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The difference between playing the stock market and the horses is that one of the horses must win.

This was the lament of a BlueWaters lunch last week. Some of the most humorous things Ive ever heard were about money. Perhaps it is because, as Voltaire said,

when it comes to money, everybody is of the same religion.

Perhaps it is because sometimes all a man can do is laugh. The stock market, as the experts tell us, is still trying to find a bottom. Meanwhile, the government announced last week that it would sell $55 billion in bonds next week as part of the massive borrowing plan to pay for its financial rescue packages. Some say that figure might have to expand to over $300 billion by the first quarter of 2009. And that does not include any possible life preserver thrown to the US auto industry. Clearly the bottom has not yet been reached.

Ive given my opinion several times over the past year about the possible dangers of other countries buying our bonds as part of their Sovereign Wealth Funds, and using the influence that investment provides as political leverage in the future. Id feel a little bit better about the proposed sale of stocks if the US government released some sort of statement that might indicate that they are at least aware of the possibility of such a conflict of interests in the future. I havent heard a word about it. And maybe that is to be expected. A drowning man doesnt much care who is throwing him a rope. I (still) would like to think that someone at the upper levels of government has their eye on this sort of thing, and a contingency plan for the future exists should the United States suddenly find itself leveraged into decisions it would not otherwise make.

I admit to being snowed under by all the negative economic news on the heels of the exhaustive (and exhausting) presidential campaign. I look back nostalgically to the pre-crisis and pre-election days when Janet Jacksons exposed breast might be the most compelling story of the day. Today she could run naked through the stock market and all anyone would want to know was what she was buying or selling.

By Myron Gushlak

Posted by Myron Gushlak at 11:57 AM | Permalink | Comments (0)

Wow! Those crazy Americans were serious about that

equal opportunity for all

crap. Who knew? The cartoonist, Sidney Harris described a cynic as

not merely one who reads bitter lessons from the past, he is one who is prematurely disappointed in the future.

Yesterdays election struck a blow against cynicism throughout the world. The election of a black man was bad enough, but when one factors in the fact that Barack Obama is extremely intelligent, stereotypes about the American electorate are disappearing faster than Christmas party invitations to Lehman Brothers executives. What about the Adlai Stevenson rule of politics that proved on more than one occasion that the American public will not vote for anyone they perceive as being more intelligent than themselves? What about the George W Bush rule (see above)?

Already this morning, Ive heard the word

Camelot

on two different American networks. Im reminded of the puzzles in the childrens Highlights Magazine when I was a child. Theres a picture of the White House with little children chasing a puppy under the Oval Office desk.

Whats wrong with this picture?

the caption asks.

Ah, but maybe this one time its a trick question. Maybe theres nothing wrong with this picture. What’s a cynic to do? Perhaps a donation to the Dorothy Parker Foundation would be in order.

What happens when a quarter of the population no longer feels disenfranchised? The words

potential

and

possibility

are creeping into my writing this morning. My personalized spell check is underlining them in green, uncertain from past experience what Im trying to say.

By Myron Gushlak

Posted by Myron Gushlak at 12:04 PM | Permalink | Comments (0)

There will be no end in the foreseeable future to talk about money. Some of it will be finger pointing to attempt to assign blame for this historic collapse. Some of it will be a constructive exchange of ideas meant to help the situation. The cost of health care will predominate for the next year, especially if the US presidential candidates follow through on their promises.

This week a study was released about the cost of diabetic care in the United States. In 2001, the cost of diabetic health care was $6.1. In 2008, that cost rose to over $12 billion, based largely on the rising costs of new drugs introduced over the past ten years. The most shocking thing about the report was not the doubling of the cost in such a short period of time, but the revelation that there is no evidence that the additional cost has improved the health of any of the patients. Several months ago, another story in the New York Times reported that there was a move toward a specific drug cancer treatment that cost the patient between $45,000 and $60,000 per year. The average patient lived an additional two years if they opted for this new treatment. If the average was two years, it is safe to assume that some patients lived four years longer, and some didn’t live any longer at all.

During the financial collapse of the past couple of months, a lot has been written and said about “mark it to market”. It was a way of describing the problem financial institutions that held these failed mortgage backed securities had in trying to determine the actual value of what they held. To explain as briefly as possible, if a trader sold a hundred shares of IBM stock, for example, at ten dollars a share, he would know that he could mark the value of that stock at ten dollars. What happened in the crash was that Lehman Brothers, again for example, may have held some mortgage backed securities that had a marked value of hundred dollars. Bear Stearns might have had a very similar, but not exact product, which they marked at eighty dollars. Goldman may have had a similar product that they valued at forty dollars. What is the value of that asset? The answer, and the reason for the collapse, was that the market could not be established. The products could not be “marked to market”.

If you find that confusing or contentious when talking about real estate, imagine the upcoming furor when someone tries to mark medical care for market. Human lives and not 401ks will be at stake. What is the value of diabetic health care? Is it based on the $6.1 billion number of 2001, or the $12 billion number today. There will be an almost infinite number of similar examples. What is the value of medical care? How can one mark it to market? And most importantly, who will decide?

By Myron Gushlak

Posted by Myron Gushlak at 12:39 PM | Permalink | Comments (0)