Read it and comment away.

[ Via CNN ]

By David Goldman, staff writerSeptember 1, 2010: 3:41 AM ET

NEW YORK (CNNMoney.com) — A hot new smartphone can be Incredible, Vibrant, Epic or just “eh,” but no matter how it stacks up, it’s a safe bet that it will start selling at $199.

On the four major wireless networks — Verizon Wireless (VZ, Fortune 500), AT&T, Sprint (S, Fortune 500) and T-Mobile — there are 13 smartphones priced at $199 with a two-year contract. There are no phone models with a higher starting price (add-ons like more memory can increase the price tag), and there are more smartphones selling at $199 than at any other single price point.

But spending $199 doesn’t guarantee you a top-of-the-line phone. On AT&T’s (T, Fortune 500) network, $199 will buy an iPhone 4, the best-selling smartphone of all time. But you’ll need to fork over the same amount for a BlackBerry Bold 9700, a nine-month-old phone that lacks a touch screen.

It will also cost you $199 to get an HTC Tilt 2, which runs Windows Mobile 6.5 — an operating system so out of date that Microsoft (MSFT, Fortune 500) is set to completely abandon it in the next few months.

So what’s so special about $199?

“The obvious answer is that $199 is a magic price point for smartphone volume,” said George Appling, partner at consulting firm Booz & Co. “The not-so-obvious reason is that carriers are not charging customers what they pay.”

In other words, wireless carriers pay significantly more for smartphones than you do. In exchange for your signature on an expensive two-year contract, they’ll offer you the smartphone for less than it costs them but as much as they think you’ll pay for it — and right now, that’s $199 across the board. Buy an unsubsidized iPhone 4 straight from Apple (AAPL, Fortune 500) and you’ll pay $599 for the 16 GB phone that AT&T sells for $199 with a two-year contract.

Smartphones generally cost carriers around $500 per unit. Volume deals and other negotiations with manufacturers can shave down that price tag, but the hotter the phone, the more a carrier will pay to buy it.

But that’s just the start of their calculations of what a phone “costs.”

0:00 /2:18The Motorola Droid 2 is unleashed

Phones that tend to eat up more bandwidth — hello iPhone! — add to the carrier’s overhead. Put together the upfront cost of the phone and the back-end cost to service it, and you’re left with the phone’s profit margin. For a model with really tight margins, the carrier might find itself essentially forced to charge more upfront than it otherwise would — it can’t discount the purchase price and still scrape out a profit. That sometimes leads to inferior phones, like the BlackBerry Bold, carrying the same price tag as more advanced rivals, like BlackBerry’s Torch.

It wasn’t always that way. Before the age of tricked-out smartphones with expensive touch screens and processors, cell phones were much cheaper to manufacture. That gave wireless companies more leeway to compete on cost, and prior to the iPhone’s mid-2007 release, phones had a wide variety of price tags.

But as phones got more expensive, a tiering of prices developed. Even the iPhone couldn’t hold the high ground: Initially priced at $599 — yes, even with a two-year contract — the phone plunged to $399 just two months after its debut. By 2008, it had settled into the $199 groove.

If you don’t need the latest and greatest, you can certainly score a gadget for less. Older, less exciting smartphones like the LG Ally, Palm Pre and Motorola (MOT, Fortune 500) Devour go for $149, or even $99.

But you won’t find many phones priced outside those $50 tier increments.

“There’s no $189 price point any more because operators don’t want to suggest that one phone is a little better or a little worse than another at the same tier,” said Charles Golvin, analyst at Forrester Research. “Carriers are looking for simplicity, even if that doesn’t reflect their margins.”

So will any carrier try to shake up the market and sell a cutting-edge phone for less? Don’t hold your breath.

“No price war is going to happen,” Appling said. “If Verizon got the iPhone tomorrow, it would probably sell for $199. They’re already in a $300 hole when they add a customer, so they’ll be extraordinarily hesitant to make that worse.”

That’s not to say the wireless carriers are getting a bad deal. They’re happy to take the initial hit in exchange for a data plan that costs subscribers an extra $30 or so a month on their bill. And smartphone users tend to stick with their networks longer than low-end phone users, according to Soumen Ganguly, principal at Altman Vilandrie & Co. That makes them dream customers: They pay more and churn less.

