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Posts Tagged ‘economics’

Wall Street and stoopid media stories: Apple, Inc.

Posted by apropos of mustard on January 24, 2008

As we have briefly pointed out, people no longer think for themselves. This herd mentality is most often seen on Wall Street, where a slight whiff of panic, real or imagined, tanks the market. Over the last three or four weeks, we’ve seen a significant sell-off in the stock market in general, for very legitimate reasons. Mostly due to the outrageous economic policy being driven by the current administration. There are other places to go to learn about economic policy – we don’t have a favorite, just a few off the cuff.

Anyhow, let’s look at one of the major darlings of Wall Street over the last few years: Apple, Inc. The market capitalization of Apple, Inc. has taken a big hit so far this year, losing somewhere over $50 billion. Apple is fairly predictable around this time of year, with a usual run up as their annual MacWorld conference/expo happens, and a corresponding sell off during or shortly after the keynote by their CEO. This year was no exception. Couple that with the general bearish attitude these days, and Apple’s share price dropped more than usual.

What is ridiculous, however, has been the overreaction to Apple’s financial results announced after market close on the 22nd of January. They had the most profitable quarter in the 31 year history of the company, and provided fiscal 2nd quarter guidance to the street that was not in line with “expectations”. Within minutes of the announcement, Apple shed over $14 billion in market cap in after-hours trading. Why? Because CNBC and other media outlets overreacted, and lots of people listened without really looking into the numbers behind the panicky statements. MacWorld has an outstanding look at this irresponsible behavior, by way of MWJ as published by MacJournals.com. Read it here. It’s rather long, but very interesting and worth the read.

Ugh.

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Common sense words from the New Hampshire debates

Posted by apropos of mustard on January 7, 2008

Some of the best material coming out of the Republican and Democrat debates in New Hampshire came from the candidates with little or nothing to lose. Not a surprise, but it is unfortunate that the front runners cannot exhibit the same candor, the same degree of common sense.

Beginning with his comments on the Bush doctrine, Ron Paul said this:

“Well, I certainly agreed with his foreign policy that he ran on and that we as Republicans won in the year 2000 — you know, the humble foreign policy, no nation-building, don’t be the policeman of the world. And we were strongly critical of the policy of the Clinton administration, that did the opposite. And we fell short. Of course, the excuse is that 9/11 changed everything, but the Bush doctrine of preemptive war is not a minor change. This is huge. This is the first time we as a nation accept as our policy that we start the wars. I don’t understand this. And that all options are on the table to go after Iran? This — this is not — this is not necessary. These are third-world nations. They’re not capable.

“But I think it’s the misunderstanding or the disagreements that we’ve had in this debate along the campaign trail is the — the nature of the threat. I’m as concerned about the nature of the threat of terrorism as anybody, if not more so. But they don’t attack us because we’re free and prosperous. And there are radicals in all elements on — in — in all religions that will result to violence. But if we don’t understand that the reaction is — is because we invade their countries, we — and occupy their countries, we have bases in their country, and that we haven’t done it just since 9/11, but we have done that a long time.

“I mean, it was the Air Force base in Saudi Arabia before 9/11 that was given as the excuse. If we don’t understand that, we can’t win this war against terrorism.”

And this is among the reasons he is not invited to the Republican debate on Fox News. He couldn’t care less about Republican ideology. Largely due to the fact that he hasn’t always been a Republican, I suppose. As a friend of mine points out – “Why doesn’t he just say we should legalize marijuana? He could totally get away with it!”

Charlie later brought up the question of how can we afford a trillion-dollar war and not afford to provide healthcare for everyone, and Ron Paul once again spoke with logic and reason:

“Charlie, you really answered the question — you answered it in your question, because you said how can we afford a trillion-dollar war and we can’t afford health care? Well, that’s the reason. The resources are going overseas. We’re fighting a trillion- dollar war, and we shouldn’t be doing it. Those resources should be spent back here at home.”

He went on to criticize economic and monetary policy:

“We run up the deficits. We tax. We borrow. We borrow from the Chinese. We can’t borrow enough. Then what do we do? We print the money, and then you wonder where the inflation comes? The value of the dollar goes down and prices go up where the government gets involved in certain things, like housing or medical care or education. Prices are skyrocketing. So you have to deal with the monetary issue to solve the problem of the medical issue.”

He may lack the poise, polish, youth, or looks of his peers, but he speaks from his heart and his head without letting ideological spew get in the way. He won’t win, so what does he have to lose?

On Charlie’s question on the rising price of oil, and whether anyone wanted to simply state the truth about the future price of oil, and that it isn’t going to get any better:

“I’ll be glad to answer that question because it’s something I talk about all the time and it’s a very important question. The Wall Street Journal yesterday had a very good chart that explains this. If you look at the price of oil in the last 10 years, if you look at it in terms of dollars, it went up 350 percent. If you look at it in Euros, it went up about 200 percent. If you look at it in the price of gold, it stayed flat. It’s the inflation, it’s the printing of money, it’s the destruction of the value of the dollar.

“Added onto this, the notion that we go to protect our oil — oil was $27 when we went over there to get the oil and protect the oil and take the oil from Iraq. There’s less than — there’s less than about half the production now in Iraq right now and we’re threatening Iran, and that pushes prices up. It pushes up the concept of supply and demand.

“But you can’t deal with the price of oil without dealing with the supply and demand of dollars. When you devalue the dollar — and the dollar is going down every day, and the further the dollar goes down, the higher the prices of oil going up. We have to understand that. “

Again attacking the fiscal policy of the current administration. What I’d like to hear is how he proposes to solve this problem. Unfortunately, Ron Paul doesn’t get enough mic time to outline his “policy for change”. Since change is the watchword for the next month or so. He has some additional commentary on the importance of understanding monetary policy on his site.

More thoughts on this, and other common sense coming out of the debates.

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