Anything to lessen the grip of the too big to fail…but then again they will just prey overseas; especially in emerging markets.Comments »
Monthly Archives: February 2012
Prepare For the TSA on the Highways of America
This article made me sick…
“By Rep. Marsha Blackburn (R-TN)
One of the great honors of my service to Tennessee is having the opportunity to represent Ft. Campbell which is home to the storied 101st Airborne, the 5th Special Forces Group and the Army’s 160th Special Operations Aviation Regiment which piloted Navy SEAL Team Six during the raid on Osama Bin Laden.
Each soldier who calls Ft. Campbell home has gone through some of the most intensive training on the planet which pushed their minds and bodies to their physical limits. In the end, those who make the cut have earned the right to be part of our United States military, are honored to wear its uniform, and are serving on the frontlines in the fight against global terrorism.
Unfortunately, the same cannot be said for our nation’s Transportation Security Officers (TSO’s) who Department of Homeland Security Secretary Janet Napolitano contends are our nation’s last line of defense in fighting domestic terrorism. Unlike “hell week” which faces potential Navy SEALs, becoming a TSO requires a basic level of classroom and on the job training. In many cases this rigorous training is less severe than the requirements of becoming a security guard in most states.
Believe it or not, only 7 years ago, TSO’s went by a more deserving title, “airport security screeners.” At the time, their title and on the job appearance consisted of a white shirt and black pants. This was fitting because airport security screening is exactly what’s required of the position. However, this is no longer the case.
In the dead of night, the Transportation Security Administration (TSA) administratively reclassified airport security screeners as Transportation Security Officers. The TSA then moved to administratively upgrade TSO’s uniforms to resemble those of a federal law enforcement officer. They further completed the makeover with metal law enforcement badges. Not surprisingly, government bureaucrats at the TSA left out one crucial component during the artificial makeover – actual federal law enforcement training as is required of Federal Air Marshalls.
While TSO’s may have the appearance of a federal law enforcement officer they have neither the authority nor the power. If a passenger brings a loaded gun or an explosive device into an airport screening area there is nothing a TSO can do until the local police step in to save the day.
If TSO’s are truly our nation’s last line of defense in stopping an act of terrorism, then the TSA should immediately end the practice of placing hiring notices for available TSO positions on pizza boxes and at discount gas stations as theyhave done in our nation’s capital. Surely, this is not where our federal government is going to find our brightest and sharpest Americans committed to keeping our traveling public safe. I would contend that we can surely strive for a higher standard and may want to look first to our veterans returning home from the battlefield.
Interestingly enough, as TSA officials like to routinely point out, their agency’s acronym stands for Transportation Security Administration, not the Airport SecurityAdministration. This fact has extended the TSA’s reach has far beyond the confines of our nation’s airports. Many of my constituents discovered this first hand this past fall as those familiar blue uniforms and badges appeared on Tennessee highways. In October Tennessee became the first state to conduct a statewide Department of Homeland Security Visible Intermodal Prevention andResponse (VIPR) team operation which randomly inspected Tennessee truck drivers and cars.
VIPR teams which count TSO’s among their ranks, conduct searches and screenings at train stations, subways, ferry terminals and every other mass transit location around the country. In fact, as the Los Angeles Times has detailed, VIPR teams conducted 9,300 unannounced checkpoints and other search operations in the last year alone. The very thought of federal employees with zero law enforcement training roaming across our nation’s transportation infrastructure with the hope of randomly thwarting a domestic terrorist attack makes about as much sense as EPA Administrator Lisa Jackson’s Environmental Justice tour.
In order to help rein in the TSA I introduced H.R. 3608, the Stop TSA’s Reach in Policy Act aka the STRIP Act. This bill will simply overturn the TSA’s administrative decision by prohibiting any TSA employee who has not received federal law enforcement training from using the title “officer,” wearing a police like uniform or a metal police badge. At its most basic level the STRIP Act is about truth in advertising.
As TSO’s continue to expand their presence beyond our nation’s airports and onto our highways, every American citizen has the right to know that they are not dealing with actual federal law enforcement officers. Had one Virginia woman known this days before Thanksgiving she may have been able to escape being forcibly raped by a TSO who approached her in a parking lot in full uniform while flashing his badge.”Comments »
Hurrah: Fed’s Fisher: Top 5 U.S. Banks Should Be Broken Up
“The biggest five banks in the United States are too powerful and should be broken up, Dallas Fed President Richard Fisher said on Wednesday.
