The Big Picture

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• Succinct Summation of Week’s Events
• Japanese Tsunami: Donate to Red Cross
• Ron Paul: Presidential Run Still on the Table
• Is Twitter Worth More Than We Think?
• QOTD: Discontinuous Technological Change
• Confidence disappoints as inflation expectations jump
• Are Liberals Driven By a Desire for Novel Pleasure and Conservatives by Fear of Pain? If So, How Does that Affect Investing, Politics and Happiness?
• Retail sales good but what comes next?
• Drawing the Correct Lessons from Lehman Bros
• Passport Ownership Percentage, by US State

Succinct Summation of Week’s Events Posted: 11 Mar 2011 12:00 PM PST Succinct summation of week’s events . . . Positives: 1) Oil prices moderate but for both good and bad reasons 2) Day of Rage ends up being Day of Nothing, Saudi stocks rally this week 3) Retail Sales good but what’s next with higher gasoline prices? 4) US Treasury finds aggressive buyers for 10 and 30 yr debt 5) NFIB small biz optimism index hits best since Dec ’07 6) Central banks in Thailand, Vietnam, South Korea and Malaysia take steps to moderate inflation pressures Negatives: 1) China reports unexpected trade deficit 2) Gasoline prices up another .05 to $3.54, hasn’t fallen in 24 days 3) Initial Claims rise but remain below 400k 4) UoM confidence drops and follows fall in Bloomberg poll as one yr inflation expectations jump to 4.6% from 3.4% 5) Higher than expected US trade deficit leads to cut in Q1 GDP forecasts 6) Moody’s downgraded Spain’s credit rating, yields continue to rise in Greece, Ireland and Portugal

Japanese Tsunami: Donate to Red Cross Posted: 11 Mar 2011 11:19 AM PST > If you would like to help out those suffering from the effects of the Earthquake/Tsunami, feel free to donate to the Red Cross.

Ron Paul: Presidential Run Still on the Table Posted: 11 Mar 2011 09:00 AM PST In an interview with Simon Constable, Congressman Ron Paul says that neither party is serious about reducing spending to curb the deficit and that he is still mulling a presidential run. 3/11/2011 9:30:00 AM

Is Twitter Worth More Than We Think? Posted: 11 Mar 2011 08:30 AM PST > CNBC’s John Melloy mentions what may be the best analysis I’ve seen on the “Charlie Sheen effect.” It comes from Lou Kerner, a keen eyed analyst at Wedbush. (See chart above) Kerner notes that Sheen may be Twitter’s “Lazy Sunday” moment: Content Creators #Winning In December, 2005 a Saturday Night Live skit called Lazy Sunday was uploaded to Youtube. One week later, Lazy Sunday surpassed 2 million views and by the time NBC had the video removed, the Lazy Sunday clip had generated 7 million video views. Lazy Sunday launched YouTube into the spotlight and ten months later, Google purchased YouTube for $1.65 Billion. Twitter had its Lazy Sunday moment on February 28th when Charlie Sheen created his @charliesheen Twitter account. In just over 25 hours, Sheen amassed over 1 million followers, making the @charliesheen account the fastest to ever reach 1 million followers and making Twitter headline news. I couldn’t begin to pit a dollar value on Twitter using traditional metrics of revenue and profits; but between Egypt and Sheen, their “buzz factor” went up immeasurably.  That makes a potential bidder more probable. ~~~ See also: Charlie Sheen sues Warner Bros., Chuck Lorre

QOTD: Discontinuous Technological Change Posted: 11 Mar 2011 07:30 AM PST “Technological change is discontinuous. The monks in their scriptoria did not invent the printing press, horse breeders did not invent the motorcar, and the music industry did not invent the iPod or launch iTunes.” - Jason Epstein > Source: Books: Onward to the Digital Revolution FEBRUARY 10, 2011 Jason Epstein Review of Merchants of Culture: The Publishing Business in the Twenty-First Century by John B. Thompson  http://www.nybooks.com/articles/archives/2011/feb/10/books-onward-digital-revolution/