The $199 price point has another perk for carriers. We’re in the midst of a smartphone innovation boom, with companies pumping out new top-of-the-line phones every few months with better screens, memory and features. When those new phones are offered at the same price point older models once were, they seem like a steal in comparison. That draws new customers into the market — and inspires those with aging phones to trade up and lock themselves into a fresh contract.

“There will always be a next big phone coming out in two months that will justify the $199 price,” Ganguly said. “Manufacturers are innovating faster than the willingness of carriers to compete on price.”

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What is a rubber-band economy? Imagine the rubber material to be hard cash (currency in circulation) – notes, coins etc outside the central banks and the vaults of depositary institutions.

Stretching it would mean that you have expanded credit. More stretch means more credit. More and more stretch – to the point that it breaks, that is the financial crisis in 2008!  A run on the banks is nothing but the rush to cash, like rubber-band retreating to its material state. Then they grabbed the broken ends quickly, tied them with a knot. Will it work?

This is a good analogy. If you care to know what is happening in the US economy in relatively simpler language – listen to this conversation between me and Sumanth.

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Hoenig, who’s dissented from all five Federal Open Market Committee decisions this year to keep the rate at which banks lend to each other for overnight funds between 0 and 0.25 percent, said the economy is in a “modest recovery, with mixed results” and intimated that policy makers shouldn’t be beholden to “volatile monthly data” nor should “market participants…direct policy.”

“Of course the market wants zero rates to continue indefinitely,” Hoenig said in prepared remarks during a speech in Lincoln, Neb. “They are earning a guaranteed return on free money from the Fed by lending it back to the government through securities purchases.”

Meanwhile, the Fed’s zero interest-rate policy “is as likely to be a negative as a positive in that it brings its own unintended consequences and uncertainty.” Getting rid of Wall Street’s guaranteed source of profit — borrowing from the central bank and investing that in Treasuries — “tells the market that it must again accept risks and lend if it wishes to earn a return,” Hoenig said.

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This week’s bone-rattlers may be making you wonder” and says: “way too many people are way too complacent this summer. Here are 10 reasons to watch out.” And without further ado…