The financial crisis has left the five biggest banks even more powerful than before, he told an event in Mexico City.
“After the crisis, the five largest banks had a higher concentration of deposits than they did before the crisis,” he said. “I am of the belief personally that the power of the five largest banks is too concentrated.”
The U.S. Dodd-Frank reform and consumer protection act includes mechanisms for regulators to break up large financial companies, but imposes high hurdles for such action.
“The purpose of Dodd-Frank was to reduce the concentration of power and we have a term called ‘too big to fail’ … perversely, these banks are now even bigger, they are too ‘bigger’ to fail than before.”
Last month a group of consumer advocates, academics and economists said they wanted to end “too-big-to-fail” banks, starting with Bank of America Corp.”Comments »
Martin Feldstein Says Not To Expect More Rosy GDP Prints Such as What Was Had Today
The U.S. economy grew 3 percent in the fourth quarter of 2011, faster than expected although don’t expect such pleasant surprises to continue in 2012, says Harvard economist Martin Feldstein.
“My personal view is that we’re not going to see the kind of 3 percent GDP growth that some people are calling for. I think we’ll be lucky if we have 2 percent,” Feldstein tells CNBC.
“There are strong headwinds. It’s going to be hard to maintain exports,” said Feldstein, chairman of the Council of Economic Advisers under President Ronald Reagan.
“Consumption got boosted last year because people cut their saving rate sharply. I don’t think that’s going to happen again. We’ve got higher oil prices, so it’s going to be a tough year.”
The country should consider itself lucky if it breaks 2 percent growth in 2012.
“Being under 2 percent, which is where we were last year, I think is more likely then higher rates,” Feldstein says.
The Federal Reserve has said that interest rates will likely stay low through 2014, which suggests the economy will not come roaring back anytime soon.
Unemployment rates currently stand at 8.3 percent, figures that Feldstein and many others say don’t reflect the true weakness of the labor market in that those who give up searching for jobs are not factored into that number.
Students graduating from school who put off looking for work aren’t counted either.
“The unemployment rate has come down by more than a full percentage point. But about half of that is because people have stopped looking for work or haven’t even started looking for work,” Feldstein says.
“So we haven’t seen the improvements in the labor market that the unemployment rate suggests.”
The one bright spot is that a weak economy means inflation rates will remain under control.
“I don’t see any short-term inflation problems. By short-term, I mean this year, next year. It’s hard to believe that in this economy, we’re going to see significant inflation problems.”
Some point out that the economy is likely stuck in a depression, which is marked by recessions followed by periods of weak growth that dip back into recession again.
Credit booms and busts as well as extended periods of deleveraging mark depressions.
A typical recession not associated with depression is normally marked by a short contraction and then a pronounced rebound.
Corrections in the business cycle tend to mark these garden-variety recessions.
“The Great Depression featured a double-dip of its own. Within the start and end dates of the Great Depression, there were two recessions, 1929 to 1933, and 1937 to 1938,” James Rickards, a hedge fund manager and the author of “Currency Wars: The Making of the Next Global Crisis,” writes in a U.S. News & World Report column.
“Recessions inside a depression are completely different phenomena than typical business and credit cycle recessions. They are the result of behavioral shifts in a larger wave of deflation and deleveraging,” Rickards says.Comments »
Coincidence or Subliminal Message ?
Why are so many presidents or hopefuls pictured as J.C. ? I have seen this image repeated with at least 4 or 5 presidents….Comments »
A Challenge To All Corporations
“Seven states have passed legislation officially recognizing companies with a conscience. Called benefit corporations, or B Corps, the firms strive to make a positive impact on society while also turning a profit. Economics correspondent Paul Solman reports as part of his Making Sen$e of financial news series.”Comments »
Having Fun With Your Tax Dollars
The ‘Real’ Rick Ross is Suing the ‘Idiot’ Rapper for His Name Back
Sheriff Joe Arpaio May Make an Ass of Himself, or Create a Constitutional Crisis
PHOENIX, Ariz. – Poll after poll in recent months has indicated that Americans have a high level of concern over Barack Obama’s eligibility to be president, with one poll showing fully half of the nation wants Congress to investigate the question.