Confidence disappoints as inflation expectations jump Posted: 11 Mar 2011 07:28 AM PST The 1st March UoM confidence # was 68.2, well below expectations of 76.3 and down from 77.5 in Feb. It’s the lowest since Oct and was likely due to the sharp rise in gasoline prices as one year inflation expectations spiked to 4.6% from 3.4%, the most since Aug ’08 and not far from the level reached in May ’08 of 5.2%. For perspective, the 20 year average is 2.9%. Inflation expectations 5 yr’s out rose to 3.2% from 2.9%. Most of the decline in confidence was in the Outlook component which fell to 58.3 from 71.6, the lowest since March ’09. Current conditions fell much more slightly, to 83.6 from 86.9. A key argument on the part of the Fed in keeping policy extraordinarily accommodative is that consumer inflation expectations remain contained. That is no longer the case.

Are Liberals Driven By a Desire for Novel Pleasure and Conservatives by Fear of Pain? If So, How Does that Affect Investing, Politics and Happiness? Posted: 11 Mar 2011 06:30 AM PST Washington's Blog strives to provide real-time, well-researched and actionable information.  George – the head writer at Washington's Blog – is a busy professional and a former adjunct professor. ~~~ Are Liberals Driven By a Desire for Novel Pleasure and Conservatives by Fear of Pain? If So, How Does that Affect Investing, Politics and Happiness? Preface: This essay slams partisan liberals and partisan conservatives. If you think I’m unfairly criticizing “your” side, it might be because you’re falling into a self-destructive pattern of defending your narrow worldview, which is the whole point of this discussion. In addition, I would bet that the “conservatives” showing fear are not really conservatives, but Republican party loyalists and authoritarians, and likewise the “liberals” showing a lack of discipline are not true progressives but naive, unthinking Democratic party loyalists. Indeed, some of the bravest people I’ve ever met are libertarians, and some of the most disciplined people I’ve ever met are progressives. Remember, poll after poll shows that both national parties are deeply unpopular with an electorate looking for something new and different. It is those who love one of the two mainstream parties who are the extremists. Numerous studies have claimed to show that conservatives tend to be more fearful than liberals. For example, Wired reported in 2008: In reflex tests of 46 political partisans, psychologists found that conservatives were more likely than liberals to be shocked by sudden threats. Accompanying the physiological differences were deep differences on hot-button political issues: military expansion, the Iraq war, gun control, capital punishment, the Patriot act, warrantless searches, foreign aid, abortion rights, gay marriage, premarital sex and pornography. “People are experiencing the world, experiencing threat, differently,” said University of Nebraska political scientist John Hibbing. “We have very different physiological orientations.” The study, published today in Science, has not yet been duplicated, but adds a potentially troubling piece to the puzzle of biology, behavior and politics. Earlier studies have linked reflexive responses to threats — which for testing purposes take the form of loud noises and graphic images — with existing states of heightened anxiety. Though the Science study's authors cautioned against an overly broad interpretation of their findings, the results suggest that fear leads to political conservatism. *** Study co-author Kevin Smith, also a University of Nebraska political scientist … agreed that “people with stronger responses are more sensitive to potential threats in their environment.” And the Telegraph reported last December: Scientists have found that people with conservative views have brains with larger amygdalas, almond shaped areas in the centre of the brain often associated with anxiety and emotions. On the otherhand, they have a smaller anterior cingulate, an area at the front of the brain associated with courage and looking on the bright side of life. The “exciting” correlation was found by scientists at University College London who scanned the brains of two members of parliament and a number of students. They found that the size of the two areas of the brain directly related to the political views of the volunteers. However as they were all adults it was hard to say whether their brains had been born that way or had developed through experience. Prof Geraint Rees, who led the research, said: “We were very surprised to find that there was an area of the brain that we could predict political attitude. “It is very surprising because it does suggest there is something about political attitude that is encoded in our brain structure through our experience or that there is something in our brain structure that determines or results in political attitude.” A Good Thing or a Bad Thing? Only time will