1. The market is already expensive. Stocks are about 20 times cyclically-adjusted earnings, according to data compiled by Yale University economics professor Robert Shiller. That’s well above average, which, historically, has been about 16. This ratio has been a powerful predictor of long-term returns. Valuation is by far the most important issue for investors. If you’re getting paid well to take risks, they may make sense. But what if you’re not?
2. The Fed is getting nervous. This week it warned that the economy had weakened, and it unveiled its latest weapon in the war against deflation: using the proceeds from the sale of mortgages to buy Treasury bonds. That should drive down long-term interest rates. Great news for mortgage borrowers. But hardly something one wants to hear when the Dow Jones Industrial Average is already north of 10000.
3. Too many people are too bullish. Active money managers are expecting the market to go higher, according to the latest survey by the National Association of Active Investment Managers. So are financial advisers, reports the weekly survey by Investors Intelligence. And that’s reason to be cautious. The time to buy is when everyone else is gloomy. The reverse may also be true.
4. Deflation is already here. Consumer prices have fallen for three months in a row. And, most ominously, it’s affecting wages too. The Bureau of Labor Statistics reports that, last quarter, workers earned 0.7% less in real terms per hour than they did a year ago. No wonder the Fed is worried. In deflation, wages, company revenues, and the value of your home and your investments may shrink in dollar terms. But your debts stay the same size. That makes deflation a vicious trap, especially if people owe way too much money.
5. People still owe way too much money. Households, corporations, states, local governments and, of course, Uncle Sam. It’s the debt, stupid. According to the Federal Reserve, total U.S. debt—even excluding the financial sector—is basically twice what it was 10 years ago: $35 trillion compared to $18 trillion. Households have barely made a dent in their debt burden; it’s fallen a mere 3% from last year’s all-time peak, leaving it twice the level of a decade ago.
6. The jobs picture is much worse than they’re telling you. Forget the “official” unemployment rate of 9.5%. Alternative measures? Try this: Just 61% of the adult population, age 20 or over, has any kind of job right now. That’s the lowest since the early 1980s—when many women stayed at home through choice, driving the numbers down. Among men today, it’s 66.9%. Back in the ’50s, incidentally, that figure was around 85%, though allowances should be made for the higher number of elderly people alive today. And many of those still working right now can only find part-time work, so just 59% of men age 20 or over currently have a full-time job. This is bullish? (Today’s bonus question: If a laid-off contractor with two kids, a mortgage and a car loan is working three night shifts a week at his local gas station, how many iPads can he buy for Christmas?)
7. Housing remains a disaster. Foreclosures rose again last month. Banks took over another 93,000 homes in July, says foreclosure specialist RealtyTrac. That’s a rise of 9% from June and just shy of May’s record. We’re heading for 1 million foreclosures this year, RealtyTrac says. And naturally the ripple effects hurt all those homeowners not in foreclosure, by driving down prices. See deflation (No. 4) above.
8. Labor Day is approaching. Ouch. It always seems to be in September-October when the wheels come off Wall Street. Think 2008. Think 1987. Think 1929. Statistically, there actually is a “September effect.” The market, on average, has done worse in that month than any other. No one really knows why. Some have even blamed the psychological effect of shortening days. But it becomes self-reinforcing: People fear it, so they sell.
9. We’re looking at gridlock in Washington. Election season has already begun. And the Democrats are expected to lose seats in both houses in November. (Betting at InTrade, a bookmaker in Dublin, Ireland, gives the GOP a 62% chance of taking control of the House.) As our political dialogue seems to have collapsed beyond all possible hope of repair, let’s not hope for any “bipartisan” agreements on anything of substance. Do you think this is a good thing? As Davis Rosenberg at investment firm Gluskin Sheff pointed out this week, gridlock is only a good thing for investors “when nothing needs fixing.” Today, he notes, we need strong leadership. Not gonna happen.
10. All sorts of other indicators are flashing amber. The Institute for Supply Management’s manufacturing index, while still positive, weakened again in July. So did ISM’s new-orders indicator. The trade deficit has widened, and second-quarter GDP growth was much lower than first thought. ECRI’s Weekly Leading Index has been flashing warning lights for weeks. Europe’s industrial production in June turned out considerably worse than expected. Even China’s steamroller economy is slowing down. Tech bellwether Cisco Systems has signaled caution ahead. Individually, each of these might mean little. Collectively, they make me wonder. In this environment, I might be happy to buy shares if they were cheap. But not so much if they’re expensive. See No. 1 above.

Also, watch the following interview with a well respected market strategist, Rosenberg.

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With current financial turmoil entering its fourth year, it is time to reflect on things that got us here. Today Ben’s bandits at the Fed announced that they will buy US debt (“in small quantities”, yeah – right!) to stimulate the weakening economy. Call this quantitative easing 2 or plain old printing, it only means one thing if you are a saver and/or retiree who did not want to be a part of this ‘spend-it-today-and-mortgage-your-tomorrow’ economy: you are an idiot. In other words, the Federal Reserve Board has once again told the savers: screw you!

What Greenspan’s reign of free money meant to this economy is that for every economic malaise, the solution is lower interest rates. This Ayn Rand’s disciple who believed in unfettered free markets as an economic utopia has himself meddled with financial markets. He has ignored, or even encouraged fraud in the form of bailouts.

Lest we forget that Greenspan was appointed by none other than the Conservative God, President Reagan. Reagan felt that Volker’s tight money policies and his tendency to regulate fraud would hamper economic growth. In Greenspan, Reagan saw a ‘free market’ champion. These are the foundations of an unprecedented cycles of boom-and-bust for over 25 years. Every boom in this period was a bit bigger than the previous one and every bust is much more painful than the previous bust.

One of the most despicable outcomes of Reaganomics is the obliteration of the so called middle class in this country. Stephen Colbert has a perfect illustration of  Regan’s trickle down economics, which the right in this country came to take for Gospel Truth.

The assault on investor trust started with the bailout of S&L by Bush Sr., which is then followed on a larger scale by Clinton-Rubin’s bailout of Mexico in 1994. That followed even bigger bailout of LTCM in 1998. Despite these huge warning shots, Summers and Senator Grahm championed the dismantling of Glass-Steagall act in 1999. That opened the gates for Foxes to guard the hen houses. That is, since 1999 Wall Street got even more creative in fleecing the main street and we all know what happened when they ran out of suckers.

