I heard a figure of $15 trillion dollars in cash and negative yielding bonds. It’s called money on the sidelines. One day it will move into equities, ’cause there’s not much else. The S&P 500 is yielding 2.3% which is much better than the 10 year U.S. treasury bond yielding less than 1.5%.
Takeover talk, cont’d: “Targets” (i.e. talk among brokers) include: Paypal (PYPL), Mobileye (MBLY), Square (SQ), Fireeye (FEYE), Twilio (TWLO), Pandora (P) and perhaps Twitter (TWIT). I’m dubious about Paypal since its market cap is $44 billion. But you never know. And allegedly its earnings numbers are strong. One of the big banks needs to be in a new growth area?
Vanguard can rip you off also.
I have money in VMSXX which is the Vanguard Tax-Exempt Money Market Fund. It’s earning the glorious sum of 0.48% per year, out of which Vanguard takes a fee of 0.15%.
If I divide one by the other, I figure that Vanguard is charging me a fee of 33% — which is higher than even my local hedge fund and belongs somewhere in the high rip-off category.
Anyone got a better idea?
Tom Brokaw explains Brexit on Colbert. And does a funny, superb job. Hint: there’s a little fishing flavor.
Click here.
Forbes did a piece on the Best and Worst Franchises. I like franchises. They’re better than being a company man, for some people. Results from Forbes:
John Cassidy on Sunderland. Cassidy is an excellent reporter. Here’s his report on a trip to central England:
Sunderland and the Brexit tragedy
The economically depressed regions (of Great Britain) that were most eager to leave the E.U. may have more to lose if their decision triggers a recession.
1986, as a young reporter just out of the Columbia Journalism School, I went to Sunderland, an old and proud but depressed shipbuilding city on the River Wear, in northeast England, to report on an effort to get jobless people back to work. From the train station, I asked a cab driver to take me to the shipyards, which peaked in the nineteenth century, when they provided many of the sailing vessels and, later, iron-hulled steamers that serviced the far-flung British Empire.
By the nineteen-eighties, the shipyards had already experienced decades of decline, much of it borne of foreign competition. Many of the yards had been closed, and those that were still operating had been placed under public ownership. Sunderland’s unemployment rate was well into double digits, and when I ventured into a local pub I found a lot of skepticism about the Thatcher government’s new “Restart” scheme, which provided counselling, training, and job-placement services for the unemployed. “People around here are bitter,” Thomas Swinburn, a man in his forties who had lost his job in the shipyards, told me. “We grafted all our lives only to put up with this. We had fighting shipyards. Where has it all gone?”
Sunderland’s last two shipyards closed down twenty-eight years ago, in 1988. Despite the fact that the city and its surrounding areas have attracted some new businesses, including a big Nissan car plant in nearby Gateshead, Sunderland has never fully recovered. Although the jobless rate isn’t as bad as it was in the eighties, it’s still high relative to the rest of Britain, and in last week’s Brexit referendum more than sixty per cent of Sunderland’s inhabitants, who have traditionally supported the Labour Party, voted to leave the European Union. When a New York Times reporter, Kimiko de Freytas-Tamura, visited the city to find out why, she emerged with some quotes that sounded eerily familiar to me. “All the industries, everything, has gone,” Michael Wake, a fifty-five-year-old forklift operator, said. “We were powerful, strong. But Brussels and the government, they’ve taken it all away.”
In reality, Brussels had little or nothing to do with Sunderland’s decline. According to the data Web site Statista, the five biggest shipbuilding nations are now China, South Korea, Japan, the Philippines, and Taiwan. The only European country in the top ten is Germany, and its industry is tiny compared with those of the big Asian producers. But in the minds of many inhabitants of Sunderland and places like it, Brussels and Westminster represent the political face of an economic system that has ignored them. As Wake told de Freytas-Tamura, the Brexit referendum enabled disgruntled voters to “poke the eye” of the political establishment.
The tragedy is that this gesture wasn’t just pointless-it was counterproductive. If the U.K. economy now enters a recession, which many economists believe is likely, Sunderland will suffer along with everywhere else. And if Britain goes ahead and leaves the E.U. (which isn’t guaranteed, as I wrote on Monday), already suffering cities will lose access to one of the few remaining sources of funding for economic-revival efforts.