tell whether the above-described studies are accurate or not. Assuming they are true for the purpose of this essay raises the question: is more fear a good thing or a bad thing? On the one hand, there are real dangers in the world, and Daddy and Mommy won’t always be there to deal with them. The government cannot fix all of our problems … we’re going to have to deal with most of it for ourselves. Our fear instinct is there to protect us and to spur us into appropriate action. If we never felt fear, we would get hit by trucks or poisoned by food that’s gone bad. As the Wired article notes: “Threatening situations do indeed seem to increase people's affinity for politically conservative opinions, leaders, and parties,” said New York University psychologist John Jost. So there is an argument that conservatives are people who have had to face dangers – perhaps early in life – and so have a more realistic view of the world. On the other hand, too much fear makes us stupid, and makes us easy prey to those who are trying to manipulate us. As I’ve repeatedly noted, the government exaggerates the threat of terror for political purposes. As the Wired article quoted above notes: Study co-author Kevin Smith, also a University of Nebraska political scientist, demurred at making such a connection. “Historically speaking, politicians have appealed to the 'be afraid' response in the electorate in an attempt to mine votes,” he said. “But in terms of going from campaigning to what we did in the laboratory, that's a large leap.” *** Asked whether the findings imply a fearmongering strategy for conservatives, New York University psychologist David Amodio responded, “Yes. And some people believe that they are actively using this strategy.” The Bush administration has been accused of exploiting fears, though it's hardly a new approach. “The whole aim of practical politics,” wrote journalist gadfly H.L. Mencken, “is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins.” Jost condemned such tactics. “From an ethical standpoint, conservative campaigns should not exploit feelings of fear in the general population,” he said. Are Liberals Novelty-Seekers? There is some evidence that liberals are more motivated by novelty. For example, the Telegraph article notes: The results, which will be published next year, back up a study that showed that some people were born with a “Liberal Gene” that makes people more likely to seek out less conventional political views. The gene, a neurotransmitter in the brain called DRD4, could even be stimulated by the novelty value of radical opinions, claimed the researchers at the University of California People who are continually driven to seek novelty will make bad decisions, and may be more likely to lose money on “novel” investment gambles, to contract sexually-transmitted diseases, and to face other negative consequences. Conservatives frequently accuse liberals of having no “values”, of being promiscuous, and of having no guiding star of consistency. If true, the desire to seek novelty might help explain those traits. Get Smarter, and Be Happier and More Successful We make better decisions when we aren’t driven to obsession by a desire for novelty or scared out of our wits by our own shadows. For one thing, we become less susceptible to manipulation. For example, the powers-that-be try to divide us and demonize the “other side” so that we won’t realize how much we all agree on. See this, this, this, this, this, this, this and this. We can fix our nation if we focus on what we all want. Moreover, if we reduce the amount that yearnings or fear drive and control us, then we will have more control over our actions. For example, we will make better investing decisions. As Business Insider notes, polarized thinking is one of the main mistakes investors make: What’s the first thing that pops in your head when you hear the word “left?” Most people instantly think “right.” That’s because humans have a tendency to view things as extremes; we see the world in black and white rather than shades of gray. We’re naturally drawn toward one side or another, which can make us bad at compromising. Psychology Today’s solution? “Be alert to polarized wording, framing, and thinking, especially when processing political arguments and debate.” And we will feel better if we lessen our polarity of being either a yearning-or-desire driven person. As Buddhist psychology has taught for thousands of years (and as several western psychiatrists have confirmed), the things that make us most unhappy are: Yearning for things we want but can’t have Trying to avoid things we are afraid of but can’t get away from And trying to space out and avoid being present in our lives so as to avoid reality We will be happy to the extent we: Let go of the things we want but can’t have, and instead appreciate what we do have Accept the scary things which we can’t avoid And are present to the events and people around us (And see this.)

