ERICOPOLY

CPI-W is called the "The Consumer Price Index for Urban Wage Earners and Clerical Workers" So that too is "urban". Perhaps the Bloomberg figures are for "core" CPI, excluding food and energy costs? I've been trying to find what those numbers would be fore the "core" CPI, but I haven't been able to find them. I was hoping to locate them so that we could at least see if they match up with the Bloomberg numbers. Refer to the post above, I can't seem to find the same numbers in bloomberg i found yesterday, just playing around with their stupid codes for everything. However, in addition to the chart posted above, here is Real GDP Per Capita. This does not adjust for hours worked, but is the total economy, not just non-supervisory production workers. Personally, I'm in the camp that real wages have risen. I just find it frustrating that "real" in the Bloomberg calculations isn't defined -- "real" is obviously relative to the data used, and these screencapture shots don't specify the data set used. I wish I was still as young as I was in 1980 though. In that respect my standard of living keeps declining every year.

CPI-W is called the "The Consumer Price Index for Urban Wage Earners and Clerical Workers" So that too is "urban". Perhaps the Bloomberg figures are for "core" CPI, excluding food and energy costs? I've been trying to find what those numbers would be fore the "core" CPI, but I haven't been able to find them. I was hoping to locate them so that we could at least see if they match up with the Bloomberg numbers.

Yes well, I didn't mix apples/oranges on purpose. I assumed that CPI-U is what we wanted because you didn't mention otherwise and I figured you just accidentally pulled the wrong data from somewhere. CPI-U is what the US Treasury uses to calculate the adjustments for TIPS -- they don't have a "national" CPI for that. Do you mind adding links to the national wage data and "national" CPI data? I must admit I have not heard of the "national CPI" before. I went to Wikipedia's article on the CPI and I still cant figure out which one it may be. Here is the Wikipedia link: http://en.wikipedia.org/wiki/United_States_Consumer_Price_Index It mentions the CPI-U and CPI-W, and "Core CPI", but neglects to mention "national" CPI.

These are figures directly from BLS: 1980 CPI: 89.7 2010 CPI: 173.8 1980 Median Hourly Wage: $7.12 2010 Median Hourly Wage: $18.85 Adjusting for HOURS WORKED, and adjusting for CPI there has been a 36% increase in take home wages. -This does not account for the fact that many things (Computers, telephones, tvs, medicine) are better today but cost the same or less -This also does not account for the expansion of FEMALES in the workforce (more jobs have been created for females that wanted to join workforce) There are different CPI's that the BLS publishes (CPI-W, CPI-U, etc...) The CPI-U (All urban consumers) does not support your conclusion... In fact the CPI-U suggests a slight decrease in what you are calling take home wages. Jan 1980: 77.8 Apr 2010: 218 218 / 77.8 = 2.8 $7.12 * 2.8 = $19.93 (adjusting 1980 wages for rise in CPI-U of 2.8x) $19.93 > $18.85 Here is the link to the CPI-U data: ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt

Despite more shares being issued due to the lower price, they can also buy more new shares for their money. For the same amount of new money invested, they should get roughly the same earnings. I don't see where the additional dilution is coming from.

You posted this while I was still typing up my post. You are exactly right IMO.

I would be interested in a quiz to see who understands externalities better... liberals or conservatives. Totally free markets mean that the lowest cost producer of electricity will win... but that may not be the most efficient allocation of capital if the external costs of the pollution, when added to the cost of production, are taken into consideration. It's not that complicated, but it's amazing how many conservatives don't seem to get it, clever as they think they are. Does anyone disagree that my version of the test would show that conservatives are less likely to arrive at the "enlightened" answer? Therefore, they don't get economics.

I thought the US was only 25% of their business. From what I understand, one of the exciting things about Citigroup is that 50% of their business is done in the "emerging markets". So there is growth potential in excess of what the other large US banks may enjoy. I think they are making most of their investments for future growth outside of the US -- I saw some Pandit video where he was talking about this.

Everybody seemed fine that the banks were giving out easy credit until they collapsed. Then it was the banks' fault! It was the banks (plus fed, regulators, Congress, Presidents, and ......) fault. There will always be idiots lining up for loans they cant afford. The duty of care is with the Lender. There is and always be will an unending appetite for free cash. Are we really to blame the idiots, for bringing down the house? Here is a quote from Buffett to a Minority bank director - You will notice that the President of the bank said, "When we started business, it was our plan to aid minority investors and the so called little guy.l This we did, but some of them didn't treat us very well in paying their debts, and that was our downfall." The President is making a mistake in blaming the borrower. Every bank gets offered lots of bad loans, and its the banker's fault if he accepts them. I am all for personal responsibility but do you really want to trust the economies health to hoping that people will properly self qualify themselves for loans? Did Congress act before the crisis broke, or after? Where was Barney Franks' pitchfork mob in 2006? Munger was right... the tiger got loose but nooooo.... it couldn't have been the zookepers fault! I think the people and the politicians were happy that the credit was flowing. Only after the problem happened did it seem obvious to them the risks.

Everybody seemed fine that the banks were giving out easy credit until they collapsed. Then it was the banks' fault!