But reporters for the traditional media – networks, major newspapers, major news corporations and conglomerates – mostly have giggled when talk turns to the serious question of just what the U.S. Constitution requires of presidents.
Nevertheless, media organizations from all political persuasions are seeking admittance to a news conference to be held by Sheriff Joe Arpaio of Maricopa County, Ariz.
The event is tomorrow at 1 p.m. Mountain Standard Time in Phoenix, 3 p.m. Eastern, and will be live-streamed by WND.
The topic of discussion will be an investigation by Arpaio’s Cold Case Posse into concerns about Obama’s eligibility. It’s the first time an official law enforcement report has addressed many of the allegations about the presumptive 2012 Democratic nominee for president.
The issues include Obama’s eligibility under the U.S. Constitution’s requirements, questions about his use of a Connecticut Social Security number and the image of his purported birth certificate from Hawaii.
In addition to the live-streaming, WND will make available to the public, the same day by email, the official report distributed to media by Arpaio’s investigators. Those interested in receiving the report can sign up for the free service.
Top national media organizations have indicated their plans to attend, and bookings for radio and television reports are in the works. Expected are reporters from the Associated Press, Reuters, Univision, the Washington Times and NBC, CBS and ABC affiliates, as well statewide radio networks, among many others.
Because of the circumstances, a decision was made to hold the press conference at the sheriff’s training center on the outskirts of Phoenix, rather than at the downtown office.
The event is expected to draw protesters who object to the sheriff’s office review of allegations that Obama may attempt to use a fraudulent document to have his name placed on the 2012 presidential election ballot in Arizona.
Without releasing any details, Arpaio has said the findings “could be a shock.”
He constituted a special five-member law enforcement posse last year to investigate allegations brought by members of the Surprise, Ariz., Tea Party that the Obama birth certificate released to the public by the White House on April 27 might be a forgery.
The posse is made up of three former law enforcement officers and two retired attorneys with law enforcement experience. Members have been examining evidence since September concerning Obama’s eligibility to be president under Article 2, Section 1 of the Constitution, which requires a president to be a natural-born citizen.
Among other issues, there also have been allegations of Obama’s use of a Social Security number that corresponds to a Connecticut address, even though the president apparently had no links there.
WND earlier reported a private investigation found that the Social Security number being used by Obama does not pass a check with E-Verify, the electronic system the U.S. Citizenship and Immigration Services of the U.S. Department of Homeland Security has created to verify whether or not someone is authorized to work legally in the country.
Arpaio’s investigation is the first official law enforcement look at the allegations surrounding Obama’s eligibility. Many of the private investigators who have examined it contend there are too many questionable circumstances to believe that everything regarding Obama is above-board.
Arpaio previously told WND that when he launched his Cold Case Posse it was with the possibility that he would clear Obama.
He said it wasn’t an issue he could ignore, after 250 members of the tea party organization “came to me and asked their sheriff to investigate Obama and the birth certificate.”
The WND TV live-streaming coverage of the news conference Thursday is possible through the support of the Western Center for Journalism.
The decisions in dozens of court cases over the last few years questioning Obama’s eligibility were typified by a recent decision in Georgia in which several individuals filed challenges to Obama’s name on the 2012 ballot and provided evidence to a hearing officer.
Even though Obama and his lawyer deliberately snubbed the case – the lawyer wrote the judge a letter in advance telling him Obama would not attend – the judge threw out the evidence presented by several attorneys and ruled in favor of Obama.
Similar ballot challenges are being filed in a long list of other states already.
The Arpaio investigators were given the case following a meeting held in the sheriff’s office Aug. 17, 2011, with tea party representatives from Surprise, Ariz., who presented a petition signed by more than 250 Maricopa County residents. The petitioners expressed concern that their voting rights could be irreparably compromised if Obama uses a forged birth certificate to be placed on the 2012 presidential ballot in Arizona or otherwise is found to be ineligible.
The tea party letter formally stated the following charge: “The Surprise Tea Party is concerned that no law enforcement agency or other duly constituted government agency has conducted an investigation into the Obama birth certificate to determine if it is in fact an authentic copy of 1961 birth records on file for Barack Obama at the Hawaii Department of Health in Honolulu, or whether it, or they are forgeries.”
The posse was constituted as a 501(c)3 organization, designed to cost the people of Maricopa County nothing, while enabling people from around the country to contribute to its mission.
