American exceptionalism.

As part of the "60 second lecture series" at the University of Pennsylvania, Beth Linker, a Penn professor of history and the sociology of science, succinctly describes one way in which America is indeed exceptional - in denying healthcare as a birthright: 

Gratuitous advice.

Amazing the counsel online advisers have been offering me lately:

1. From "12 Life Lessons You Can Learn From Jane Austen" (Bill Deresiewicz, HuffPost):

Listening to people's stories is the nicest thing you can do for them. (from Mansfield Park)

A person's story is the most personal thing about them, and paying attention to it is just about the most important thing you can do. Our stories are what make us human, and listening to someone else's stories - entering their feelings, validating their experiences - is the highest way of acknowledging their humanity.

 
Scene from Mansfield Park.

2. From "How to be a MILF" (1) (Sarah Maizes, HuffPost):

Have sex before you go out.

You and your partner plan a nice dinner out: Some wine, a little garlic bread, the linguine and clam sauce special...you following me here? My point is that unless you and your partner agree that nothing is sexier than rolling around with a belly full of carbs, smelling of garlic and clam sauce, it might be nice to have a little "pre-Date" nookie with your partner. And added bonus: you'll feel gigglier and closer all night long.

3. From "18 common phrases to avoid in conversation" (Mary Mitchell, Seattle-based corporate-etiquette expert, RealSimple):

What not to say during a job interview: "My current boss is horrendous."

It's unprofessional. Your interviewer might wonder when you'd start bad-mouthing her. For all you know, she and your current boss are old pals. Instead say: "I'm ready for a new challenge" or a similarly positive remark.

4. From "Five reasons to be concerned your husband is a psychopath" (Jon Ronson, HuffPost):

He was very gallant when you first met him, not so gallant now.

Psychopaths can be very superficially charming. I knew a woman, Mary, who met an extremely gallant man while Internet dating. He was so gallant he'd even walk on the road side of the sidewalk. (I am so ungallant I didn't even know that was a thing. I am not a psychopath.) Mary married her man and he turned out to be a pedophile and a bigamist and a fraudster - a textbook psychopath. Okay, give your husband the benefit of the doubt if the intensity of his gallantry has diminished since the courtship days. That's normal. We can't keep that level up. But if he's replaced the gallantry with being a remorseless, unempathetic bastard, you may have a problem.

5. From "See, I told you so" (David Olive, EB):

Never eat eggs at night, listen to jazz only at night, don't date a woman whose favorite film is ET.

Works for me.

Note: The reference is of course to the Moro Islamic Liberation Front, the Filipino terrorist group.

 

Flash: capitalism more popular in China than the U.S.

 
Source: The Economist.

Here's a chart depicting the world turned upside-down. The world I was born into, that is, circa 1957.

How to describe Germany, Brazil and China, the nations whose people are most likely to say "the free-market system is the best"?

To start and end with, none of them have "free-market" systems as Stephen Harper, John Boehner, Richard Branson or Donald Trump would understand the term.

They are what was described in our Econ 101 classes as "command economies," where governments make most of the decisions about capital deployment, not private-sector CEOs.

"Free enterprise" in these nations is a concept whose meaning is determined by the Ministry of Finance, the Ministry of Industry, the infrastructure bureaucrats and so on, at both the national- and subsidiary-government levels.

Germany, Brazil and communist China also have this in common: recent years of strong economic growth. Not so the U.S., where "faith in the free market is at a low," says the Economist. In the most recent survey, last year, just 59% of Americans agreed "strongly" or "somewhat" that the free market is the best system for the world's future, as the Economist puts it. That's down from 80% when the question was first asked in 2002 - a U.S. recession year, as it happens. "And among poorer Americans, under $20,000 [in annual income], faith in capitalism fell from 76% to 44% in just one year."

Why the popularity decline for capitalism in the nation best-known for it?  

Speculates Barry Ritholtz of Big Picture, third-most popular economics blogger in the U.S. measured by April uniques:

I wonder if the unbridled embracing of Free Market ideals, taken to excess the past few decades — self-regulation, Efficient Market Hypothesis, radical deregulation, which were eventually followed by the massive financial collapse and subsequent government bailouts of girlie men bankers – might have anything to do with this? [Author's emphasis.]