I found that while getting tires changed at Walmart, it's nice to have something to do (browsing in the store). Getting some shopping done while at the Laundromat makes sense for the same reason.

The correllation lies with strong El Nino creating upper level wind shear that weakens and deters Atlantic hurricanes, making landfall improbable. Currently I believe the threat is from a weakening El Nino (the deflector shield is down).

From what I understand, over the past decade their network utilization never hit prior forecasts due to disruptive technologies like Akamai's. Instead of an end user from Mountain View California getting data from a server in New York, the data for the end user comes from a server in San Jose that had locally cached the New York servers' data. Is that a fair summary of why the explosive growth never happened? Apologies if that's too oversimplistic -- I'd rather like somebody to give me a better explanation if one exists.

I read the Carnegie biography a couple of months ago followed by Chernow's biography of Rockefeller. However I do not remember the example that you are alluding to. Anyways, I think it's possible that the money printing to date this time around will merely support the prior levels of inflation provoked by the collateralized lending against artificial values with silly LTVs. That type of lending ought to have been inflationary and it won't come back. I worry about inflation quite a bit but I increasingly wonder about where the price level would be today without the quantitative easing -- perhaps by merely supporting prior price levels it is heavy inflation right there already. We don't feel it though because we were slowly cooked over more than a decade. This is a case where the hard money people would be correct even though the printing happened after the inflation. That's why I brought up the topic of credit booms sparking inflation (the examples of rising gold and silver deposits).

There were several periods of high inflation when on the gold standard. One of them was Mexican silver coming to the US around the 1830s and another was a flight of European gold deposits to America during WWI. Fractional reserve banking can multiply such deposits in such a way that the money supply goes way up -- believe the term is "credit creation multiplier". To the misconception(tossed around by Jim Rogers etc...) that recessions are necessarily short if there is no FED, take a look at the depression of 1837-1844. There was no federal bank at the time. It had been abolished. End the Fed... what a dream to a world where depressions/recessions are short... it's a nice dream but it's not supported by history.

One of the reasons why Apple is so good is that their backwards compatibility is so atrocious. They have had the flexibility to just completely toss out the old and reinvent their platform. Microsoft can't do that to their corporate customers. So you get these products that are compromises between the past and the present. I would not trust Apple with my desktops if I were a very large corporation.

It has been suggested that retail investors nearly always lose with options. This suggests that if you take the other side of the trade you will nearly always win. I've also read that 70% of options expire worthless -- this suggests that if you write options you win 70% of the time. I'm just having a little bit of fun with this. Seriously, I think if you feel like you simply must use leverage then writing deep-in-the-money is probably a better way to go for most retail investors because you are effectively getting an interest free margin loan, and margin loan rates are typically very high at retail brokerages.

The government collects a share of taxable income without needing to put any skin in the game. This is essentially the ultimate risk/reward proposition. Therefore, it doesn't make sense for the government to invest in equities -- why buy the cow when you get the milk for free? These people who say that the govt privatizes profits but publicizes losses seem to forget that the public gets a cut of profit from every business without risking any capital. The public get a much better deal than the rich.

Rabbitisrich wouldn't start out by selling puts on WCOM. The running insult here is that you assume we are all stupid, and that you must enlighten us.

For a minute there I didn't think you had a sense of humor. Good on you.

There is somebody else that has been talked about recently on this board that tried to talk like Warren in his letters, but it ultimately turned out that the character of the man shined through.

I can't wait to hear it. I'm a big boy, please tell me what "volumes" it spoke.

Citi has the lowest commercial real estate exposure -- only 3% of total loans. Based on the theory that consumer losses peak first, Citi is a well capitalized survivor of the consumer loan loss peak, but one with little exposure to the next debacle.

I guess even the assets:loans ratio isn't that meaningful. Like you suggest, the issue is really more one of loan quality, and past history is enough to scare you away from this company. The reason why I say that assets:loan ratio isn't that meaningful is that this is after all the banking industry we're talking about. A bank can have a very high amount of absolute leverage (12:1) while taking on very little risk. Imagine if the loan book of a bank today were entirely comprised of real estate first mortgages where the buyer put 30% down. The bank could lever that 12:1 without much risk at all. Even if we saw yet another 30% decline (after already suffering one the past few years) the bank would still be making money as it is the borrower losing that 30% of equity, not the bank. Berkowitz (in January 2010) stated that "we are in the spring of a recovery". That's why he owns Citigroup -- he believes the economy has already crashed, and he also stated that Citigroup is "overcapitalized". That's not an unreasonable viewpoint if you start with the premise that the economy is truly in recovery. Sprott on the other hand doesn't agree with this macro view.

You are forgetting to add back in the loss reserves. They offset some of the assets that you include in your tangible equity to assets ratio, so I think it's fair to include them in your ratio. The ratio seems to only serve to give you an idea of the leverage involved -- I think that's the point right? So the loss reserves help mitigate the risk. The higher the loss reserves as a percentage of total assets, the more it mitigates the risk. When you say 5% ratio, it implies 20:1 leverage. But they have a loss reserve of 6.7% (I think that's just for CitiCorp but I could be wrong). I believe their leverage is more like 12:1 -- accounting for the loss reserve.