Kedrosky
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Does the Obama Administration have less business experience? According to some semi-whimsical (I think) research in a new J.P. Morgan report that would seem to be the case. The author looked at private sector experience of 432 Cabinet secretaries whose activities touch most on the private sector across all presidential administrations since 1900. Here is the result:
There are obviously many, many issues here, not least of which is that the author isn’t entirely clear on what the y-axis percentage means, how different kinds of experience are weighted, etc. Nevertheless, it’s still thought-provoking.
The title is somewhat tongue in cheek but not inconsistent with the chart below.
The chart was originally published at FancyStats and then republished at InfectiousGreed. The chart analyzed bankruptcy filers in several different ways. I could find no information regarding the underlying database so cannot comment much on the findings. Some tentative guesses, just accepting the data as is, are the following: 1. More education seems to increase your chances of filing for bankruptcy. 2. College exposure seems to really enhance these probabilities. Those exposed to some college represent 55% of the failures. We know how bad the schools have gotten, but did anyone suspect that education could be dangerous to your wealth?
Lower income groups are more affected than upper. These data represent last year. I suspect the real crunch for upper income earners will come this and next year as more upper-end homes are foreclosed upon and BMW leases cannot be met, etc.
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- Image by inspecie.co.uk via Flickr
Despite the rally today, up well over 100 Dow points as I write this, caution is in order as discussed in this link from Paul Kedrosky to Bill Gross.
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Bill Gross: One of Our U.S. GDPs Has Gone Missing
Discuss (11) · Some good stuff from Pimco’s Bill Gross in his latest monthly missive. A sample:
[The last fifty years] produced a persistent increase in asset prices vs. nominal GDP that led to an average overall 50-year appreciation advantage of 1.3% annually. That’s another way of saying you would have been far better off investing in paper than factories or machinery or the requisite components of an educated workforce. We, in effect, were hollowing out our productive future at the expense of worthless paper such as subprimes, dotcoms, or in part, blue chip stocks and investment grade/government bonds. Putting a compounding computer to this 1.3% annual outperformance for 50 years, produces a double, and leads to the conclusion that the return from all assets was 100% (or 15 trillion – one year’s GDP) higher than what it theoretically should have been. Financial leverage, in other words, drove the prices of stocks, bonds, homes, and shopping malls to extraordinary valuation levels – at least compared to 1956 – and there could be payback ahead as the leveraging turns into delevering and nominal GDP growth regains the winner’s platform. …Rage, rage, against this conclusion if you wish, but the six-month rally in risk assets – while still continuously supported by Fed and Treasury policymakers – is likely at its pinnacle. Out, out, brief candle.
Important reading. More here.
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