GDP, M&A, EBITDA, P/E, NASDAQ, Econo-thread Part 11

[DrSpike]

I doubt anyone here knows what I am talking about, but there is a character in Up Pompeii, an old british sitcom, called the soothsayer. She enters every episode with the catchphrase "woe, woe and thrice woe" (said very dramatically).........guess who she reminds me of?

[Roland]

I really got me a Cassandresque reputation, it seems...

[DanS]

Originally posted by Adam Smith
Proposed inscription for Roland's tombstone.

On another topic, the self-help book How Not to Run an Economy has just been published.

[Roland]

I thought you were talking about "Debunking Economics"....

[DanS]

Really, am I overreacting about this Japan stuff? Does anybody have a context in which to judge how severe is the situation?

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1035872862233&p=1012571727092

We would have thrown the bums out after the first double-dip.

Once the dollar depreciates by another 10%, Japan could be really hurting.

[Roland]

"We would have thrown the bums out after the first double-dip."

We will have ample opportunity to verify this hypothesis.

The main problem is with the corrupt LDP fiefdoms. And I'm not sanguine about the US situation either in that regard - just look at how the Bushies are torpedoing the SEC reforms.

[Saras]

RATE CUT! They're speaking of Another RATE FREAKING CUT

[Roland]

Alldaway down to zero. The hilarious thing is that they still have such an ample supply of braindead bulls trying to rally on this.

[DanS]

Saras: Talk of a half point. Don't know how serious it is, but you gotta keep people spending until the ROW is healthier (whenever that will be--2005?).

Roland: Re the LDP, I can understand it. But Americans (the only system I can compare directly) would be throwing the captain and crew overboard that got them in a similar situation. Bush '41 got thrown out after a mild recession, even though everything else he did was successful. Wouldn't the Austrian public do similarly?

So the LDP must think that they're invincible or something. Not a good situation. Depressing to watch, especially since the Japanese have a lot going for them otherwise.

"just look at how the Bushies are torpedoing the SEC reforms"

Webster isn't a name you would throw in the hopper for torpedoing. He's one of the troubleshooters of the Washington establishment. Of course, he's an attorney. Respected bipartisan. Competent, but unfortunately not an accountant. Has held just about every kind of high profile job in Washington (FBI, CIA, judge, etc.). Was looking for work.

The whole surrounding brouhaha was due to the Dems overreaching and breaking a Washington taboo--leaking a choice before it was final and then trying to ram the choice through by shear force of embarrassment. 9 times out of 10, the president will feel the need to choose somebody else, if only to protect his perogatives.

"The hilarious thing is that they still have such an ample supply of braindead bulls trying to rally on this."

As stated above, it's entirely rational, once the bonds are run up. Sten got out of his. Now what is he gonna do with all that cash?

[Roland]

"But Americans (the only system I can compare directly) would be throwing the captain and crew overboard that got them in a similar situation. Bush '41 got thrown out after a mild recession..."

And replace him with a Democrat. Which is pretty much the same as changing power between the LDP factions. Apart from a short interlude all it caused was rotation among the LDP factions....

"Wouldn't the Austrian public do similarly?"

We have killed politicians for much less.

"Webster isn't a name you would throw in the hopper for torpedoing."

Age, agenda and background - I'm very sceptical. I also meant the withdrawing of most of the budget increase.

"Now what is he gonna do with all that cash?"

Buy lottery tickets.

[DanS]

"Age, agenda and background - I'm very sceptical. I also meant the withdrawing of most of the budget increase."

Agenda? Not sure what you mean there. Webster is considered a neutral. You will see that none of the Dems are attacking Webster, because by and large, they like him. They bring up the lack of accounting work, which is a fair criticism.

Age doesn't mean much of anything in Washington, unless you're senile, in which case it might even help. Background just means he's Washington establishment as opposed to Wall Street establishment. But his credentials are blue chip.

Re the enforcement budget increase, I haven't been following it too closely. Do you have a link?

I think the two biggest issues at hand are expensing of stock options and pension funding assumptions.

"And replace him with a Democrat."

I think the system of political punishments doesn't work too badly. Our political system was able to take care of the S&L ~ $1.2 trillion (?) S&L crisis.

[Sten Sture]

What's he gonna do? uh, meekly buy some back! I am just following technicals for now...

FOMC is rated at an 80% chance of a cut on Wednesday by the Fed Funds futures; I think the probability is much lower than that, but it is a very minority opinion.

The big employment report is out tomorrow and a really bad number could rally bonds again. I still think the worst is behind us, and that we will have a good holiday retail sales number, but the consumer can be fickle, so who knows.

[DanS]

Sort of an esoteric question...

Does anybody here have a recommendation of a good, practical article or book on negotiation theory? 2 party, adversarial, forced by statute. The "failure" being binding arbitration.

The models I am using are woefully primitive. Any place to start thinking about a model would be greatly appreciated.

Oh and Pitt was home free until his latest screw up...

[DrSpike]

All such models boil down to game theory, whether it be cooperative or non-cooperative.........the best reference for beginners IMO is:

Binmore, K (1992). Fun and games: A text on game theory.

Better but more advanced is:

Osborne, M and Rubinstein, A (1994): A course in game theory.

Flawless but only for the particularly ambitious (I only use this for postgrads):

Fudenberg, D and Tirole J (1991): Game theory.

For the economic historian the following articles are seminal, and paved the way for all that came after:

Von Neumann, J, and Morgenstern O (1944): The theory of games and economic behaviour.

Nash, J (1951): Non-cooperative games.

Hope this helps.

[DanS]

Great! Thank you!

Is there any particular one of these I should look at if I'm trying to do up a valuation of a negotiation? I have a couple of books on game theory already, including an article survey, but I could never really get into them.

Or is there an "index" to find an article describing the game I'm playing? (I take that this is a 2-person noncooperative game, in a an n-person market. Compulsory intellectual property licensing.)