I have been investing in this country for nearly 20 years. In the last 18 months, I have nearly cut-down my participation in the market to near zero. I have never been so skeptical about the financial markets, the Wall Street interests, the Feds, and the US Treasury than I am now. This whole game is a giant fraud. I have a feeling that I am not alone with this mistrust in the system. Zero Hedge weighs in (Main Street’s Boycott Of Capital Markets Succeeding):

For the longest time it was consensus thought that only Wall Street could f**k Main Street. The ride is now turning. After what the FT reports was a 16% decline in fixed income, currencies and commodities trading revenues for Q2, coupled with advisory revenues down 17%, the bank is now “planning to cut up to several hundred employees following a sharp fall in market activity in the second quarter. Sources close to the bank say that the job losses, which could be announced as early as Wednesday, will be spread across BarCap’s sales and trading staff as well as its back office support functions.” Too bad the SEC has not, and will not realize that its only function is to restore the faith of the retail investors in the credibility of the capital markets. Yes, the same retail investor who both on margin and in total has always been the primary driver of stocks. Alas that has not happened and tens of thousands of Wall Streets will soon feel the wrath of Main Street as the boycott of stocks by the broader population comes to fruition, allowing the former “strategists” to experience just how real the difference between the U-3 and U-6 rate is first hand.

I don’t wish anybody ill. But, when the best and brightest minds gravitate to making fast buck with computer trading and exotic derivatives which add absolutely no value to the economy or to the society, it is time to shake the imbalances to the core. It is time to say good bye to an economy where paper products are created and sold ad-infinitum and return to an economy where useful goods are made and sold.

I will feel safe to return to the market when I see tens of thousands more layoffs are announced at Wall Street firms.

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Guts, or kahunas as some would call it, look like this:

In this video, Dylan raises temperature on the congressman who does nothing but divert the topic to criticize the Govt and spew Republican talking points.

Talking point #1: Indict the Federal Government

Talking point #2: Divert the topic to all Republican talking points

And the ending is just fantastic….

“>> You’re just doing weird republican talking points. I’m done with you. I wish you luck.

>> I’m really here to talk about jobs.

>> I don’t think you are. but you are doing a good job of spouting republican — I’m sure somebody in the republican party will give you a pat on the back. Congratulations and thank you for nothing..”

Don’t under any illusion that I am a Democrat. For years I have been very critical of Clinton’s handling of the economy. In fact, Dylan exactly reflects how I feel about the mess both parties have created.

Watch the whole clip…

Visit msnbc.com for breaking news, world news, and news about the economy

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So, you are a financial “professional” on Wall Street. You think the world owes you bazillion dollars because you are: a) very smart, and b) you have an MBA in finance, may be from Wharton, or Harvard or Columbia and therefore what you do must be good. You claim that your financial “innovations” help the economy and the society more than they hurt. Really?

This is an excerpt from a WSJ discussion forum at which Mr. Volker participated in Dec 2009.

Do Innovations Do Much Good?

MR. VOLCKER: A few years ago I happened to be at a conference of business people, not financial people, and I was making a presentation. The conference was being addressed by a very vigorous young investment banker from London who was explaining to all these older executives how their companies would be dust if they did not realize the joys of financial innovation and financial engineering, and that they had better get with it.

I was listening to this, and I found myself sitting next to one of the inventors of financial engineering. I didn’t know him, but I knew who he was and that he had won a Nobel Prize, and I nudged him and asked what all the financial engineering does for the economy and what it does for productivity.

Much to my surprise, he leaned over and whispered in my ear that it does nothing—and this was from a leader in the world of financial engineering. I asked him what it did do, and he said that it moves around the rents in the financial system—and besides, it’s a lot of intellectual fun.

Now, I have no doubts that it moves around the rents in the financial system, but not only this, as it seems to have vastly increased them.

How do I respond to a congressman who asks if the financial sector in the United States is so important that it generates 40% of all the profits in the country, 40%, after all of the bonuses and pay? Is it really a true reflection of the financial sector that it rose from 2½% of value added according to GNP numbers to 6½% in the last decade all of a sudden? Is that a reflection of all your financial innovation, or is it just a reflection of how much you pay? What about the effect of incentives on all our best young talent, particularly of a numerical kind, in the United States?

