Understanding the Great Depression and the 1970s

Well how come the http://en.wikipedia.org/wiki/Great_Depression has a cool name, but the 1970s do not? Wikipedia as usual has a great analysis that includes how different countries were affect. Particularly relevant now in our interconnected world.

But the causes are the big issue Causes of the Great Depression which comes down to Keynes and monetary theory (I’m glad I liked my econ 101 classes!). What does sound familiar is that in the 1920s, everyone loaded up on debt to buy cars and things as well as factories. Then there was price deflation and a dramatic cut in spending to keep up on payments (sound familiar). The final face was massive layoffs and then as economic activity dropped, the debt was still there. Then banks failed wiping out savings but not the debt (hopefully this won’t happen this time) and as more loans were called, more people went bankrupt and stopped buying. The monetarist point out the fed wasn’t loose enough, so money supply fell by 1/3 as they let banks fail (not this time around!)

What is most interesting is the differential effects of the American flu:

* Australia. Back then (and now), it was really depending on exports
* Canada. Same deal
* Japan. Had the smart economists. They devalued their currency, so they could export more and they had deficit spending (but not for wars) to stimulate the economy. Not surprising, this caused inflation and ultimately led to the nationalists taking over when the economy was trying to cool.
* France. Was relatively isolated from a trade point of view, so was less affected. Maybe this is more like China today which has lots of exports, but a big internal deman.
* Germany. The war reparations crippled the economy and brought in Hitler.
* Latin America. Really hard hit because they were heavy exporters to the US.
* Netherlands. They had the gold standard for way too long, so they didn’t depreciate their currency, thus choking off exports.
* South Africa. Export driven also, they had a terrible time.
* Soviet Union. Because it was political and economically isolated, there was little impact

While most folks see the depression starting in the stock market in 1929, then economic activity collapese 2 years later. The most interesting thing is that in 1937 there was another recession. The bad part of rhetoric about big bad business,  but the good thing was a $5B fiscal stimulus package.

Sequoia issues warning of secular bear market (aka it is better to hold t-bills)

!Force of Good: a blog by Lance Weatherby

Today, Sequoia Capital hosted a mandatory CEO All-Hands Meeting on Sand Hill Road. There were about 100 CEO’s in attendance and let me tell you, the mood was somber. I’m not one to perpetuate doom and gloom or bad news, but let me underscore this for you: We are in a serious economic downturn and this is just the beginning. Immediate, decisive and swift action is required, along with frugal, day-to-day management of expenses and our business is required.

Market trends – Wikipedia, the free encyclopedia

A secular market trend is a long-term trend that usually lasts 5 to 25 years (but whose distribution is more or less bell shaped around 17 years, in the stock market), and consists of sequential ‘primary’ trends. In a secular bull market the ‘primary’ bear markets have in the past almost always been shorter and less punishing than the ‘primary’ bull markets were rewarding. Each bear market has rarely (if ever) wiped out the real (inflation adjusted) gains of the previous bull markets, and the succeeding bull markets have usually made up for the real losses of any previous bear markets. This is one of the reasons why a secular market trend may be said to encompass the primary trends within it. In a secular bear market, the ‘primary’ bull markets are sometimes shorter than the ‘primary’ bear markets and rarely compensate for the real losses of the ‘primary’ bear markets occuring during this extended cycle.

For example, in the 1966 – 82 secular bear market in stocks, there was hardly any nominal loss. But in real terms the loss was devastating. (In the past most ‘housing recessions’ were of a slow nature, thereby allowing inflation to keep housing prices steady.) Another example of a secular bear market was seen in gold during the period between January 1980 to June 1999. During this period the nominal gold price fell from a high of $850/oz ($30/g) to a low of $253/oz ($9/g),[7] and became part of the Great Commodities Depression. The S&P 500 experienced a secular bull market over a similar time period (~1982 – 2000).[8]

Hussman Funds – Weekly Market Comment: Secular Bears – February 25, 2008

First, let’s define our terms. From my perspective, a “secular bear market” comprises a series of two, three or more individual “cyclical” bear markets (with cyclical bulls in-between), where in general, each successive bear market achieves a lower level of valuation at its trough. Over the period from peak valuations and trough valuations, it has invariably been true that stocks have lagged Treasury bill returns. .