"Girlie men bankers." Yes, those would be the ones spared liquidation by Uncle Sam and express indignation that (a) they actually needed rescuing; (b) that they weren't to blame for the catastrophic global financial meltdown of 2008-09 and resulting Great Recession that has cost about 11 million Americans their jobs; assert that they had know idea that over-caffeinated traders in their organizations far below their pay grade were jeopardizing their institutions and the global system by loading up on subprimes, derivatives and other toxic waste - which confessed unawareness should have been a firing offense, (d) are still refusing to extend loans to creditworthy individuals and job-creating businesses; and (e) are paying themselves giganto bonuses when the view on Main Street, understandably, is that they should have long ago been fired, since by the bankers' feckless actions that's what's happened to them or people they know.

I believe it was Governor Schwarzenegger who popularized "girlie men" for Democrats in the not-so- Golden-State by the time Arnie moved who wouldn't do his bidding in cutting social services but not raising taxes on the wealthy, in the 1978 birthplace of the Howard Jarvis tax revolt.

We need a gender-neutral term for real culprits in failing to accept responsibility for their economically destructive malevolence, deliberate or unintended. After all, none of the dozen largest U.S. banks requiring a bailout lest every one of America's other 7,000 or so regional and local banks collapse along with them was headed by a woman.

 

"You can take it to the bank."

Here are some neat posters from the 1920s extolling the protective role of the newish Federal Reserve System, from the archives of the San Francisco Fed and currently featured on Liberty Street Economics, the blog of the New York Fed.

America's third and lasting stab at creating a central bank occurred in 1913, prompted by the banking "panics" of 1873, 1893 and 1907. Time was, legendary financier J.P. Morgan was a one-man central bank, able to arrest panics simply by hauling Wall Street peers into his office and ordering them to inject liquidity into a then primitive system.

But by the 1907 panic, the populist distrust that caused the dismantling of the previous two central banks - most famously by President Andrew Jackson - had been redirected from a government feared of over-control of the markets to high-rolling financiers for whom economic stability was, to put it kindly, not a priority in their ardent pursuit of vast private wealth. (Sound familiar?)

Mindful that the short-lived First and Second Banks of the United States had failed to win public favour, the Federal Reserve System went on a p.r. campaign to win popular appeal and avoid the fate of the two earlier central banks. (The Federal Reserve Board, headed by Ben Bernanke, is is the system's presidentially appointed Board of Governors; in addition, there are 12 Federal Reserve Banks located in America's major cities.) The posters shown here were displayed in the front windows of America's then-12,000 or so indpendently owned and operated banks as a reassurance against future panics ruinous to depositors.

The notion that an idea was so sound that "you can take it to the bank" had its origins in this era.

H/T: Big Picture. 

 

An imperfect case for buying "dead money" stocks.

Motley Fool is a venerable consortium of investment analysts closely watched by Main Street investors. Lately it objects to the Wall Street tag "dead money" being applied too liberally to stocks.

The term applies not to losses, necessarily, but the absence of investor gains. A better term might be "playing dead," since the mutt is still healthy, it's just been ages since he was jumping up on visitors.  

"While there might be a case to be made for any stock not going up, when the phrase "dead money" is thrown around it typically is talking about a stock that hasn't gone up in the past and therefore is expect to not go up in the future," explains Fool contributor Matt Koppenheffer, a Nevada-based former private equity manager and investment banker.

"The problem with focusing on stock performance in this way is that stock price is not always indicative of the performance of the underlying company. So to suggest that since a stock hasn't performed that it won't perform is...well, it's not a theory I'd like to put to work in my portfolio."

Trouble is (for me), too many dead-money stocks of the past decade have stayed dead. The reasons often are deep-seated, so I'd be surprised if they didn't remain comatose for the next several years, if not indefinitely.