In Britain, I was just talking to a high-tech company about the immense attraction to go into finance when both Britain and the United States are suffering from a basic inability to produce things competitively, to keep up with the new economy. Is this a result of financial innovation that we should be really worried about?

Let us think about what structural changes are necessary to produce what is the heart of the problem, about too big to fail, moral hazard and the rest. As I say, I agree with many of your individual suggestions, but there were no suggestions in the area of moral hazard. It was suggested to improve regulation, and that may help, but having gone that far, it is better that you talk about some more serious structural changes.

I made a wiseacre remark that the most important financial innovation that I have seen the past 20 years is the automatic teller machine. That really helps people and prevents visits to the bank and is a real convenience.

How many other innovations can you tell me that have been as important to the individual as the automatic teller machine, which is in fact more of a mechanical innovation than a financial one?

My thoughts, exactly! When a majority of smart kids shun product-oriented engineering career paths and aspire to be financial engineers on Wall Street, it is not just sad – it is downright troublesome. A bankster dude responded:

MR. MURRAY: The financial-innovation point is the one that you are making most strongly, and there was a statement that financial innovation is tied to economic growth, which Mr. Volcker is disputing. Eraj Shirvani [who is managing director of Credit Suisse in the investment-banking division], do you want to take that on?

ERAJ SHIRVANI: It is never fun to take on Paul Volcker, but maybe I can ask a question for clarification.

So, is your hypothesis that corporate bonds, the securitization market—none of these financial innovations have done anything to help the economy? What shocks me about today is the number of people in this room who have all been architects of the economy as we have it today who have now decided that all of a sudden everything they have worked on over the past 30 years is all bad and the pendulum has swung too far.

I worry when we say that nothing good can come from innovation. Have there been excesses? Absolutely. Have there been inappropriate products? Absolutely. Are there investors who should be held accountable for buying things they didn’t understand? Absolutely. However, that does not make it right to say that innovation in itself is a bad thing. [Read the whole thing here]

Nobody is saying that nothing good came out of the so called “innovation.” The good that came out of is at best marginal. However, when you pit risks against rewards, it ain’t worth it. After all, this country saw the best economic expansion in the 1960s and early 70s – despite a crippling war and barely any stock market boom, much less any financial “innovation.”

My humble request to those who compare Fraud Street banksters to pigs. Please don’t insult the pigs. When pigs are slain, you get bacon. But if you slay a bankster, you get nothing.

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You may recall one of my earlier posts in which I featured a Frontline documentary on Brooksley Born. Well, this visionary and caring woman got to take on the chief criminal himself. From Huffington Post:

The panel created to investigate the roots of the financial crisis escalated the government’s assault on Goldman Sachs on Thursday, criticizing the Wall Street firm for failing to turn over basic documents and accusing it nearly lying under oath.

For a second consecutive day, the bipartisan Financial Crisis Inquiry Commission reiterated its request for additional data from Goldman, namely figures regarding the firm’s derivatives activities. And for a second consecutive day, Goldman’s top executives demurred.

“We generally do not have a derivatives business,” David Viniar, Goldman’s chief financial officer, told the panel Thursday under oath.

Goldman Sachs holds more than $49 trillion in notional derivatives contracts, making it the third-largest derivatives dealer among U.S. banks, according to first quarter figures from national bank regulator the Office of the Comptroller of the Currency. The commission has found that Goldman is a party to more than 1 million different derivatives contracts, Commissioner Brooksley Born disclosed Thursday.

“We don’t separate out derivatives and cash businesses,” Viniar clarified under questioning. The derivatives units are “integrated” into the firm’s cash businesses, making it difficult for the firm to isolate its derivatives data, he said.

In January, the panel asked Goldman chairman and chief executive Lloyd C. Blankfein for a breakdown of the firm’s revenues and profits from its derivatives activities. He said the firm would comply. The commission reiterated that request Wednesday and Thursday.

Viniar said the firm doesn’t “keep” records outlining its revenues from its derivatives dealing.

“I am very skeptical that you can’t measure these revenues and profits,” Born told Viniar. “I urge you to provide us with this information. It’s been about six months we’ve been asking for it… and it makes one wonder also why Goldman has the incentive or impetus not to reveal this information.