During the referendum campaign, Boris Johnson and other Brexiteers made much of the fact that Britain, like the other rich countries in the E.U., such as Germany and the Netherlands, makes a (small) net fiscal contribution to the E.U. In 2015, this amounted to about 8.5 billion pounds. But that’s a national figure that doesn’t account for local variations. As a depressed region, the northeast of England is eligible to receive money that Brussels allocates to the E.U.’s less prosperous areas via several purses, including the European Regional Development Fund and the European Social Fund.
In recent years, de Freytas-Tamura pointed out, the E.U. has helped finance a number of projects in Sunderland, including a new campus for the University of Sunderland, a business park for software developers, and a fancy leisure center. While some local residents complain that they can’t afford access to these facilities-membership at the leisure center costs thirty pounds a month-the projects are physical manifestations of the E.U.’s commitment to building up poorer regions (a commitment that, over the years, has also done a great deal for countries like Ireland and Portugal). And more help was in the offing. For the period from 2014 to 2020, the E.U.’s development arms had allocated about four hundred and fifty million pounds to England’s northeast.
Unfortunately, during the Brexit campaign, the leaders of the Remain campaign did little to highlight these and other positive features of the E.U. But local civic and business leaders have been less reticent. Under the auspices of the North East Local Enterprise Partnership, they have put together a regional economic plan that relies heavily on E.U. funding and is thus now in jeopardy.
“While we acknowledge this decision by the electorate, the North East LEP is very aware of the many ways in which this region has benefited from being a member of the EU,” Andrew Hodgson, a marine engineer who chairs the Enterprise Partnership, said in a statement after the Leave victory became apparent. “This has included access to European trade and investment and European funding, which has helped to regenerate our towns and cities, support business growth and investment in science and support many of our rural stakeholders including farmers.”
Of course, E.U. funding won’t bring big shipyards back to Sunderland or reverse the effects of half a century of globalization-which have helped other parts of the U.K. and, indeed, parts of the northeast to prosper. But one of the great ironies and tragedies of last week’s vote is that the E.U., while it has certainly promoted trade and economic modernization, has always taken regional disparities seriously. More seriously, arguably, than governments in London.
“We are now urgently seeking assurances from the Government that it will help us reduce the impact of leaving the single market in terms of funding, jobs and investment,” Hodgson said in his statement. With “Mr. Austerity,” George Osborne, still running the British Treasury, which has savaged local-government budgets in recent years, there is little chance that Hodgson’s request for assistance will be met. Unless the Brexit vote is somehow reversed, the residents of places like Sunderland will most likely be left to fly the Union Jack and fester.
Folding bikes are great for commuting and getting around town. Here are my two favorites. This one is called a Tern Verge x10. Click here.
This one is called a Dahon Dash x20.
I have two Dahon folding bikes. I ride at least one every day. The Dash x20 is the lightest Dahon currently makes. You can get it with upright handlebars (which I prefer). Click here.
You can often find Dahon bikes on eBay at slightly cheaper than full retail. The nice thing about folding bikes is you can put them in your car’s trunk, check them on an airline and hike them in a restaurant while you have lunch and dump them on some poor hotel bell cap. The Dahons are a real pleasure to ride.
Serious progress, finally.
Business Insider reports a A 19-year-old created a free robot lawyer that has beaten 160,000 parking tickets. British programmer Joshua Browder launched the beta version of the bot in London in September. Click here.
Favorite natural cure
Out Golfing. Silly, but funny.
I accidentally overturned my golf cart.
Elizabeth, a very attractive and keen golfer, who lived in a villa on the golf course, heard the noise and called out: “Are you okay, what’s your name?”
“It’s John, and I’m okay thanks,” I replied as I pulled myself out of the twisted cart.
“John, she said, Forget your troubles. Come to my villa, rest a while and I’ll help you get the cart up later.”
“That’s mighty nice of you,” I answered, “but I don’t think my wife would like it..”
“Oh, come on now ” Elizabeth insisted.
She was so very pretty, very sexy and very persuasive … I was weak.
“Well okay,” I finally agreed but thought to myself, “My wife won’t like it.”
After a couple of restorative Scotch and waters, I thanked Elizabeth. “I feel a lot better now, but I know my wife is going to be really upset. So I’d best go now.”
“Don’t be silly!” Elizabeth said with a smile, letting her robe fall open slightly. “She won’t know anything. By the way, where is she?”
