Facebook IPO

I’m sorry that it seems like rather stoogish to post about the Facebook IPO now that it has already started trading.  However, it’s always a good idea to remind folks that the soundest way to “play” IPOs is to wait for them to trade for a while and form a solid base. (“Gee, thanks Brian. What the heck does that mean?”)

Facebook is trading at $39.61 this instant.  For a much-hyped Wall Street IPO, that’s a dud. But by waiting for a base to form over the next few months, we keep a safer edge in our favor.  We let the market sort out what the stock is really worth, what its prospects really are.  (Especially after the IPO lockup expires and insiders and underwriters can start to sell their shares and after the hype has diminished.)  Golly, maybe $39 is a screaming bargain.  Or its all downhill from here.  But if we wait for the supply and demand for shares work itself out, we’ll can be more confident that if it does burst up from a consolidation in a few weeks or months, the odds are more in our favor than blindly buying the first chance we get.

Everything looks rosy when a company IPOs.  (That’s Wall Street’s job: to separate your money from you.)  It’s your job to be patient and let the euphoria run off and use discernment.

(I hasten to add that, following my own advice, I’m not touching this one with a ten foot pole. Yet.)

of monopolies

The following are the basic data points from the PostCrescent.com article about the Outagamie County Airport “making itself competitive.”

• Airport revenues growing at 1% per annum.

•  Airport’s expenses are growing at 8%-11%  per annum. (Do the math…)

•  Airport borrows $3 million in bonds to become its own refueling monopoly. (I’ll add, after putting the regulatory squeeze on competition with an ’06 Ordinance.)

Reporter concludes the article, and I quote: “The purchase has no direct impact on county taxpayers because the airport generates its own revenues.”

I needed a good laugh this morning.

Can We Get Ahead by Picking Each Other’s Pockets?

Here is an excellent post from the Mises.org crew.  As a further enticement, here are the mini-headlines with in the post:

C + I + G = Baloney

Victims of a Failed Economic Theory

Government Spending Is a Parasite on the Private Economy

Or, in a paragraph:

The key fallacy embedded in Keynesian economics and the GNP equation is the idea that government spending adds to an economy’s health. In reality, the opposite is true: government spending subtracts from an economy’s health. The real economy is the private economy — there is no other. Government spending must come out of the private economy.

Auto-anthropogenic economic asphixiation

Basic physics show that the atmospheric mechanism describing how “greenhouse” gases are thought to warm the earth is flat out wrong. Period. Physically Impossible. Do not pass ‘go’ and do not collect billions in taxes.

http://arxiv.org/PS_cache/arxiv/pdf/0707/0707.1161v4.pdf

another AIG bailout?

If the weary taxpayers have to pour more money into AIG (or, more accurately, AIG’s counterparties) to bailout Greek shareholders of Greek banks owning Greek debt, then I predict a run on pitchforks at the hardware store.

Denninger’s commentary here.

Original German article in F.A.Z. linked here.

Translation to English here.

inflation vs deflation

Estimates are that global government banks and agencies have shoveled against the bubble upwards of $30 Trillion (that’s a ” T “) in direct aid and indirect guarantees.  Does that mean we’re facing a hyperinflationary hell?

Not necessarily.  If the trillions upon trillions were in the form of currency, then we’d be on a direct path through Thermopylae. Instead, the vast vast majority of the aid is in the form of credit reserves and contingent taxpayer guarantees.  So long as the reserves remain just that — reserves — and are not put into general use, then their effects on the system are limited only to keep zombie banks (and their creditors & establishment owners) above ground.

Behind the curtain — think Wizard of Oz — the central banks are trying to figure out the best way to remove these reserves from the system.  And government/central banks have never been able to time that shift correctly.  Fortunately, the public’s unwillingness to borrow and the bank’s unwillingness to lend keep the reserves out of reach.

(BTW, I facilitate the local Dave Ramsey Financial Peace University course. Believe me, people are increasingly very unwilling to borrow.  I mean not a thin dime  ever, ever again.  And we’re teaching our children that too. There are inter-generational consequences to this extended crisis.)

 

Austrians take Salamanca (Jeffrey Tucker – Mises Economics Blog)

Oh, to be free enough in time and money to attend a bona fide economics conference; such are the dreams of nerds. As the Austrian School economists congregate in Spain, we can only tune in via blog updates from the dapper Jeffrey Tucker.

The second full day in Salamanca – by Jeffrey Tucker

Here was a nugget from a presenter, a businessman from London. “…As he was attempting to transact business in Iceland, he recalled very well correspondence with the Iceland central bank. He asked whether he can send Euros in a business deal. They wrote back “no, we are in danger of going bust.” He praised the bank for being honest, and keeps the email as a historic memento.”