“You’re suggesting you don’t give it to your regulators. You don’t put it in your financial reports… so you don’t give it to the market… [or to your counterparties],” Born continued. “And you’re refusing to give it to us. I hope very much that we will see this very shortly.”

Viniar took exception to that last comment.

“Commissioner, again, we’re not refusing anything,” Goldman’s chief financial officer said. “We don’t have a separate derivatives business.”

Viniar then said that Goldman isn’t alone in not breaking out its derivatives-specific revenues and profits.

Born quickly shot back.

“They don’t,” Born, the nation’s former top derivatives regulator, conceded. “But some other firms have provided us with that data when we’ve asked for it, and Goldman Sachs hasn’t.”

Phil Angelides, the panel’s chairman, could barely contain his incredulousness.

“Are you telling me you have no system at your company that tracks revenues or assets of contracts, and liabilities and payments under contracts?” Angelides asked. “You have no management reports, no financial reports that track these contracts?”

“I’ve never seen one,” Viniar responded. Pressed further, Viniar added that the firm doesn’t track these things because it’s “not meaningful.”

Viniar again was asked to provide the data.

Later on, Byron Georgiou, another commissioner, reiterated the panel’s request for information pertaining to Goldman’s contracts with AIG. Goldman “aggressively” demanded increasing amounts of collateral from the insurer beginning in 2007 to cover what it perceived as the deteriorating value of those contracts’ underlying securities, Angelides said.

Goldman may have marked those securities at a lower value than what it marked comparable securities for its own clients. In other words, it may have undervalued securities from AIG in order to get more cash while overvaluing them when dealing with other counterparties in order to hold on to its own cash.

The panel has asked for that data. Goldman has not handed it over.

“When you tell us that you don’t know how much you make in your derivatives business, nobody here really believes it,” Georgiou said. “It’s crazy. It doesn’t make any sense. Goldman Sachs is, if not the most sophisticated investment bank, certainly one of the most sophisticated investment banks in the world — and nobody here believes you don’t know how much money you’re making on various aspects of your business. It doesn’t make any sense.”

Georgiou then asked for a specific breakdown of what Goldman paid AIG to insure specific securities, and what Goldman charged its own clients for the same protection. That insurance came in the form of credit default swaps, which are derivative contracts that act like insurance against default. Georgiou wants to know the premium, if any, Goldman received. It’s not the first time the panel has asked for this information.

Viniar said he’d provide the data.

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Here is an excellent summary on GLD. Please be careful and read the fund’s prospectus, if you are invetsed in it. The emperor is naked.

“The Gold ETF is an excellent conduit to redirect physical demand into paper. The Gold ETF is similar to a fractional reserve bank. As long as customers don’t fear for their money, the bank can service the cash demands for a small percentage of its customers. A run on the bank develops when too many customers request their cash at once. A large ETF holder, fearing for the return of their gold, will demand delivery as stated in the prospectus at some point. If the fear spreads beyond a small group, a run on the ETF will occur. Unfortunately, unlike banks, there’s no such thing an ETF holiday, or Federal Deposit Insurance Corporation. The market price and revised investors expectations towards its holdings will be quickly discounted into the share price.”

http://edegrootinsights.blogspot.com/2010/06/gold-etf-swells-to-pass-50-billion.html

The risk of ETFs is higher.

http://ftalphaville.ft.com/blog/2009/10/08/76621/gold-etfs-caveat-emptor/

I would say even the bank vaults are not safe. Do you believe the banksters?

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This is my first posting. If you are really want to know what a “Dollar” is please see this
presentation.

Collapse of the Dollar: Testimony on MT Sound Money Bill (HB 639) from Constitutional Money on Vimeo.

Some brave folks who shine the light -

http://www.gata.org/

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Enough Said. (Hat tip to the Big Picture Blog)

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Here is the Tech summary for the geeks.
The processor A4 is the same one used by the iPad.
It has dual mic and dual camera.
The metal casing is actually an Antenna ( two Antennas in fact separated by a cut).
Apple combined the three chips into one (the ARM Cortex CPU + the video GPU + and the RAM ).
WiFi is 802.11n
You can create folders and organize the apps.
You can do multi tasking by pressing the home button twice.
Bing is added as a search provider along with google and yahoo.