My problem is that I'm having the hardest time, admittedly off the top of my head - thinking of stocks long dismissed as dead money suddenly springing to life. Which is the Fools' thesis, that some of the best buys right now are stocks that have long languished.

The one example that comes quickly to mind of a dead-money stock that has lately sprung to life is Ford Motor Co., whose average annual return over the past five years is an eye-popping 19.9%.

Fool cautions about past performance often being no indicator of future returns. Word for word the fine print in mutual-fund ads, and it's good that government requires that investor warning - though in the ads' case, the caution is that this year's brilliant returns might not be repeated. Fool's argument is the reverse in the case of specific stocks.

But as I said, I'm having a tough time coming up with examples. And Fool doesn't help, noting only that the "dead money" appelation for Microsoft, Intel, Cisco, Citigroup, Apple, Goldman Sachs and a few others isn't warranted. They might go gang-busters over the three- to five-year time horizon Fool counsels.

I'm with Warren Buffett that I only want to buy stocks I'm keen to own forever. But speaking of Berkshire Hathaway Inc., that stock's been dead money for the past five years. The Fool theory that there's a difference between "past dead money and "future dead money" sort of falls apart here, because Berkshire's 5-year average annual return is 5.3%, and over the past decade it's been 7.3%. Unless you count 7.3% as a satisfactory return - as you well might, since it's exactly the average annual return on all stocks over the past century - that's not an impressive investment.

Fool argues that so many of the aforementioned "dead money" stocks were wildly overvalued circa 2000, before the huge dot-com and tech bubbles burst. Fair enough. But GE has had a decade since then to recover to something approaching its inflated stock-market value of 2000 upon the retirement of Jack Welch, possibly the most over-celebrated CEO of the past century. Yet in a decade of stewardship by a non-egomanical Jeff Immelt, GE investors have suffered a miserable annual return of -8.7%. At some point, like a good baseball manager, you say "I've seen enough" and pull the pitcher who's poised to give up even more runs.   

As noted, I'm a patient investor - my time frame is forever, more patient even than the Fools'. (Whom I commend for dissuading day-traders and other short-term speculators.)

But guess what? Past performance usually is indicative of a stock's direction "going forward," to quote the Fools. At least in the case of blue-chips, though certainly not flashes-in-the-pan like the late 1990s run-up of Nortel Networks Corp. or Krispy Kreme Doughnuts Inc.

As investors, we have a limited set of tools. By definition, assessing likely future stock performance requires looking at historical record ("past dead money"), unless you have the gifts of a late-night infomercial soothsayer.

You look at the commanding market share of a well-run company, which gives it pricing power; and at its financial resources to fend off upstart rivals. You look to see if most of its products are #1 or #2 in their categories. And you look at the character of management. And the culture of the enterprise.

On the latter point, both Coca-Cola Co. and Procter & Gamble Co. haven't hestitated in the past decade or so to cashier CEOs they felt were not working out. That's rare. That's the character of a good board. As to culture, those two firms and McDonald's Corp. and 3M Co. are relentless innovators, whose culture is all about new-product development. So that's another yardstick: What percentage of sales and profits does the company derive from products that have been on the market five years or less?  

And you look at the industry itself. There are, for instance, no good airline stocks - never have been, likely never will be. It's just too easy for would-be rivals to launch a competing carrier that will underprice the incumbents and vapuorize everyone's profits in a price war.

The same goes for automobiles, yet another of the great 20th-century inventions that you would think investors should have made a ton of money from. But no. Production and marketing costs are high, competition is rampant, and consumers are fickle, accounting for the spikes and troughs in Prius sales, for instance, according to volatile pump prices.

I wouldn't buy Ford now, as mightily impressive as its turnaround has been, because the big gains have been made and it is, after all, an auto company. Auto companies make lousy investments. Even after shedding the albatross of Chrysler, Daimler AG (the former DaimlerChrysler AG) boasts a five-year average annual return of just 3.2%. And this is arguably the best-run automaker in the world - indeed, the firm that invented the internal combustion engine we still use - with a wider global reach than its peers.

