Carnival of the Capitalists

BusinessPundit ^ | 10/13/03 | BusinessPundit

[TastyManatees]

Carnival of the Capitalists

Welcome to the first edition of the Carnival of the Capitalists. Modeled after the Carnival of the Vanities, this weekly roundup is intended to be a "Best Of the Blogosphere" for posts covering business, economics, stocks, accounting, taxes, business law, and related topics. More info can be found in my first post on the subject.

There are some excellent posts here from some very intelligent people. I hope this eventually gets recognized by the major business news sources because, while bloggers may not always write as well as the pros, I think we can provide a different perspective on these issues. (So if any of you have connections, please notify them of this post.) More info can be found at the bottom of this post, but for now, here are this week's entries, in random order.

On the Benefits of a Market Economy in Iraq from Truck and Barter

I've criticized other economists for focusing blindly on the marginal financial costs of war. It's easy to focus solely on the costs, because they can be extrapolated by simple methods from current U.S. budget allocations. As I write this costofwar.com says the toppling of Hussein and the occupation of Iraq--i.e. setting up democratic political institutions, the reconstruction of schools, the reconstruction of the a modern electric grid, water supply, and road network, eliminating the Ba’athists, rebuilding of the Iraqi police forces and military, securing oil production, and etc.--reads just over $78 billion. This is an enormous sum of money--roughly $275 per person in the United States.

However, time has come for somebody to provide an estimate of the economic benefits of the Iraq war. I am not an expert in these matters--and I don't know who is. But the world needs to know that there will be substantial economic benefits--not immediately, and not primarily to U.S. residents. The benefits will accrue in the future, and primarily to Iraqi residents and their trading partners. These benefits will pale in comparison to the consumer-based market rush experienced after the downfall of Saddam.


NASD Firm Margin Levels Spikes to Record Levels from The Big Picture

On Monday, the NASD publicized the dangers of Margin in a report titled “Investing with Borrowed Funds: No "Margin" for Error.” That warning was particularly timely: NASD member firms’ margined holdings hit record levels in July of this year (see charts below, excel spreadsheet, bottom). As of that date, clients of NASD Firms had just under 26 Billion dollars in margined positions.

Prior to this, NASD margin had peaked at $21.4 Billion in March 2000 (along with the Nasdaq peak). Margin in brokerage accounts fell during the Bear market, bottoming near $5 billion dollars in December 2002. Its not surprising that this 76.3% drop is nearly identical to the Nasdaq’s valuation loss of 78.41% over the same period. Similarly, NYSE member firms saw their margin levels drop 53.25%, close to the peak to trough loss in the S&P500 of 50.51%.


Liberals Like Money Too from Tasty Manatees

At the risk of stating the obvious, the motivation in publishing a newspaper is not to disseminate unbiased, trustworthy news. If that were true, newspapers with massive staffs and intelligent reporters like the New York Times would be paragons of objectivity. The primary motivation of a newspaper publishing company is to obtain a high rate of return for its investors...in other words, profit.

[TastyManatees]

Carnival of the Capitalists is a collection of interesting posts by commenters on the market, economics, and business topics. I am proud to say my own piece was included alongside the others, as BusinessPundit has assembled an impressive array of intelligent and worthy posts. My only concern is that by placing my humble opinion near theirs, I will look the worse.

Tasty Manatees

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