This result is not particularly sensitive to the level of Treasury bills, but instead reflects the simple mathematics of total return. Holding the P/E multiple constant, the total return on stocks is equal to earnings growth plus the dividend yield. Since peak-to-peak earnings growth for the S&P 500 has historically been capped at only about 6% from cycle to cycle (as I’ve presented in numerous prior charts), it’s hard to get significant long-term traction from one bull market peak to the next unless the second bull market reaches a higher P/E than the first one did. Worse, when each successive bear market registers a lower trough valuation, even rapid earnings growth is incapable of pulling total returns to satisfactory levels.

Secular bears in the past century include 1901-1917, 1929-1949, and 1964-1982. To illustrate, consider the 18-year period from 1964 to 1982. From a valuation standpoint, the S&P 500 reached about 20 times record earnings in 1964 and 1965. Even though stock prices continued erratically higher until 1972, a buyer of stocks at the rich valuations of the mid-1960’s would have been only slightly ahead of Treasury bills by the 1972 peak.

Hussman Funds – Weekly Market Comment: Secular Bears – February 25, 2008

prior “secular bear markets” have generally provided a wide range of investment conditions and many good opportunities to accept market risk. Though investors who carelessly ignore valuations are sometimes forced to endure years of disappointing returns, it is also generally true that excellent investment opportunities develop well before the end of a secular bear. In the 1965-1982 period, for example, the brutality of the 72-74 plunge made the water safe for investors for several years at a time beginning in 1974 (even though stock returns didn’t durably outperform T-bills until the 1982 trough was set

Hussman Funds – Weekly Market Comment: Secular Bears – February 25, 2008

Though the 2000-2002 decline was similarly brutal, it unfortunately originated from truly psychotic valuations of about 34 times record earnings. As a result, the 2002 bear market trough occurred at the highest valuation (15 times record earnings) of any prior bear market trough in history, and failed to clear the excesses of the prior bubble. Predictably, the recent bull market has been far less robust than typical bulls

!Market’s 7-Day Rout Leaves U.S. Reeling – WSJ.com

On its way down, the Dow Jones Industrial Average broke through another milestone, closing below 9000 for the first time since 2003, wiping out the bulk of the gains from the last bull market. The decline leaves America in one of its worst bear markets in decades, a slump that is triggering comparisons to long-running declines of the 1930s and 1970s.

Thursday’s decline — the 11th largest in percentage terms in the Dow’s history — put the stock market either in, or nearly in, a crash. A common definition of a crash is a 20% decline in a single day or several days. The Dow’s crash in 1987 was 22.6% in one day. The 1929 crash was back-to-back declines of 12.8% and 11.7%

Favorite quotes

Well many of the most famous quotes are misquotes, but here is the researched actuals of my favorites:

From the Winston’s Churchill’s speech to the Harrow School, 29 October 1941 after 10 months of a war alone against Nazi Germany… Never Give In, Never, Never, Never – The Churchill Centre

this is the lesson: never give in, never give in, never, never, never, never-in nothing, great or small, large or petty – never give in except to convictions of honour and good sense. Never yield to force; never yield to the apparently overwhelming might of the enemy.

Fortune favors the bold which is from the “Aeneid”:http://en.wikipedia.org/wiki/Aeneid which is an epic poem by Virgil that tells the story of Aeneas, the Trojan who is the ancestor of the romns. and uses classical Latin “spelling’:http://www.proz.com/kudoz/latin_to_english/poetry_literature/2673397-audentis_or_audentes.html of audentis not audentes and iuvat which is pronounced juvat.

“Edmund Burke”:http://en.wikiquote.org/wiki/Edmund_Burke is misquoted to have said, “all that is necessary for the triumph of evil is that good men do nothing”. But it looks “like”:http://www.tartarus.org/~martin/essays/burkequote.html he never said this, although he did say.Edmund Burke – Wikiquote

It may have been adapted from these lines of Burke’s in his Thoughts on the Cause of Present Discontents (1770): “When bad men combine, the good must associate; else they will fall one by one, an unpitied sacrifice in a contemptible struggle.”

There is also much controversy about an add that Lord Earnest Shackleton took out for his Antarctic expedition. No one has been able to find the original source newspaper or the date and there is a reward. It appears this was not for the ill-fated and famous Endurance expedition, but is probably for the earlier Nimrod one. But most folks now this it came from a adwriter who wrote a book about top 100 best ads and he probably made up the #1 pick himself 1949 pulpbook called the 100 best ads by Julian Watkins which was in a turn a crib from another guy Tillman who himself made up the story of his own ad.


“Men wanted for hazardous journey. Low wages, bitter cold, long hours of complete darkness. Safe return doubtful. Honour and recognition in event of success.”

