Time to go bargain hunting today — but not IBM, Microsoft or Petrobras.
The Storm of the Century gave us a few inches. Way, way less than they predicted. You can now drive, and catch trains and buses. (And play tennis later this afternoon.)
God invented economists to make weather forecasters and astrologers look good.
The only thing we know about predictions is most likely they’ll be wrong. Some great predictions:
“Television won’t be able to hold any market it captures after the first six months. People will soon get tired of staring at a plywood box every night.” Darryl F. Zanuck, head of 20th Century Fox, 1946.
“There is no reason anyone would want a computer in their home.” Ken Olson, president, chairman, and founder of Digital Equipment Corp. 1977.
“The ‘telephone’ has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.” Western Union internal memo, 1876.
“I think there is a world market for maybe five computers.” Thomas Watson, chairman of IBM, 1943.
“Everything that can be invented has been invented.” Charles H. Duell, commissioner U.S. Office of Patents, calling, in 1899, for the permanent closing of the office.
“We don’t like their sound, and guitar music is on the way out.” Decca Recording Co., rejecting the Beatles, 1962.
“We could use up all the proven resources of oil in the entire world by the end of the next decade.” President Jimmy Carter, 1972.
“It will be years–not in my time–before a woman will become Prime Minister.” Margaret Thatcher, 1974.
Greek pain. Yesterday I wrote that the Greeks rejecting imposed austerity made huge sense. Here’s an explanation (from Paul Krugman) as to what actually happened to Greece.
To understand the political earthquake in Greece, it helps to look at Greece’s May 2010 “standby arrangement” with the International Monetary Fund, under which the so-called troika — the I.M.F., the European Central Bank and the European Commission — extended loans to the country in return for a combination of austerity and reform. It’s a remarkable document, in the worst way. The troika, while pretending to be hardheaded and realistic, was peddling an economic fantasy. And the Greek people have been paying the price for those elite delusions.
You see, the economic projections that accompanied the standby arrangement assumed that Greece could impose harsh austerity with little effect on growth and employment. Greece was already in recession when the deal was reached, but the projections assumed that this downturn would end soon — that there would be only a small contraction in 2011, and that by 2012 Greece would be recovering. Unemployment, the projections conceded, would rise substantially, from 9.4 percent in 2009 to almost 15 percent in 2012, but would then begin coming down fairly quickly.
What actually transpired was an economic and human nightmare. Far from ending in 2011, the Greek recession gathered momentum. Greece didn’t hit the bottom until 2014, and by that point it had experienced a full-fledged depression, with overall unemployment rising to 28 percent and youth unemployment rising to almost 60 percent. And the recovery now underway, such as it is, is barely visible, offering no prospect of returning to pre-crisis living standards for the foreseeable future.
The Paul Krugman piece is here.
The Wall Street Journal has a piece on Greek corruption (which seems to be endemic) by Bret Stephens. Click here.
Understanding Oil. Its price has dropped 50% since September. There’s a great piece “Who will rule the oil market?” by Daniel Yergen in Sunday’s New York Times. Excerpts:
Then around 2010, the same technologies started to be seriously applied to the search for oil. The results were phenomenal. By the end of 2014, oil production in the United States was 80 percent higher than it had been in 2008. The increase of 4.1 million barrels per day was greater than the output of every single OPEC country but Saudi Arabia. …
American shale oil has become the decisive new factor in the world oil market in a way that could not have been imagined five years ago. It has proved to be a truly disruptive technology.
You should read Yergin’s entire article. Click here.
This chart comes from the Economist Year in Review. It visually sums up what has happened. It compares US with Saudi Arabian oil production. Fascinating:
Some readers missed yesterday’s column. As a joke, I published my favorite spam email. And — sure enough — companies rejected my column as spam. If you missed my column (there was stuff other than spam), click here.
The Australian Tennis Open continues today. It’s on ESPN2 and The Tennis Channel. Nadal got knocked out by a man he’d beaten 18 times before. It was an engrossing match. They’ll replay it endlessly. “Nobody beats Tomas Berdych 19 times.” This is his fiance. Lucky man.
Shake Shake (SHAK) will IPO this week. Other IPOs this week are here.