keep our current tax-favored treatment of dividends, capital gains and interest on state and local bonds, then let everybody save and invest, simply and economically, for whatever purposes they desire?
In a Florida gated community for the more-or-less retired, The New York Times finds Tarnish on the Golden Years. High-Net-Worth residents worry about returning to the ranks of the Mass Affluent.“Older middle-class people have made plans based on a set of assumptions of how the world works, and the world has gone crazy,” said Alicia H. Munnell, director of the Center for Retirement Research at Boston College. Those assumptions once included the notions that bank accounts and corporate bonds were secure . . . .High-net-worth investors have learned they can't even trust money-market funds. ("Help! My cash is being held hostage in the Reserve Primary Fund!")
Traditional mutual funds and retirement saving plans, as well as insurance plans for loss of one’s home due to fire or flood, or of one’s income due to disability, are actually risk management vehicles that help reduce inequality. The new president’s important mission should be to broaden these plans.2. The federal government should subsidize programs to encourage and spread investment literacy:
[W]e need to subsidize financial advice for the common man. The crisis we are in is largely due to investor ignorance. Some emergency measures, like the Hope Now Alliance, have been set up essentially to offer such help, but these will presumably be dismantled after the crisis, and they are not well designed for serving investors’ broad needs. We need some permanent subsidies to get the full scope of financial advice out to the people.Cool idea! Tens of thousands of "Wall Street banking and investment experts" are unemployed. A new version of the depression-era Works Progress Administration could quickly form and deploy several brigades of financial advisers. Worth a try?
The year was 1958. Half a century ago.In the second quarter of 1958, the dividend yield on stocks was 3.9% and the yield on 10-year Treasuries was 2.9%. Three months later, dividend yields were down to 3.5% while Treasuries had climbed to match them at 3.5%. The next three months made history, as stock prices kept rising and pushed the dividend yield down to 3.3% while bond prices kept falling and drove the bond yield up to 3.8%. *** The two yields had come close in the past but had always backed away at the critical moment. In 1958, they reversed their historical positions and have never looked back.Could Mr. Bernstein's long wait be almost over? Though the yield on the S&P 500 remains lower than the 10-year bond yield, that bond yield is equaled by JPMorgan's dividend yield, and AT&T pays almost 6% at today's closing price. GE, 6.2%. Dow Chemical, 6.7%. Pfizer, 7.5%.
When this inversion occurred, my two older partners assured me it was an anomaly. The markets would soon be set to rights, with dividends once again yielding more than bonds. That was the relationship ordained by Heaven, after all, because stocks were riskier than bonds and should have the higher yield. Well, as I always tell this story, I am still waiting for the anomaly to be corrected.
A surprising number of visitors to this blog are drawn by a post from last June: Mortgage Derivatives Explained. The post links to a whimsical poem by Shel Silverstein – enlightening, but probably lacking the information the visitor seeks.[F]inance, like other forms of human behavior, underwent a change in the twentieth century, a shift equivalent to the emergence of modernism in the arts—a break with common sense, a turn toward self-referentiality and abstraction and notions that couldn’t be explained in workaday English. In poetry, this moment took place with the publication of “The Waste Land.” In classical music, it was, perhaps, the première of “The Rite of Spring.” Jazz, dance, architecture, painting—all had comparable moments. The moment in finance came in 1973, with the publication of a paper in the Journal of Political Economy titled “The Pricing of Options and Corporate Liabilities,” by Fischer Black and Myron Scholes.Lanchester points out that some people did foresee the collapse of the "financial economy." They even wrote books about it.
Although a jury found Mary Ann Langley guilty of killing her husband by throwing gasoline on him and lighting him on fire, she could still inherit his $1.2 million estate, family members and attorneys said.
This turn of events was made possible by a jury of eight women and four men who did not convict Langley of murder two weeks ago after a seven-day trial at state Superior Court in Stamford. The jury was unable to find beyond a reasonable doubt that Mary Ann Langley intended to kill her husband by throwing the gasoline on him, and instead found her guilty of intentional first-degree manslaughter in the December 2006 death of her husband, James, 55.
State statutes prohibit only murderers from inheriting from their victims, not individuals convicted of manslaughter.* * *Known in legal circles as a "slayer statute," the law in Connecticut and in 42 other states prohibits murderers from inheriting from their victims' estates, according to a state Office of Legislative Research report on the topic from February.
Because Mary Ann Langley, 59, was convicted of manslaughter and not murder, the question of whether she is eligible to receive proceeds from the estate is set to play out in Norwalk Probate Court or in state Superior Court in Stamford.
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