It's just too simple to assert, as Fool does, that a stock "wrongly" dismissed as dead money now and forever is likely a good buy because, on that consensus opinion, it's priced so cheaply. I'll go out on a limb here with a good word for Royal Bank of Canada and note that it's five-year average annual return is an unimpressive 4.6%.

Of course, that period coincides with the epic global financial meltdown, when all financial stocks took a pummeling. That RBC stock still appreciate at all during that time is impressive. Then you look further back in history, and see that RBC's 10-year average annual return is 13.2%. Closer, that is, to the stock's true history and potential. And I won't mention how much more profitable RBC will become if, as it has said, it proceeds to dispose of its albatross of chronically underperforming U.S. banks, goosing its overall margins and padding its capital reserves in one go.

Nothing says do-nothing stocks can't rise from the dead. It just doesn't happen very often. I couldn't help noticing that in financial blogger Barry Ritholtz's list of five non-financial vocations from which investors can learn, published recently in the Washington Post, the first one he cites is "Historian."

I majored in history, so I have a bias that says a stock I'm told is "just resting" is destined to remain nailed to the perch rather than for reasons unknown begin flying loop the loops. There are too many tood stocks out there to take chances on ones that have disappointed investors for years. Exceptions make the rule, but the retirement kitty goes into stocks with a strong pulse.

 

   

Enjoy your weekend.

 
"Make it two. My neighbors elected a socialist MP." (Getty Images)

 

Weekend reads.

Geopolitics

 
Dominique Strauss-Kahn, who quit this week as managing director of the IMF after sexual assault charges were brought against him. (AP)

How to topple Gadhafi. (Barak Barfi, New Republic) Turn Libya's tribes against him.

How DSK's sex-assault charges will shipwreck U.S.-French relations. (Paul Berman, New Republic)

Political circus

 
TSA officer at Sea-Tac (Seattle Tacoma International Airport). (AP)

My sex life with the TSA. (Naomi Klein, Reader Supported News)

Dubya has trousered $15 million in speaking fees since politcal exit. (Erik Hayden, National Journal) Dubya made one state visit to Canuckistan as president, two in his first post-presidential year alone for speaking gigs in Calgary and Toronto. In which his most memorable utterance was..."Hi y'all."

Why the GOP is committing fracticide. (Ben Adler, Reuters)

The demo the GOP lost in NY-26 that should terrify Republicans. (Jonathan Chait, New Republic)

 
Elizabeth Warren. So vexed is the GOP with Obama's pick to run the new Consumer Financial Protection Agency that they plan to prevent even a recess appointment.

The cult of Elizabeth Warren. (Tiffany Stanley, New Republic)

More solid proof that Obamacare is working. (Rick Ungar, Forbes) Millions of young people, least costly to the system, are buying insurance for the first time and bolstering premium income.

Detroit auto rebound is a 2012 asset Obama should exploit. (Jonathan Cohn, New Republic)

Obama's no intellectual. Good. (David Greenberg, New Republic)

 
Wreckage from tornados of record number and strength sweeping across the U.S. Southeast this year. (AP)

Has Obama restored FEMA's good reputation under Clinton? (Bradford Plumer, New Republic)

Obama denialist Shelby Steele keeps getting more pathetic. (Jonathan Chait, New Republic) Unapologetic about his pre-2008 tome that Obama was unelectable, Steele now comically lays into the president's foreign policy.

Annals of commerce

Red Bull's billionaire maniac. (Duff McDonald, Bloomberg BusinessWeek)  

The dismal science

America can slip free of its fiscal crisis by embracing the shock therapy by which Canada became the healthiest major economy of our times. (David Rosenberg, Globe and Mail) Rosenberg is former New York-based N.A. markets chief analyst for Merrill Lynch.

Untold good-news story: U.S. Midwest job growth is outpacing the nation on rebound in manufacturing jobs. (Barry Ritholtz, Big Picture)

U.S. is still a manufacturing superpower, it's the jobs that have been hollowed out. (Paul Krugman, NYT) 

 
Courtesy IMDB (Internet Movie Database).

