Steve Jobs

The government’s central planning of Olympic ticketing has been a complete failure, perhaps best evidenced by the THOUSANDS of empty seats at many of the events.  The government has managed to monopolize an entire industry and screw it up with Soviet-level inefficiency… then make it a criminal offense for the private sector to fix it. This is typical of how a government operates. They take a very cavalier attitude because they don’t care about results, they only care about maintaining control. As a result, they run their operations based on the premise that people really have no choice. With regard to Olympic ticketing, this is mostly true. My choice was either to go through the system legitimately (albeit painfully), deal with some dodgy backroom ticket broker at three times the price, or just watch it on television.

In the eyes of our most decorated ‘scientists’, the brilliance and guile of Ingvar Kamprad, Sam Walton, Ray Kroc, Asa Candler, Richard Branson, Steve Jobs, and millions of others are far less important than an effective government bureaucracy. His entire book, in fact, is an impassioned argument for even more government control and redistribution of wealth. Right… because it’s been working so well. These ideas are totally absurd. Yet this what passes as science today. And because it’s science, society simply believes it to be true. No doubt, people in the future will look back, and they’ll wonder… but they won’t understand one bit.

If we understand the difference between parasitic wealth and real value/wealth creation, we can properly align the tax structure to reality: the tax on authentic wealth creation should be low, to encourage wealth creation and the employment (broad-based wealth creation) generated by legitimate value creation. We must also understand that the Central State now protects and enables parasitic skimming as the primary function of the nation's financial system. Thus the entire financial system is parasitic on the wealth of the nation. Financial parasitic incomes should be taxed at 99%. If Mitt Romney reshuffles assets created by others and skims $100 million, 99% of that parasitic wealth should be returned to the nation via taxes. The parasite still gets to keep $1 million, more than enough to live well but not enough to buy the presidency, the Congress and the regulatory machinery of the Central State.

So Facebook keeps falling, and is now floating around the $27 mark.  We’re a third of the way down to my IPO valuation of FB as worth roughly $2-4 a share (or 5-10 times earnings), although I wouldn’t be surprised for the market to stabilise at a higher price (at least until the next earnings figures come out and reveal — shock horror — that Facebook is terrible at making money). The really stunning thing is that even after all these falls, FB is still trading at 86 times earnings. What the hell did Morgan Stanley think they were doing valuing an IPO without any viable profit model at over 100 times earnings? The answer is that this was an exit strategy. This IPO was about the people who got in early passing on a stick of dynamite to a greater fool which incidentally is precisely the same bubble mentality business model as bond investors who are currently buying negative-real-yielding treasuries at 1.6% hoping to pass them onto a greater fool at 0.5% (good luck with that).

In Christian ethics – although not in exclusivity – there are a number of vices, most often referred to as the seven deadly or capital sins, which depict the antithetical side of virtue. Of the seven, avarice or greed (Avaritia in Latin) comes at the head of the list for me since its practice affects the wellbeing of others, and not just those who profess it. And it was this lady, Avaritia, who walked the Red Carpet a week ago, Friday, May 18, in a glittering dress that reminded us of what rapacious capitalism is all about, as shares of Facebook started trading past their scheduled time in the NASDAQ. A very surprising opening with a larger (25 percent) number of shares issued for trade, at a much higher (52 percent) price… or a “more aggressive” price in Wall Street IPO parlance.

All you need to read.

All you need to read and some more.

Hard landing, soft landing, civil unrest, dominant economic superpower – the forecasts flow freely regarding China. The fact that good data is hard to come by regarding China does not seem to inhibit many outside observers. In this piece I will look at China through the lens of economic structure, Chinese history and culture—concepts which a number of observers often overlook. My general conclusion is that Chinese GDP growth rates are about to undergo a gradual but nevertheless perceptible decline. But I now believe a hard landing crash is unlikely, assuming that Europe does not totally disintegrate and the US does not roll over into a full scale recession.

I don't how the future will unfold, not just because I'm an idiot but because it's unknowable. Though we cannot know the future, we do know two very important things: 1) that which is unsustainable will implode, and 2) the present Status Quo is unsustainable. That ultimately leaves us with a single question: what are we going to do about it? In my view, it's not important that we agree on solutions--agreement would in fact be a catastrophe, for dissent and decentralization are the essential characteristics of any sustainable "solution." What is important is that we realize the future boils down to a simple choice: do we passively comply with the Status Quo feudalism or do we resist?....  That is the false choice provided by the Status Quo: do you want to buy/sell/drink sugar water or saccharine? There is another choice: do we want to passively self-destruct in servitude to the Status Quo or do we want to join those with a positive vision for the future? Every act is a choice, and the future is in our hands.

And so Steve Jobs legacy is now gone as Apple goes Jamie Dimon. At least Apple was not part of the stress test. And as announced yesterday, we for one, can't wait to find out if it was JPM that advised Apple, to pull a JPM. Finally, we hope that AAPL's cash creation rate remains the same, as $45 billion in 3 years may put quite a large dent on the company's onshore cash, which according to reports is one-third of total.

Listen up you Muppets!!!!! I'm rehearsing from my Goldman Interview, applying for retail stock broker, pushing Apple inventory :-)

The U.S. Is Letting China Steal Its Nuclear Innovations … Just Like Xerox Let Apple and Microsoft Steal Its Valuable Breakthroughs

All you need to read.

Bill Gross' monthly letters are always a fresh source of jovial imagery, although the bond king may have outdone himself in his latest monthly letter which collapses the principles of investing onto the football field: "My point about pigskin offense and defense is the perfect metaphor for the world of investing as well. Offensively minded risk takers in the markets have historically been the ones who have dominated the headlines and won the hearts of that beautiful gal (or handsome guy).... Canton, however, has an approximately equal number of defensive in addition to offensively positioned inductees, so there must be a universally acknowledged role for both sides of the scrimmage line. What fan can forget Mean Joe Greene, Deion Sanders or Mike Ditka? The old, now politically incorrect showtune laments that “you gotta be a football hero, to fall in love with a beautiful girl,” but football and any of life’s heroes can play on either side of the line, it seems." And it only gets better. While at its heart Gross' latest is merely yet another lamentation against the confines of the financially suppressive regime that arises from ZIRP and ends with what many expect is a whimper (when in reality they all forget to factor in the facility of hitting the CTRL+P keys as many times as necessary), the flourish of abandon this time around is palpable. We would not be surprised to soon see Gross hang up his offensive (and defensive) jersey, and sit back and enjoy the coming lunacy from a distance (but hopefully not before he allocates just a little to the Ron Paul SuperPAC).

Nothing sums up the euphoria these days better than Apple, Inc.