Those wishing to send a tax-deductible contribution directly to the Cold Case Posse may do so by mailing a check or money order to: MCSO Cold Case Posse, P.O. Box 74374, Phoenix, AZ 85087.
WND has reported that dozens of experts with varying ranges of competency who have looked at the situation believe the birth documentation image released by Obama last year is not genuine.
A flying-banner and billboard campaign to let people know about the questions regarding eligibility that was started by WND CEO and Editor Joseph Farah also has raised the public’s awareness of the situation.
Farah wrote recently that the underlying question to be determined is whether the U.S. Constitution remains the law of the land, or whether it has become “an archaic old document that needs to be amended.”
“At its core, it’s really quite simple: Does Article II, Section 1 of the Constitution dealing with who can serve as president of the United States simply mean that any citizen age 35 or older is eligible? If so, why did the founders use a different term altogether – ‘natural born citizen’? What is a ‘natural born citizen’? Is it anyone born in the United States? If so, why have candidates born outside the United States been deemed eligible? Do we owe it to America’s future to go back in history to determine what that term actually means?
“Until now, as hard as it may be to believe, no official vetting of Obama’s credentials has been done – not by the 50 secretaries of state who oversee elections, not by the Federal Elections Commission that administers the nation’s elections laws, not by the Electoral College, not by any judge in America, not by Congress, not by anyone,” he continued.
Even before the results become public, Farah said he’s confident there will be a significant impact.
“I strongly believe it could be a game-changer,” he said.Comments »
The Myth of Buy and Hold: Even Buffett is an Active Trader
via Dorsey Wright Money Management
No one can dispute that Warren Buffett is a good investor—he’s made a ton of money over many years and it’s been well-documented. He holds court periodically and even his public calls have been pretty good, like his “Buy American. I Am.” editorial in the New York Times on October 16, 2008. (More recently he said bonds should come with a warning label, so take that for what it’s worth.) You could do worse than trying to emulate Warren Buffett.
So what is St. Warren actually doing? Well, fortunately some college professors did the heavy lifting. They analyzed Berkshire Hathaway’s quarterly filings from 2006 all the way back to 1980, 2,140 quarter-stock observations. CXO Advisory had a nice summary of their work. In the words of the professors:
…we observe a median holding period of a year, with approximately 20% of stocks held for more than two years. At the other end of the spectrum, approximately 30% of stocks are sold within six months.
Yep, Warren Buffett has 100% turnover. He blew out 30% of his portfolio selections within six months, and held about 20% of his picks for the longer run. That is active trading by any definition.
Read the rest here.Comments »
World Beta: Combining Value and Momentum Approaches
This is a really interesting semi-annual report from Hussman. In it he shows the returns of his main fund, both hedged and unhedged. The take-aways are that a) his stock picking has added a lot of value over the broad indexes and b) the hedging has added value, not on an absolute level, but a lot on a risk adjusted level by reducing volatility and drawdowns over the past decade. Click on chart to enlarge.
We have presented a lot of hedging ideas over time, the main one being a momentum, or trend, based system (A Quantitative Approach To Tactical Asset Allocation). Most of the results of a moving average system have similar properties in that the they do not increase absolute return over buy and hold, but rather reduce volatility and drawdown. (One can use other methods such as momentum/relative strength and or leverage to increase absolute returns like Relative Strength Strategies for Investing.)
Hussman’s fund is interesting, as it essentially increases equity exposure as valuations come down, and decreases exposure or hedges as valuations increase. Reminds me a lot of GMO. So in some ways it is a bit of a dynamic short volatility fund based on valuation (I know not quite the right description but works for purposes of this post). Here is an older post we did on hedging using CAPE, and found that a simple method of investing when the CAPE was less than average generates equity returns with less risk and drawdown.
Anyways, I think it is instructive to demonstrate how pairing a fund like this with a long volatility strategy would have worked since inception. So, I’m going to include the GTAA strategy from my paper here, only using the hypothetical 5 asset classes and the 10-month simple moving average. I’m also going to lop off a very conservative 2.0% for fund expenses, trading friction, etc.
To see the strategy and the returns, go here.Comments »
Time to Add the VIX to Your Equity Portfolio?