“Still under the cart, I guess,”
Harry Newton who made it up to the country last night, where the weather is gorgeous and the plumbers, electricians, roofers, air conditioning technicians and other trades are all overworked. Fortunately for them, they live here, not Sunderland. I’m playing tennis this afternoon.
I own a franchise in Chicago. I could give a lecture on the subject. One word of advice is spend the extra $ on a great location and make sure you own the rights to a strong territory. With that said, I wouldn’t get into the franchise business unless you know what you’re doing. Better yet, become the franchisor not the franchisee. The model works out well for the franchisor but makes it very difficult for franchisee to make money.
Good advice, Glenn. A friend of mine had a series of dry cleaning stores from his father. He decided to sell or franchise (I forget which) a few of them. So he worked out the average sales and costs for his whole chain, then used those averages to sell off his worst producing locations. Which, of course, had far worst numbers. Beware!
This is a little long but worth the read….
Meanwhile Matt Taibbi in Rolling Stone discusses the Brexit referendum within the greater context of that thing called “democracy.” I found this piece especially fascinating, given what’s happening here with Trump.
The Reaction to Brexit Is the Reason Brexit Happened
If you believe there’s such a thing as “too much democracy,” you probably don’t believe in democracy at all
“This isn’t democracy; it is Russian roulette for republics,” Kenneth Rogoff recently wrote in the ‘Boston Globe,’ of last week’s Brexit vote.
In 1934, at the dawn of the Stalinist Terror, the great Russian writer Isaac Babel offered a daring quip at the International Writers Conference in Moscow:
“Everything is given to us by the party and the government. Only one right is taken away: the right to write badly.”
A onetime Soviet loyalist who was eventually shot as an enemy of the state, Babel was likely trying to say something profound: that the freedom to make mistakes is itself an essential component of freedom.
As a rule, people resent being saved from themselves. And if you think depriving people of their right to make mistakes makes sense, you probably never had respect for their right to make decisions at all.
This is all relevant in the wake of the Brexit referendum, in which British citizens narrowly voted to exit the European Union.
Because the vote was viewed as having been driven by the same racist passions that are fueling the campaign of Donald Trump, a wide swath of commentators suggested that democracy erred, and the vote should perhaps be canceled, for the Britons’ own good.
Social media was filled with such calls. “Is it just me, or does #Brexit seem like a moment when the government should overrule a popular referendum?” wrote one typical commenter.
On op-ed pages, there was a lot of the same. Harvard economics professor and chess grandmaster Kenneth Rogoff wrote a piece for the Boston Globe called “Britain’s democratic failure” in which he argued:
“This isn’t democracy; it is Russian roulette for republics. A decision of enormous consequence. has been made without any appropriate checks and balances.”
Rogoff then went on to do something that’s become popular in pundit circles these days: He pointed to the lessons of antiquity. Going back thousands of years, he said, Very Smart People have warned us about the dangers of allowing the rabble to make decisions.
“Since ancient times,” he wrote, “philosophers have tried to devise systems to try to balance the strengths of majority rule against the need to ensure that informed parties get a larger say in critical decisions.”
Presumably playing the role of one of the “informed parties” in this exercise, Rogoff went on:
“By some accounts… Athens had implemented the purest historical example of democracy,” he wrote. “Ultimately, though, after some catastrophic war decisions, Athenians saw a need to give more power to independent bodies.”
This is exactly the argument that British blogging supernova Andrew Sullivan unleashed a few months ago in his 8,000-word diatribe against Donald Trump, “Democracies end when they are too democratic.”
Like Rogoff, Sullivan argued that over-democratic societies drift into passionate excesses, and need that vanguard of Very Smart People to make sure they don’t get themselves into trouble.
“Elites matter in a democracy,” Sullivan argued, because they are the “critical ingredient to save democracy from itself.”
I would argue that voters are the critical ingredient to save elites from themselves, but Sullivan sees it the other way, and has Plato on his side. Though some of his analysis seems based on a misread of ancient history (see here for an amusing exploration of the topic), he’s right about Plato, the source of a lot of these “the ancients warned us about democracy” memes. He just left out the part where Plato, at least when it came to politics, was kind of a jerk.
The great philosopher despised democracy, believing it to be a system that blurred necessary social distinctions, prompting children, slaves and even animals to forget their places. He believed it a system that leads to over-permissiveness, wherein the people “drink too deeply of the strong wine of freedom.”