Here is summary for the non geeks

The phone is ridiculously thinner than previous iPhone , probably the thinnest phone on earth.
The display is better.
The battery can get you thru a working day.
You can take photos in low light.
You can record HD video.
And you can make video calls with another iPhone 4 using WiFi.

So what do you think of the phone? Are you buying it ? What other phones are on you mind ? What are the most important features to you ? Are you affected by ATT recent data plans charges ?
Comments please ?

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AP Photo

US money supply plunges at 1930s pace as Obama eyes fresh stimulus
The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history.

The M3 figures – which include broad range of bank accounts and are tracked by British and European monetarists for warning signals about the direction of the US economy a year or so

in advance – began shrinking last summer. The pace has since quickened.

The stock of money fell from $14.2 trillion to $13.9 trillion in the three months to April, amounting to an annual rate of contraction of 9.6pc. The assets of institutional money market funds fell at a 37pc rate, the sharpest drop ever.

“It’s frightening,” said Professor Tim Congdon from International Monetary Research. “The plunge in M3 has no precedent since the Great Depression. The dominant reason for this is that regulators across the world are pressing banks to raise capital asset ratios and to shrink their risk assets. This is why the US is not recovering properly,” he said.

[Read full article here]

Frightening indeed. Ladies and gentlemen, I am getting more and more convinced that the economy is going to get very ugly. I really hope that I will be proven wrong.

My bet is on deflation. On the contrary… Hugh Hendry warns us to get ready for hyperinflation. He has access to better data. But, I am sticking with my guts.

Money Week 28 May 10 -Hugo Hendry Interview

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The Cartoon Says it All

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Hendry is very sharp and amusing in his antics. In this BBC interview, Hendry really sticks it to Jeffrey Sachs and the academic ilk and the ideologues who are out of touch with reality (OK, like me).

Let’s purge this system of its rottenness. Let’s take on a recession. It’s going to be tough, people are gonna lose their jobs. They are going to lose their jobs anyway. We can spread this over 20 years, or we can get rid of it over 3 years

Zero Hedge has a nice post-script about the “tenured academic stupidity” of Jeffrey Sachs.

We apologize in advance for harping back on this issue, but it is pretty damn hilarious. In the BBC Newsnight interview with Hendry, Tett and Sachs, the esteemed Columbia professor, at 4:50 into the clip, asks “How long has this Greek question been on the table. Ablout 10 weeks maybe?” A rather violent explosion from Sachs follows when Hendry calls him out on his tenured stupidity. All this was discussed yesterday. However, we wanted to provide a response to the Ivy League professor, as he did pose a legitimate question. In the following FT interview from January 2009, Hugh Hendry discussed the future of the eurozone and the PIIGS, and at 24 seconds into it, he provides the response Sachs is seeking: “I fear [the collapse of the Eurozone] is becoming more likely.” He follows “If we saw parity with the euro, my goodness, that would be deemed to be unthinkable.” And concludes, “There is a shortage of dollars. People think I’m crazy – they are printing billions, trillions of dollars. But keep in mind America has $50 trillion of debt outstanding. And that was fine because they thought it had $50 trillion of assets. And what we are discovering is these asset prices deflate – it’s vaporization…” Dear Mr. Sachs – the very person you were sitting across the table from foresaw everything to the dot, just as it would happen 16 months later, even as you were calling up old buddies to get that Teacher of the Year award, or get that extra fellowship (in demagoguery?). Our advice to you is do what your parents did, get (an honest) job sire…. which will never happen – pouring the Kool Aid is easy and pays well.

So here is our second bit of advice: watch all Hendry appearances, and listen to what he says. He will always end up being right, and you will always be wrong, since you defend a broken system which is fated for implosion. And just as Hendry sees deflation first, then hyperinflation (and watch this clip for some more brilliant insight), so it shall be. And for some reason people like Sachs will once again be invited to round-tables, in which they will groundlessly claim that nobody foresaw any of ensuing Keynesian collapse… So now that we have answered your question, we have one of our own – how does Columbia allow this level of mediocrity to be publicized on national television?

[Hugh Hendry a year ago]

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