Arnold's true love child is California's deficit crisis. (Kevin Drum, Mother Jones)

Income inequality worldwide is a failure of capitalism. (Kentaro Toyama, Atlantic)

Crime & non-punishment

Banker criminality demands prosecution. (Barry Ritholtz, Big Picture)

The People vs. Goldman Sachs. (Matt Taibbi, Rolling Stone)

Fun couple

 
Bibi and Barry. (Reuters)

Obama to Bibi: It's not me you need to convince, it's the Palestinians. (Tony Karon, Time)

What Bibi gains by misrepresenting Obama's Mideast policy. (Joe Klein, Time)

Netanyahu continues to needlessly alienate Israel's few friends. (Jeffrey Goldberg, Atlantic)

Don't be fooled, Bibi, by the scores of standing ovations in your speech to the joint session of Congress. (Jane Eisner, Guardian) Republicans in the audience cynically want to separate Dems from traditionally Dem Jewish donors. Meanwhile, American Jews are wearying of Netanyahu's intransigence.

Urban affairs

 
In a province almost entirely covered with mountains, the Lower Mainland accounts for much of what little arable land B.C. possesses. Protecting it from development is essential but pushes up land - and housing - costs. (CP)

Vancouver's now the priciest housing market in N.A., third dearest in the world, after Hong Kong and Sydney. (Steve Ladurantaye, Globe and Mail) Hemmed in by mountains and Fraser Valley farmland, Vancouver's running out of room to grow. (Jeff Lee and Kelly Sinoski, Vancouver Sun)

America's greatest mayor? (John Avlon, Daily Beast) How Rick Baker, against long odds, rehabilitated St. Petersburg.

A&E

How Roger Ailes (show right), erstwhile Nixon confidante, built the Fox News fear factory. (Tom Dickinson, Rolling Stone)

The Stockholm Syndrome theory of why we endure - and do benefit from - impossibly long novels. (Mark O'Connell, The Millions)

Why we lie about getting through our only partially read War and Peace and Middlemarch. (Elizabeth Minkel, New Yorker)

In defense of Wikipedia; McLuhan as father of the Internet; and the long-overdue death of the "expert" priesthood. (Maria Bustillos, The Awl)

Tina Brown's Newsweek/Daily Beast strategy: More celebrity bylines! (Rachel Morris, New Republic) Um, isn't that what Tina did at Tattler, Vanity Fair, New Yorker and Talk! Most of which lost money under her stewardship?

George Will's strangely selective pedantry. (James Downie, New Republic) Nothing surprises me about a pundit who predicted the durability of the Soviet Union in a Nov. 9, 1989 WaPo column, which hit the streets just as the Berlin Wall started coming down.

Social studies

Our irrational fear of forgetting. (Margaret Morganroth Gullette, NYT)

 
Can 550 million users be wrong? Just remember, every word and image you post can be viewed by millions, among them folks who don't mean you well - reporters, police and disgruntled ex's. (Reuters)

Facebook is not your friend. (Allie Townsend, Techland/Time)

The secrets of thin people. (Lorie Parch, RealSimple) For starters, they buy food in bulk - none of those highly processed meals-to-go for them.

 

Vermont, synonym for "progress."

The "Socialist Republic of Vermont," as the late reactionary Robert Novak called it, has just had signed into law by Governor Peter Shumlin a plan to provide America's first single-payer healthcare for all, covering all 620,000 Vermonters.

Vermont, of course, was first in the nation to ban slavery (1777), to close a nuclear power plant for environmental reasons, and to legalize same-sex unions. (But "unions," mind, not marriages. This is still America, after all.)

 
As if Vermont weren't already blessed. (Getty Images)

In the U.K. Guardian, an admiring Amy Goodman writes:

Vermont has become an incubator for innovative public policy. Canada's single-payer healthcare system started as an experiment in one province, Saskatchewan. It was pushed through in the early 1960s by Saskatchewan's premier, Tommy Douglas, considered by many to be the greatest Canadian. It was so successful, it was rapidly adopted by all of Canada. (Douglas is the grandfather of actor Kiefer Sutherland.) Perhaps Vermont's healthcare law will start a similar, national transformation.

