WC Varones

Our friend Adrienne Gonzalez of Jr. Deputy Accountant has been named managing editor of Going Concern, the web's most popular (and funniest) accounting site.

JDA's hits over the years include getting the name "Zimbabwe Ben" in print in Time Magazine.

Let it never be said we don't have an eye for talent.

Over at Econbrowser, Professor Hamilton discusses a recent paper by Blinder and Watson that looks at the difference between GDP growth rates under Democratic and Republican administrations.  Growth is higher under Democratic administrations, but the researchers find that this is due to luck, not policy.  Republicans tended to be in office during GDP-killing oil shocks, while Democrats benefited from things like the productivity-enhancing growth of Walmart.

But the third factor after oil shocks and productivity gains cited by the authors is "more optimistic consumer expectations (as measured by the Michigan ICE)."  Could this be influenced by more optimistic media coverage of the economy during Democratic administrations?  Remember the relentless drumbeat of negativity in the media during the second half of the Bush I presidency? Surely that constant refrain begins to affect consumer sentiment.  A 2004 Federal Reserve study found that indeed, news coverage does significantly affect consumer sentiment.  Meanwhile, the entire Obama presidency has been a worse economy than Bush I in terms of unemployment, underemployment, welfare dependency, and the wealth gap, but the media coverage has been muted on the economy and fawning on Obama personally.

Media bias toward liberal views is well-documented, and the vast majority of national news reporters and producers reflect their New York - Washington DC surroundings and vote consistently Democratic.  It would be naive to believe these views don't affect their coverage of the economy, or that the tone of media news coverage doesn't affect consumer confidence.

Hear it from the mouth of the "beneficiary."  Is this the country you want?  Is this good for the recipients?



Incentives, people.  Incentives.

HT: Mish.

Proving once again that a little knowledge is a dangerous thing, Bloomberg / Businessweek reporter Kyle Stock beclowns himself by pretending to understand financial ratios.

Stock makes the attention-grabbing claim, "Hey, Shoppers: Black Friday Savings Are a Hoax" based on corporate operating margins:

Forget the door-busters, coupons, and “friends and family” deals. U.S. shoppers on the whole will be paying more over the next few weeks than they do the rest of the year. Turns out, retail profit margins tend to be higher during the holiday period, despite all the promotions.

Among the 15 largest U.S. retailers, operating margins in the holiday quarter last year were 11 percent, compared with 9 percent in the preceding nine months. Amid the year-end shopping frenzy, these companies padded their bottom lines, on average, by roughly one-quarter.

Wrong, moron. Higher holiday season operating margins do not mean shoppers are paying higher prices.

Kyle Stock doesn't understand the difference between gross margins and operating margins. Gross margins are what Kyle should be looking at, the markup from cost of goods sold to the price charged to the customer. Operating margins include all operating expenses, including wages, store leases, and corporate overhead. Operating margins can increase for a number of reasons, including higher sales. If the company increases sales over which to spread the fixed costs, operating margins increase. Did Kyle ever consider that sales might increase for some stores during the holidays?

Home Depot (HD) and Lowe’s (LOW) may be the only places where a shopper can expect to catch an honest break at the end of the year. Macy’s (M), Bed Bath & Beyond (BBBY), and L Brands (LTD), the company behind Victoria’s Secret, are particularly adept at producing opulent holiday returns.

Obviously, Home Depot and Lowe's have different seasonal trends than clothing stores, being more related to home and garden work and less related to drywall under the Christmas tree. If Kyle had bothered to take even a cursory look at the financials, he'd notice that gross margins for the two stores are fairly steady throughout the year, but operating margins are lower in winter because of lower seasonal sales.

Some stores, like Bed Bath & Beyond and L Brands, do have higher gross margins in the holiday season.  Macy's gross margins, on the other hand, are highest in summer.  But the seasonal differences in gross margins are small relative to the differences in operating margins, which are explained by large holiday sales volumes.

Not everyone understands the basics of financial statements. But for someone who is paid to write about this stuff for an alleged business publication to be this ignorant is truly stunning.

Businessweak.

Just Say No to crap consumerism. Get out there and Buy Nothing!

Cartoon by Rick McKee

We were commenting just yesterday that Greenspan's Body Count has slowed down. Most victims of Greenspan's bubble have long since been foreclosed, gotten loan mods, found new jobs, or otherwise hung onto their houses long enough for Bernanke's echo bubble to bail them out.

Well, speak of the devil...

ABC Fresno:

Police say they have uncovered a critical piece of evidence that is shedding light on what lead to two deaths over the weekend at a Fresno home. The man who police believe shot and killed his wife and then turned the gun on himself left behind a note.

Family members Monday said Harmandeep Singh left a suicide note that was turned over to detectives. While the couple may have seemed to be all smiles around their family, police are finding there were some underlying problems.

[...]

Since Saturday, investigators have learned the pair had some financial problems police believe may have contributed to the murder-suicide.

Harmandeep Singh and Karanjit Kaur lived at 6577 West Celeste Avenue in Fresno, purchased for $470,000 in June 2007 and now worth $298,000 despite Bernanke's best efforts to equal Greenspan's bubble-blowing.

Greenspan's Body Count stands at 247.

Who would have thought that a guy with no understanding of economics trying to rule a command economy by executive order would be a problem?

From the mouths of maniacs:

We have made good progress, but we have farther to go to regain the ground lost in the crisis and the recession. Unemployment is down from a peak of 10 percent, but at 7.3 percent in October, it is still too high, reflecting a labor market and economy performing far short of their potential. At the same time, inflation has been running below the Federal Reserve's goal of 2 percent and is expected to continue to do so for some time.

For these reasons, the Federal Reserve is using its monetary policy tools to promote a more robust recovery. A strong recovery will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools such as asset purchases. I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy.

Sounds like she just took the December taper off the table.

"Most realists, they die sad and alone. You gotta bullshit some too." - Mike Tyson