The Mess That Greenspan Made - Part 40

Granted, I’m 54 years old and am fast approaching the once unthinkable age of 60, so, there are a lot of things in this changing world that I just don’t get, but the “my life is in my smart phone” thinking amongst the younger set really makes me scratch my head sometimes, particularly when reading stories like Mobile addiction growing at an alarming rate last week at CNBC and learning the new term Nomophobia at Wikipededia.

Mobile addicts are multiplying at an alarming rate, as an increasing number of teens, college students and middle-age parents fall victim to the problem.

A “mobile addict” is defined as a user that launches apps more than 60 times a day, according to mobile analytics firm Flurry, six times more than the average user.

The number of mobile addicts has grown by 123 percent over the past year, according to Flurry, which looks at data from 500,000 apps across 1.3 billion mobile devices.

As of March 2014, there were 176 million addicts, up from 79 million in the same period last year. Females accounted for 52 percent of addicts, while the rest were males.

It comes as no surprise that teens and college students are part of this group as their youth has coincided with the mobile revolution.

“[Teens] are not just accustomed to mobile, they expect their mobile device to handle nearly every type of task and communication,” Flurry said.

I recently made the switch from a Breaking Bad-style pay-as-you-go flip phone to a smart phone, but only because Trac-Phone and Samsung came out with an inexpensive device (Galaxy Centura for $70 at Target) that will probably only cost me $100 a year in usage fees.

Since ski season ended last week and I stopped using Skitracks and texting my skiing buddies, the phone just sits there most of the time, though it is pretty cool to have your entire music library on the device and be able to play it via Bluetooth in your car.

The latest issue of the Iacono Research Weekend Update has been posted to the website and is now available for subscribers here.

There will be four changes to the model portfolio as detailed in the first discussion topic below along with commentary on gold stocks and tech stocks in the second topic:

The executive summary is as follows:

Iacono Research Model Portfolio PerformanceAmid mixed economic news that indicated a clear slowdown in the U.S. housing market but fairly solid growth elsewhere, heightened tensions in Ukraine sent investors fleeing from high-flying U.S. stocks and resurgent emerging market shares into safe haven assets such as Treasuries and gold. As shown to the right, year-to-date percentage gains for long-dated Treasuries are now in double-digits.

Energy prices fell (which was more than a bit curious given the growing geopolitical turmoil) but most natural resource stocks rose, paced by some big gains for gold and silver mining stocks that followed rebounding precious metals higher. REITs moved higher and now also sport double-digit percentage gains for the year as the model portfolio rose 0.8 percent, now up 4.9 percent for the year.

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The Drought in the Golden State

This item at The Economist’s Daily Chart feature and the graphic below that was pulled from it detail the dire state of affairs in California these days, water-wise.

They’ve reportedly got the budget under control (thanks in large part to the combination of yet another real estate boom/bubble and yet another technology boom/bubble), but what’s being called the worst drought in 500 years may be a more difficult problem to solve.

I remember that early-1990s dry spell – people were painting their lawns green in Santa Barbara and harassing neighbors who chose to wash their cars in their driveway. The thing is, the population has grown by about 8 million or so since then and by about 20 million since the late-1960s, the last time that reservoir levels were this low.

Also see this AP story about how California’s water problems (and last winter’s Polar Vortex problems) are both probably a result of the world’s climate change problems.

Economy in Crisis Like Descending Slime

More hope for the economics profession arrived in the foreward of this paper(.pdf) from the Post-Crash Economic Society (as spotted in this item at Zero Hedge) in which Andy Haldane, Executive Director for Financial Stability at the Bank of England, takes on the dismal science.

Unbridled competition, in the financial sector and elsewhere, was shown not to have served wider society well. Greed, taken to excess, was found to have been bad. The Invisible Hand could, if pushed too far, prove malign and malevolent, contributing to the biggest loss of global incomes and output since the 1930s. The pursuit of self-interest, by individual firms and by individuals within these firms, has left society poorer.

The crisis has also laid bare the latent inadequacies of economic models with unique stationary equilibria and rational expectations. These models have failed to make sense of the sorts of extreme macro-economic events, such as crises, recessions and depressions, which matter most to society. The expectations of agents, when push came to shove, proved to be anything but rational, instead driven by the fear of the herd or the unknown. The economy in crisis behaved more like slime descending a warehouse wall than Newton’s pendulum, its motion more organic than harmonic.

In this light, it is time to rethink some of the basic building blocks of economics.

I’ve not yet read the paper itself, but, if it’s anything like the forward, it should be great.

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