Author: Prieur du Plessis · February 29th, 2012 ·
The interim solving of the debt crisis in Greece has restored calm in the markets, with the CBOE S&P 500 Volatility Index (VIX) settling at 17.3 compared to its long-term average of 20.0. The big question now is whether the VIX will return to the low levels of 1991-1996 and 2004-2006.
To read the rest of the analysis and see some great charts, go here.Comments »
Gold Falls in ‘Manic’ Plunge
Gold futures fell as much as $100 to below $1,700 an ounce on signs that that the Federal Reserve will refrain from offering more monetary stimulus to bolster the U.S. economy.
In testimony before Congress today, Fed Chairman Ben S. Bernanke gave no signal that the central bank will take new steps to boost liquidity. The dollar rose as much as 0.8 percent against a basket of major currencies, eroding the appeal of the precious metal as an alternative investment. Yesterday, gold reached $1,792.70, a three-month high, even as coin sales by the U.S. mint slumped in February .
“People were expecting that the Fed would loosen policies, even if the perception is that the economy is doing well,” James Dailey, who manages $215 million at TEAM Financial Management LLC in Harrisburg, Pennsylvania, said in a telephone interview. “The investor sentiment changed as the Fed committed to nothing. This is the manic nature of the market.”
In electronic trading on the Comex in New York, gold futures for April delivery fell $90.30, or 5 percent, to $1,698.10 at 5:14 p.m., compared with yesterday’s settlement. Earlier, the price tumbled as much as $100, or 5.6 percent, to $1,688.40, the lowest for a most-active contract since Jan. 25.
The settlement at the close of floor trading was $1,711.30, down 4.3 percent, the most since Dec. 14. The price, down 1.7 percent this month, has gained 9.2 percent in 2012.
Read the rest here.Comments »
US Fund Managers Boost Equity Holdings in February
By Sam Forgione
NEW YORK | Wed Feb 29, 2012 9:39am EST
(Reuters) – U.S. money managers increased their equity holdings in February to the second highest level in 14 months, tracking a rally in the S&P 500 stock index, a Reuters poll showed on Wednesday.
The poll, which surveyed 13 U.S.-based fund management companies between February 17 and 28, found that firms allocated 65.6 percent of their assets into equities, a gain of nearly 3 percentage points since January.
February’s equity allocation figure is only exceeded over a 14-month period by 66.8 percent in December.
The benchmark S&P 500 – which has risen 3.5 percent in February and on Tuesday closed above the May 2011 intraday high of 1,370.58 points – is up more than 9 percent this year. Also on Tuesday, the Dow Jones Industrial Average closed above 13,000 for the first time since 2008.
Risk has made a huge comeback this year on signs of improvement in the U.S. economy, including job growth, manufacturing and consumer confidence, as well as an attractive risk-reward ratio on equities relative to other asset classes.
“There’s almost a crisis fatigue, and cash has been on the sidelines for such a long period of time and people want to have a better return than the 1.98 they get on the 10-year Treasury. They’re looking for more,” said Colleen Denzler, senior vice president and head of fixed income strategy for Janus Capital Group.
“So if there’s any chance that clarity and consistency is around the corner, they’re going to reach for high yield, they’re going to reach for equities, and that’s what we’ve seen since January.”
Read the rest here.Comments »
Why it took the Dow so long to eclipse 13K: Next Few Days are Crucial
By Mark Hulbert, MarketWatch
CHAPEL HILL, N.C. (MarketWatch) — Well, the Dow finally did it.
The “it,” of course, is closing above 13,000.
The real story here, however, is not that the Dow finally did so — but why it took so long. After all, it’s been nearly a month since the Dow first came within 1% of 13,000.
The market’s action over the next couple of days will be crucial in helping to answer this question.
If the Dow’s tentativeness in recent weeks was caused by nothing more than the routine difficulties of breaking through a resistance level, then the stock market should exhibit abnormal strength in the next couple of days, now that this resistance level has been broken.
If, in contrast, the market was bogged down by something more serious, then stocks’ behavior in coming sessions could very well be anemic at best — and possibly much worse.
I base these comments on a fascinating 1993 study, “Price Barriers in the Dow Jones Industrial Average,” which was published in the academic Journal of Financial and Quantitative Analysis. The authors were Glen Donaldson of the University of British Columbia in Vancouver and Harold Kim, who at the time was at Princeton.