Retail sales good but what comes next? Posted: 11 Mar 2011 06:17 AM PST Feb Retail Sales were about in line with expectations at all levels of focus but positively, Jan was revised higher. Sales, ex auto’s and gasoline, rose .6% vs an expected gain of .5% and Jan was revised up by .3% to also reflect a rise of .5%. Taking out building materials also from the headline figure, sales rose .6% for a 2nd month. Auto/parts sales rose 2.3% and gains were also seen in electronics, food/beverages, clothing, sporting goods, department stores and restaurant/bars. Sales fell for online retailers, furniture and health/personal care. This data shows nominal gains and thus doesn’t reflect an increase in sales due to inflation in addition to volume. Bottom line, sales over the 1st two months of the year are good but March will be more telling in terms of how the consumer deals with higher energy prices in particular as gasoline, while trending up for months, really spiked at the end of Feb which wasn’t captured in today’s data.

Drawing the Correct Lessons from Lehman Bros Posted: 11 Mar 2011 06:00 AM PST "It wasn't a mistake to let Lehman fail, it was a mistake to let it live so long." -Ann Rutledge, a principal with New York-based R&R Consulting and the co-author of two books on structured finance. > I am continually astounded by the many missed opportunities you Humans have to learn valuable life lessons. Perplexingly, you manage to not only miss the causes of major events, but to draw the wrong lesson from your experiences. It is curious to me how such an oft clever species can frequently be so dense. The most recent example of this is the latest revelation from the rotting carcass of Lehman Brothers. No, the collapse of Lehman Brothers is not what “plunged the economy into the worst financial crisis since the 1930s” any more than the first trailer destroyed by a tornado caused the rest of the trailer park to be demolished. Bloomberg News, one of the most astute gatherers of business intel, could write something so ignorant is simply mind boggling to me. It reveals how easy it is to push a false narrative, and how valuable a commodity the Truth itself is. To anyone who wants to understand how Lehman Brothers committed suicide, there are plenty of books on the subject. But today’s revelation shows exactly how corrupt the organization was. Starting with Dick Fuld, who majored in arrogance at Pompous U, to the criminal enterprise that was their CFO/accounting division. Repo 105s — moving billions of dollars off balance sheet each quarter to hide their true financial state from investors, creditors, and the SEC — were bad enough. Now we learn that the criminality at Lehman Brothers went so far as to make “$3 billion in loans to itself in transactions that even today would elude the Dodd-Frank law designed to prevent such financial alchemy.” This revelation teaches us that any firm that is hellbent on committing suicide, that flouts ordinary accounting rules, that goes to extremes to misrepresent their financial conditions, can accomplish that. Laws against murder won’t stop a serial killer, but they should allow the criminal justice system to bring them to justice. The purpose of regulations cannot stop someone like Lehman’s Dick Fuld or AIG’s Joseph J. Cassano. They exist to provide guidelines of acceptable behavior to the rest of us, and to bring cretins to justice when they are caught on their murderous sprees. I am still waiting for some Justice from the serial killers’ ball of 2007-09 . . . > Previously: Dick Fuld's Fantastic Revisionism ! (September 2010) Source: Lehman Failed Lending to Itself in Alchemy Eluding Dodd-Frank Christine Richard and Bob Ivry Bloomberg, March 11 2011 http://noir.bloomberg.com/apps/news?pid=20601087&sid=a8_JWPw5d1sA&pos=7

Passport Ownership Percentage, by US State Posted: 11 Mar 2011 06:00 AM PST Wow, this post, from Grey’s Blog, is astounding to me: How Many Americans Have a Passport? The Percentages, State by State click for table, text, chart (Data set here: http://www.data.gov/tools/4330 )

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