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REMINDER: All investment, economics, and finance related material now appears at the new IaconoResearch.com. For the time being at least, this has become a personal blog covering a variety of mostly unrelated topics.

Why We are Unlikely to Visit Las Vegas Again

On May 8, 2012, in Our Culture, by Tim

Since we are about to embark on another cross-country road trip today (as detailed in this item at Iacono Research), it seemed like a case of “now or never” to get a few comments up about our journey to Las Vegas last month, so, what follows is a quick recap of our visit along with a few thoughts about how the area has changed and how we’ve changed.

Wynn Hotel from TIIt was a fascinating trip in many ways and the “end of an era’” as well since one of the main reasons we made the journey was to visit relatives who are now racing the clock to get everything squared away before the moving vans show up in a couple weeks to take them to Arkansas after having lived in Las Vegas for more than 20 years.

They managed to sell their house in North Las Vegas at about the same price they paid back in the late-1980s, a 2012 housing success story if ever there was one for one of the nation’s worst housing markets.

Since they’ll no longer be there, we have even less of a reason to go back there which is why it seems unlikely that we’ll ever visit the place again. If we ever return to Southern California, we’ll likely pass through, but I’m guessing that we’ll never spend the night there again or walk the streets and take in the sights.

Despite the opulence of places like the Venetian, Wynn, and Palazzo, the area had an even greater underlying sense of despair and an obviously growing divide between the rich and the poor that make it all a little depressing to take in – kind of like the troubled relative who shows up at a family gathering with a nice car and a nice, tidy appearance when you know from hearing the family talk about him that the guy’s life is a mess.

From the outside, things appear just fine, but beneath the shiny veneer, it’s a different story.

(more…)

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The Many Perceptions of Ben Bernanke

On March 15, 2012, in Currencies, by Tim

I don’t know a thing about Silver Circle or the Silver Circle Movie (coming soon to theaters), but, after stumbling upon this cartoon today, it just seemed too good not to share.

What Ben Bernanke Does

Sadly, that last one in the lower right is probably going to turn out to be spot on, though it may take more than a few years to come to fruition.

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The Sudden Rise of Inflation Through History

On March 15, 2012, in Economy, by Tim

In advance of tomorrow’s report on consumer prices that has the potential to offer a few surprises given the recent surge in the cost of gasoline, clothing, and other essentials, Amity Shlaes files this report at Bloomberg about how inflation has a way of coming about suddenly and, once it does, can be very difficult to stop.

A little is all right. That’s the message Federal Reserve Chairman Ben S. Bernanke has been giving out recently when asked about the evidence of inflation in the U.S. recovery.

BloombergSometimes Bernanke doesn’t even go that far. He simply says he doesn’t see inflation. The Fed chairman recently described the prospects for price increases across the board as “subdued.”

“Sudden” is more like it. The thing about inflation is that it comes out of nowhere and hits you. Monetary policy is like sailing. You’re gliding along, passing the peninsula, and you come about. Nothing. Then the wind fills the sail so fast it knocks you into the sea. Right now, the U.S. is a sailboat that has just made open water, and has already come about. That wind is coming. The sailor just doesn’t know it.

“Sudden” has happened to us before. In World War I, an early version of what we would call the CPI-U, the consumer price index for urban areas, went from 1 percent for 1915 to 7 percent in 1916 to 17 percent in 1917. To returning vets, that felt awful sudden.
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History has other examples. In 1945, all seemed well: Inflation was 2 percent, at least officially. Within two years that level hit 14 percent.

All appeared calm in 1972, too, before inflation jumped to 11 percent by 1974, and stayed high for the rest of the decade, diminishing the quality of life for whole cohorts.

The fact that financial repression is now official government/central bank policy and that it’s been more than a generation since we’ve seen high official rates of inflation in the U.S. will surely make dealing with rising prices even more difficult this time around.

Also, this ominous warning was offered:

The greater the denial before, the faster the inflation accelerates after.

Yikes! Suddenly, tomorrow’s CPI report seems a whole lot more interesting…

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Greg Smith and Goldman Sachs – Day Two

On March 15, 2012, in Banks, by Tim

With time to reflect on Goldman Sachs Vice President Greg Smith’s resignation letter/NY Times op-ed as detailed here yesterday, the financial media is, today, again abuzz, writing and talking about what it all means (see the links post from earlier) while video developers are launching some new material, an example of which is below.

There’s also this offering by a Muppet (the term used by some at Goldman to describe clients who they were “ripping off”) and it includes the following joke that begs the question of whether bankers have finally surpassed lawyers in the jokes department:

What’s the difference between a dead cat on the road and a dead banker on the road?

There are skid marks around the cat.

Didn’t that used to be a lawyer joke?

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Retirement Confidence At Record Lows

On March 14, 2012, in Our Culture, by Tim

Some highlights from the Employee Benefits Research Institute’s Retirement Confidence Survey in which we find Americans as ill-equipped as ever to enter their golden years:

Many workers report they have virtually no savings and investments. In total, 60 percent of workers report that the total value of their household’s savings and investments, excluding the value of their primary home and any defined benefit plans, is less than $25,000.

Although 56 percent of workers expect to receive benefits from a defined benefit plan in retirement, only 33 percent report that they and/or their spouse currently have such a benefit with a current or previous employer.

That second one is kind of a shocker, that is, unless those 23 percent of respondents who said there were going to receive a pension but didn’t have a pension retirement plan thought they were being asked about social security.

And this chart says a lot about how the fortunes of aspiring retirees are changing:

Retirement Confidence

That area circled in red has gone from around 50 percent to 60 percent over the last ten years and will likely continue to go higher in the years ahead as long as Ben Bernanke is running the Federal Reserve and savers continue to be punished.

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Dylan Grice On When To Sell Your Gold

On March 14, 2012, in Commodities, by Tim

Via this item at Business Insider and this one at BullionVault come some much needed words of reassurance for precious metals investors (it’s been another rough week) from Société Générale strategist Dylan Grice:

Some would say the time to sell gold is now… Gold just isn’t the misunderstood, widely shunned asset it was a few years ago. Isn’t the bull market now long in the tooth, with better opportunities to be found elsewhere?
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The reason I own gold is because I’m worried about the long-term solvency of developed market governments.
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Eventually, there will be a crisis of such magnitude that the political winds change direction, and become blustering gales forcing us onto the course of fiscal sustainability. Until it does, the temptation to inflate will remain, as will economists with spurious mathematical rationalisations as to why such inflation will make everything OK (witness the IMF’s recent recommendation that inflation targets be raised to 4%: IMF Tells Bankers to Rethink Inflation – WSJ). Until it does, the outlook will remain favorable for gold. But eventually, majority opinion will accept the painful contractionary medicine because it will have to. That will be the time to sell gold.

Grice also gets in a in a jab or two at economists:

…economists look down on disciplines which might teach them it, such as history, because they aren’t mathematical enough. True, historians don’t use maths (primarily because they don’t have physics envy) but what they do use is common sense, and an understanding that while the economic laws might hold in the long run, in the short run the political beast must be fed.

I don’t know about you, but I feel much better now…

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