The two researchers carefully analyzed the past behavior of the Dow Jones Industrial Average DJIA -0.41% as it approached round numbers, such as those ending with two or three zeroes.They theorized that, to the extent such round numbers represent genuine psychological barriers, the Dow’s behavior in the vicinity of those barriers would have been different than its behavior when it was well above or below those levels.
Dow closes above 13,000
Stock indexes rise but give up earlier gains after a morning of choppy trading that follows mixed economic data. Still, the Dow ends up closing above 13,000.
For example, it should have taken longer on average for the Dow to move through a multiple of 100 or 1,000 than through any other level. And by the same token, once a barrier was broken, the pace of the Dow’s change should have become faster than average.
This is exactly what the researchers found.
The researchers next conducted the identical test for the Wilshire 5000 Total Market Index XX:W5000FLT -0.56% , reasoning that few investors have been aware of that index’s level. That certainly seems a reasonable assumption; after all, how many of you are aware of where it closed on Tuesday, the day the Dow finally closed above the 13,000 level?
Read the rest here.Comments »
Why the ‘Risk-on’ Rally Will Not Last
By Richard Bernstein
The recent rally in global markets has been led by what most investors are now calling “risk-on” assets. Their counterparts, risk-off assets, have lagged. We question the longevity of this risk-on trade. Indeed, we believe that the secular investment theme remains risk-off.
Investors use the hackneyed term risk-on to refer to assets that have tended to outperform when investors are bullish. Commodities, real estate and emerging markets would be prime examples. Risk-off assets are perceived haven assets such as US Treasuries, German Bunds, the US dollar and even US stocks.
Yet few investors seem to understand the implied economic forecasts of the risk-on/risk-off trades. Our research shows that risk-on assets’ outperformance during the 2000s was directly related to the inflation of the global credit bubble. The most popular investments during the decade were all credit-related investments. When one buys risk-on assets, therefore, one assumes that the deflation of the global credit bubble will subside and that credit will again expand. The implied forecast of a risk-off trade is the exact opposite, ie, that the credit bubble will continue to deflate.
During 2009-10, it was widely thought that the deflating credit bubble was solely a US problem, and that economies in the remainder of the world were still healthy. Consensus at the time was that the US was de-basing the dollar, and the euro would soon be an alternative reserve currency. In 2011, investors fully realised that there were credit problems in Europe too, and talk of the euro becoming a reserve currency ended.
Despite 2011’s dismal emerging markets equity performance, investors continue to believe that the emerging markets are largely immune to the developed world’s credit hangover. But cycles often begin in the US, travel to Europe and then end up in the emerging markets. This cycle will likely follow that historical precedent. The emerging markets’ difficult tugs-of-war between inflation and growth indicate that the emerging markets, rather than decoupling from the developed world, were perhaps the biggest beneficiaries of the global credit bubble.
If risk-on assets are credit-related assets, then it follows they should outperform when credit is expected to expand, and underperform when credit is expected to contract. Accordingly, we expect risk-on assets’ outperformance to be periodic when policymakers attempt to reinflate the global credit bubble. Risk-on assets outperformed subsequent to the Federal Reserve’s attempts to stymie US financial sector consolidation, and they have been outperforming more recently as the European Central Bank made moves to thwart European bank consolidation.
The question is whether policymakers can fully alleviate the effects of a deflating global credit bubble. Longer-term investors should be sceptical.
Read the rest here.Comments »
Top 10 Hedge Funds By Net Gains Since Inception
Top 10 Hedge Funds By Net Gains Since Inception
1. Ray Dalio’s Bridgewater PureAlpha: $35.8 billion net gain since 1975
2. George Soros’ Quantum Endowment: $31.2 bn net gain since 1973
3. John Paulson’s Paulson & Co: $22.6 bn net gain since 1994
4. Seth Klarman’s Baupost Group: $16 bn net gain since 1983
5. Brevan Howard: $15.7 bn net gain since 2003
6. David Tepper’s Appaloosa Management: $13.7 bn net gain since 1993
7. Bruce Kovner’s Caxton Associates: $13.1 bn net gain since 1983
8. Louis Bacon’s Moore Capital: $12.7 bn net gain since 1990
9. Thomas Steyer’s Farallon Capital: $12.2 bn net gain since 1987
10. Steve Cohen’s SAC Capital: $12.2 bn net gain since 1992
LISTEN: Sotheby’s Q4, 2011 Conference Call
The Bears Take the Market Down a Smidgen
The bears took the market down in a unconvincing manner after a rally this morning. The NASDAQ made a brief rise above 3000; territory not seen since December of 2000. Gold got ha-hammered homo style for $93 sticks or 5.26%. Oil managed to pare losses and gain about $0.41 to close at $106.98. The dollar rallied $0.53 on Bernanke’s comments to $78.81…
DOW down 53.66
S&P down 6.50
NASDAQ down 19.87
[youtube://http://www.youtube.com/watch?v=TTPqPZzH-LA 450 300]Comments »
SHOCK: 1 IN 8 CHANCE OF CATASTROPHIC SOLAR MEGASTORM BY 2020
The Earth has a roughly 12 percent chance of experiencing an enormous megaflare erupting from the sun in the next decade. This event could potentially cause trillions of dollars’ worth of damage and take up to a decade to recover from.
