Links of the day

Goldman Sachs: More Transparency Would Boost Share Value...Roger Ehrenberg argues that Goldman's PE ratio is too low given valuations of its competitors...my response to this is that Goldman and other investment banks obviously are involved in a lot of proprietary trading activities, or as Ehrenberg puts it, "alternative asset management activities" which likely often work at cross purposes to the rest of your portfolio if you own some GS stock...no one should buy the stock of any investment bank; in my view stakeholder conflicts of interest are unavoidable unless an investment bank is a completely private entity...

The Surprising Shortage Of Quality Global Labor...key point: "wages and cost of living will adjust upward much more quickly than the 30 or 40 years he expects. It turns out that companies only enjoy the advantages of low-cost labor at best for a three- or four-year window"...based on examples of countries where wages for jobs outsourced from the US have rapidly increased...

Earnings Deceleration and Equity Prices...key quote: "

Historically, earnings growth runs about 7% -- roughly the combination of inflation and GDP.

Mean reversion, however, does not simply return a measure to its historical average. Rather, it oscillates above and below. While 6.3% is a respectable number for earnings growth, it is important to note that the profit growth is a cyclical phenomena, swinging wildly above (+28% a few years ago) and wildly below (minus 25% a few years before that)"...thank you for pointing out that a mean or average equals data points above and below that mean number...a lot of people forget that...

The Panic of 2007: No Buyers at Any Price...Charles Hugh Smith points to a story with the following comment by Alan Greenspan: "The verdict on the new order is unsettled. No one really understands its Byzantine ways. "It has become so complex and so arcane," former Fed chairman Alan Greenspan said recently, that it is "swamping" governments' regulatory controls. Yet, it "seemingly works because there is an implicit, invisible hand which creates ... smoothness." Most markets, he said, self-regulate"...if Alan Greenspan is admitting that the financial system is not comprehensible by the world's top financial minds, that ought to concern anyone..

Since 1997, Boeing has cut the production time for a 737 in half, now taking only 11 days to build one...per the Seattle PI...

Oddness in Washington state...In a story on Washington farmers, the Seattle PI states that "It's a blueberry boom. In recent years, Columbia Basin growers have planted hundreds of acres of the sweet berries that traditionally are found in foggy valleys of Western Washington and Oregon. They're attracted to the price that blueberries fetch, as well as the ability to harvest them by machine at a time when many farms are going begging for migrant labor"...something new is going on in the US labor market when farming operations can't find migrant workers...