Too much license, Plato wrote (and Sullivan echoed), leads to a spoiled populace that will turn to a strongman for revenge if anyone gets in the way of the party. These “men of naught” will inevitably denounce as oligarchs any wise group of rulers who try to set basic/sensible rules for society.
You have to be a snob of the first order, completely high on your own gas, to try to apply these arguments to present-day politics, imagining yourself as an analog to Plato’s philosopher-kings.
And you have to have a cast-iron head to not grasp that saying stuff like this out loud is part of what inspires populations to movements like Brexit or the Trump campaign in the first place.
Were I British, I’d probably have voted to Remain. But it’s not hard to understand being pissed off at being subject to unaccountable bureaucrats in Brussels. Nor is it hard to imagine the post-Brexit backlash confirming every suspicion you might have about the people who run the EU.
Imagine having pundits and professors suggest you should have your voting rights curtailed because you voted Leave. Now imagine these same people are calling voters like you “children,” and castigating you for being insufficiently appreciative of, say, the joys of submitting to a European Supreme Court that claims primacy over the Magna Carta and the Bill of Rights.
The overall message in every case is the same: Let us handle things.
But whatever, let’s assume that the Brexit voters, like Trump voters, are wrong, ignorant, dangerous and unjustified.
Even stipulating to that, the reaction to both Brexit and Trump reveals a problem potentially more serious than either Brexit or the Trump campaign. It’s become perilously fashionable all over the Western world to reach for non-democratic solutions whenever society drifts in a direction people don’t like. Here in America the problem is snowballing on both the right and the left.
Whether it’s Andrew Sullivan calling for Republican insiders to rig the nomination process to derail Trump’s candidacy, or Democratic Party lifers like Peter Orszag arguing that Republican intransigence in Congress means we should turn more power over to “depoliticized commissions,” the instinct to act by diktat surfaces quite a lot these days.
“Too much democracy” used to be an argument we reserved for foreign peoples who tried to do things like vote to demand control over their own oil supplies.
I first heard the term in Russia in the mid-Nineties. As a young reporter based in Moscow in the years after communism fell, I spent years listening to American advisors and their cronies in the Kremlin gush over the new democratic experiment.
Then, in 1995, polls came out showing communist Gennady Zyguanov leading in the upcoming presidential race against Boris Yeltsin. In an instant, all of those onetime democratic evangelists began saying Russia was “not ready” for democracy.
Now it’s not just carpetbagging visitors to the Third World pushing this line of thought. Just as frequently, the argument is aimed at “low-information” voters at home.
Maybe the slide started with 9/11, after which huge pluralities of people were suddenly OK with summary executions, torture, warrantless surveillance and the blithe disposal of concepts like habeas corpus.
A decade and a half later, we’re gripped by a broader mania for banning and censoring things that would have been unthinkable a generation ago.
It seems equally to have taken over campus speech controversies (expanding the “fighting words” exception to the First Amendment is suddenly a popular idea) and the immigration debate (where Trump swept to the nomination riding a bluntly unconstitutional call for a religious test for immigrants).
Democracy appears to have become so denuded and corrupted in America that a generation of people has grown up without any faith in its principles.
What’s particularly concerning about the reaction both to Brexit and to the rise of Trump is the way these episodes are framed as requiring exceptions to the usual democratic rule. They’re called threats so monstrous that we must abrogate the democratic process to combat them.
Forget Plato, Athens, Sparta and Rome. More recent history tells us that the descent into despotism always starts in this exact same way. There is always an emergency that requires a temporary suspension of democracy.
After 9/11 we had the “ticking time bomb” metaphor to justify torture. NYU professor and self-described “prolific thought leader” Ian Bremmer just called Brexit the “most significant political risk the world has experienced since the Cuban Missile Crisis,” likening it to a literal end-of-humanity scenario. Sullivan justified his call for undemocratic electoral maneuvers on the grounds that the election of Trump would be an “extinction-level event.”
I don’t buy it. My admittedly primitive understanding of democracy is that we’re supposed to move toward it, not away from it, in a moment of crisis.
It doesn’t mean much to be against torture until the moment when you’re most tempted to resort to it, or to have faith in voting until the result of a particular vote really bothers you. If you think there’s ever such a thing as “too much democracy,” you probably never believed in it in the first place. And even low-Information voters can sense it.
Even more to the point, what is the EU going to do to make it look like the Brits made a big mistake.