Such an extreme event is considered to be relatively rare. The last gigantic solar storm, known as the Carrington Event, occurred more than 150 years ago and was the most powerful such event in recorded history.
That a rival to this event might have a greater than 10 percent chance of happening in the next 10 years was surprising to space physicist Pete Riley, senior scientist at Predictive Science in San Diego, California, who published the estimate in Space Weather on Feb. 23.
“Even if it’s off by a factor of two, that’s a much larger number than I thought,” he said.
Earth’s sun goes through an 11-year cycle of increased and decreased activity. During solar maximum, it’s dotted with many sunspots and enormous magnetic whirlwinds erupt from its surface. Occasionally, these flares burst outward from the sun, spewing a mass of charged particles out into space.
Small solar flares happen quite often whereas very large ones are infrequent, a mathematical distribution known as a power law. Riley was able to estimate the chance of an enormous solar flare by looking at historical databases and calculating the relation between the size and occurrence of solar flares.
The biggest solar event ever seen was the Carrington Event, which occurred on Sept. 1, 1859. That morning, astronomer Richard Carrington watched an enormous solar flare erupt from the sun’s surface, emitting a particle stream at the Earth traveling more than 4 million miles per hour.
When they hit the Earth’s atmosphere, those particles generated the intense ghostly ribbons of light known as auroras. Though typically relegated to the most northerly and southerly parts of the planet, the atmospheric phenomenon reached as far as Cuba, Hawaii, and northern Chile. People in New York City gathered on sidewalks and rooftops to watch “the heavens … arrayed in a drapery more gorgeous than they have been for years,” as The New York Times described it.
Auroras may be beautiful, but the charged particles can wreak havoc on electrical systems. At the time of the Carrington Event, telegraph stations caught on fire, their networks experienced major outages and magnetic observatories recorded disturbances in the Earth’s field that were literally off the scale.
In today’s electrically dependent modern world, a similar scale solar storm could have catastrophic consequences. Auroras damage electrical power grids and may contribute to the erosion of oil and gas pipelines. They can disrupt GPS satellites and disturb or even completely black out radio communication on Earth.
During a geomagnetic storm in 1989, for instance, Canada’s Hydro-Quebec power grid collapsed within 90 seconds, leaving millions without power for up to nine hours.
The potential collateral damage in the U.S. of a Carrington-type solar storm might be between $1 trillion and $2 trillion in the first year alone, with full recovery taking an estimated four to 10 years, according to a 2008 report from the National Research Council.
“A longer-term outage would likely include, for example, disruption of the transportation, communication, banking, and finance systems, and government services; the breakdown of the distribution of potable water owing to pump failure; and the loss of perishable foods and medications because of lack of refrigeration,” the NRC report said.
But such possibilities likely represent only the worst-case scenario, said Robert Rutledge, lead of the forecast office at the NOAA/National Weather Service Space Weather Prediction Center. The potential dangers might be significantly less, since power companies are aware of such problems and can take action to mitigate them.
For instance, companies may store power in areas where little damage is expected or bring on additional lines to help with power overloads. This is assuming, of course, that they are given enough warning as to the time and location of a solar storm’s impact on the Earth. Satellites relatively close to Earth are required to measure the exact strength and orientation of a storm.
“It’s like being able to see a cyclone coming but not knowing the wind speed until it hits your boat 50 miles off the coast,” Rutledge said.
Image: NASAComments »