Tommy Douglas faced down a 1962 doctors' strike and introduced his then-novel Medicare gradually. Indeed, he waited 18 years from the time of his first becoming Saskatchewan premier, in 1944, to introduce his controversial plan. The rest of Canada hardly rushed to embrace it, Ontario's conservative premier of the time being a particularly obdurate holdout. With similar caution, "Green Mountain Care" (what else?), spearheaded by Shumlin and Bernie Sanders, the only avowed Socialist in the U.S. senate (he caucuses with the Dems), will not be rolled out until 2014.

But Goodman is right, on all counts. Medicare, a term which in Canada refers to healthcare for all, not just seniors, was introduced nationally in 1966 and today is the thing about Canada that Canadians say they most like. (Conversely, Toronto is the thing most Canadians say they most dislike.) And in 2004 CBC program seeking to determine whom we considered "the greatest Canadian," Tommy Douglas won out over the likes of Wayne Gretzky, Pierre Trudeau and even the nation's founder, John A. Macdonald.

But I'm just not sure if this will migrate. I love to think it will.

When he was governor of Wisconsin, Tommy Thompson scrapped traditional welfare in place of a more costly and comprehensive program, Wisconsin Works, that could be crudely described as "welfare to work," but was more nuanced and compassionate than that sounds. The state's chronically unemployed were paid to get their high-school equivalency and post-secondary education, with their daycare expenses covered for that time. Social workers were assigned to Wisconsinites committed to improving their lives, helping guide them through the government bureaucracy and with work placements. The state's welfare rolls shrank dramatically.

That was in the later Clinton years, and hopes of other states adopting Wisconsin's experiment ran high. But in the decade or so since, the Wisconsin approach has not been taken up.

That said, for pragmatic economic reasons, there's reason to hope that "Granite State Care" and "Empire State Care" knock-offs would soon emerge, as neighboring New Hampshire and New York sought to also (a) take better care of their people, (b) reduce healthcare costs, and (c) prevent their best and brightest citizens from defecting to Vermont.

Fingers crossed.

 

Sam Walton would be proud.

 
As Sam used to say, "Pile it high!" A Wal-Mart beer display at a Florida store.

From People of Walmart.

 

I find this extremely objectionable.

Here's what a gratuitous Joshua Green (who otherwise is reliably enjoyable) has to say about Rick Santorum's high-school yearbook photo:

A quick office straw poll here at The Atlantic, conducted amidst uproarious laughter, confirms that this is, in fact, the single worst year book photo that most of us have ever seen. An outright disaster. I suppose it's Santorum's misfortune to have been in high school during this era. I'm pretty sure that 1976 wasn't too kind to anyone. But still. Wow--he looks like McLovin in polyester. I have yet to meet the political consultant talented enough to spin this one. My condolences to Santorum. Brave of him to have struggled through this and made something of this life.

Hey, I graduated high school in 1976. And I looked way worse than Santorum (shown right). I was saddled with geeky aviator glasses, printed dress shirts covered with grape vines and other awwwful designs. On special occasions I "made the scene" in one of my three (3) pant suits, among them a yellow crimpoline (sp?) number with pearl dome buttons. (There's worse, but I'm not about to commit it all to pixels.)

I object to discrimination on any basis, and that includes fashion victimhood. This is a cheap shot, Josh. I guessing from your own photo that you graduated in later, more fashion-correct times. You might even have had a wardrobe consultant. (One of my friends did. His name was Icepick.)

I mean, show some pity. Think of all the neat girls at Carmel High School in Mundelein, Ill. that Rick daren't approach for fear of rejection. Think of the ceaseless ridicule. ("Hey Rick, where's your slide rule?" "Your Mom cut your hair again? She use the same bowl?")

There's a legion of us that struggled to emerge from a mid-1970s cocoon. Please, for the love of G-d, don't make us drag our tragic childhoods all the way to the grave.

(Lest any of you mistake this for one of my rants, I've just applied for an internship at the Onion.)

Related

Chris Good has a collection of high-school photos of declared and possible 2012 GOP presidential contenders,