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"Steep Budget Cuts"

How did I miss W's Steep Budget Cuts?

Federal workers have told presidential transition leaders they feel rudderless, their morale impacted by the Bush administration's opposition to industry regulation, steep budget cuts or the departures many months ago of Bush political appointees.

-- Carol D. Leonnig, "Widespread Complaints About a Rudderless Government", WaPo, 11/6/2008

But for the public who wants to pay for the work the government actually performs, is the outrage that Bush cut the budgets that would have paid for projects these civil servants wanted to work on, or that he didn't also cut the budgets that paid for the civil servants?

Federal employees said that they are not a passionately partisan group


Hundreds of federally-employed scientists, researchers and agency lawyers have drafted, studied and restudied regulations that went nowhere.

The head of your organization makes it absolutely clear that he's not interested in X. You do X anyway. He basically ignores your work. You feel bad. Yet, you still have a career, and now you have hope.

Ask Me in Forty Years!


Don't ask me about the stock market!

Just don't. I don't know anything more than you do about the recent volatility. I'm not clever enough to time markets, and I'm not foolish enough to trust my money to people who claim they can.

Anyway, I have a very small portfolio at this point, and I don't follow the day to day swings in particular stocks or stock indices. My mutual fund investments have been declining in value lately -- that is, if I, like everyone tells me to, value them at spot prices. But since I probably won't be retiring until 2048, spot prices just don't mean very much to me.

So ask me again in forty years!

The Scourge

IBD has a great article on the implications of Sarbanes-Oxley for non-wealthy investors. It is the non-currently wealthy individuals who are less to become wealthy cause they are going to miss out on some of the early growth phase of companies.

Imagine you had a time machine and could go on a stock-buying spree 25 years ago. Yet you didn't bring that much cash on board.

You could do pretty well investing in the growing firms of Wal-Mart Stores or Apple. But you'd make a killing on this retailer that had just recently gone public with only four stores to its name. Buying 100 shares of Home Depot in 1982 would yield you $1.6 million by 2002.

But time travelers coming back to 2007, even with a fistful of stock market data, probably won't be so lucky. Neither will today's savvy investors who study past trends in publications such as Investor's Business Daily. This is because a law sold as protecting investors from fraud is actually hurting investors' ability to grow wealthy with legitimate firms.

As a U.S. Chamber of Commerce task force this week unveils recommendations for lightening the burdens of the Sarbanes-Oxley Act of 2002, expect the media to paint the issue as business vs. shareholders.

The truth, however, is that average investors have been some of this law's biggest victims.

Rushed through Congress after the Enron and WorldCom scandals, Sarb-Ox ended up imposing many mandates that greatly encumber honest entrepreneurs. Home Depot co-founder Bernie Marcus recently told IBD that his company could not have gone public as a four-store firm "in today's legal and regulatory climate."

This means that Home Depot's early investors would also have lost out if Sarb-Ox had been in place.

My Stock Broker is an ANN

Its seems like Artificial Neural Networks (ANN) are ready to invade the stock markets;

“Artificial intelligence is becoming so deeply integrated into our economic ecostructure that some day computers will exceed human intelligence,” Mr. Kurzweil tells a room of investors who oversee enormous pools of capital. “Machines can observe billions of market transactions to see patterns we could never see.”…

But some are aware that a former Microsoft executive and chairman of the Nasdaq stock market, Michael W. Brown, is an investor in Mr. Kurzweil’s new hedge fund, FatKat, and that Bill Gates once described him as “the best person I know at predicting the future of artificial intelligence.” …

“Five years ago it would have taken $500,000 and 12 people to do what today takes a few computers and co-workers,” said Louis Morgan, managing director of HG Trading, a three-person hedge fund in Wisconsin. “I’m executing 1,500 to 2,000 trades a day and monitoring 1,500 pairs of stocks. My software can automatically execute a trade within 20 milliseconds — five times faster than it would take for my finger to hit the buy button.”

Studies estimate that a third of all stock trades in the United States were driven by automatic algorithms last year, contributing to an explosion in stock market activity. Between 1995 and 2005, the average daily volume of shares traded on the New York Stock Exchange increased to 1.6 billion from 346 million….


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