Finally, we have the Art of War (孫子兵法 Sun2 Zi2 Bing1 Fa2)

The Art of War – Wikipedia, the free encyclopedia


So it is said that if you know your enemies and know yourself, you will fight without danger in battles.
If you only know yourself, but not your opponent, you may win or may lose.
If you know neither yourself nor your enemy, you will always endanger yourself.

Ripping CDs on a Mac

On Windows, I use Lame and a specialized encoder because most experts think Lame is way better in making MP3 than iTunes (no surprise there, Apple likes its AAC format). I normally use Max, but it uses MusicBrainz as its database whereas iTunes uses GraceNote. So a good solution is a “ituns-LAME”:http://creativebits.org/mac_os_x/a_word_about_encoding_music_and_itunes script that uses iTunes/Gracenote and then encodes with Lame. Documentation is terrible, so I’d use Max, unless it couldn’t find an album then drop back to iTunes-Lame.

iTunes – Wikipedia, the free encyclopedia

Importing of audio CDs into MP3 can also be accomplished using variable bitrate (VBR), however it has been noted in a double-blind experiment conducted in January 2004 of six MP3 encoders, where the iTunes encoder came last, that the quality of the files produced by iTunes was below par. These results were later refuted because the method of testing using in the experiment was questionable.

A word about encoding music and iTunes… | creativebits

LAME (http://lame.sourceforge.net/) is a fantastic, free encoder that can achieve all the above. This program is normally run from the command line, which can be a problem for many Mac users who normally prefer something a bit slicker.

There are now two good solutions for the Mac.

– Max (http://sbooth.org/Max/)
– iTunes-LAME (http://www.blacktree.com/apps/iTunes-LAME/)

itunes inconsistent in how it handles artwork

If itunes finds the artwork for you, it never adds it to your MP3 files, so you have to Get Info and copy and past it. If you have art yourself, then you have to copy and paste them in. A little strange.

Pushing Album art to MP3 files – Mac Forums

n my experience they only way to get the artwork stored into the ID tags is to manually do so.

-If iTunes finds the artwork on it’s own, to add it to the ID tag, ‘get info’ of one of the songs on the album, go to the artwork tab, select the album cover, copy it (command-c in OSX, control-c in Windows), then highlight all the songs on that album, ‘get info’, click in the blank artwork field, then paste (command-v or control-v) and hit ok. It will then embed the artwork in the ID tag.

-If iTunes doesn’t find the artwork and you add it yourself, it’s a little easier…just find the relevant artwork (I usually get a 300×300 pixel or larger file; I check Wikipedia first, then I do a Google image search based on album name), copy the picture in the browser (or download the jpeg if you’d like, although it’s an unnecessary step) by right clicking (or control clicking if you have a 1 button mouse), select copy image, then ‘get info’ on all the songs on the album and paste in the blank artwork field like in the above case…which will then embed the artwork you found in the ID tag


Biogas – Wikipedia, the free encyclopedia

Biogas typically refers to a gas produced by the biological breakdown of organic matter in the absence of oxygen. Biogas originates from biogenic material and is a type of biofuel. One type of biogas is produced by anaerobic digestion or fermentation of biodegradable materials such as biomass, manure or sewage, municipal waste, and energy crops. This type of biogas comprises primarily methane and carbon dioxide.

Its kind of a neat way to have less pollution and resell it as a diesel replacement by compressing it into liquid natural gas.

“Clean Energy Fuels”:http://www.cleanenergyfuels.com/ is one of the beneficiaries of this as if “Westport Innovations”:http://www.westport.com/ which respectively supply the LNG an dmake the systems for trucks.

Chronicles of Chrestomanci

A great recommendation by Sam, Louie and John. By “Diana Wynne Jones”:http://en.wikipedia.org/wiki/Diana_Wynne_Jones#Chrestomanci_series, the only confusing thing is the internal order of the books, the order they are written and the recommended order of reading are all different. So, here is the way to read them according to the author:

# Charmed Life (1977). Actually in the middle of the chronology
# The Lives of Christopher Chant (1988). The first in the chronology
# Conrad’s Fate (2005). The second in the chronology
# Witch Week (1982). Separate from the other books, but in the same era as Charmed Life.
# The Magicians of Caprona (1980). Right after Charmed Life
# The Pinhoe Egg (2006). After the magicians

There is also a series called Chronicles of Chrestomanc that more or less puts them in the chronological order:

# Charmed Life
# The Lives of Christopher Chant
# Witch Week
# Magicians of Caprona

Time after Time

My buddy Gene got this song in my head, “Time after Time”:http://en.wikipedia.org/wiki/Time_After_Time_(Cyndi_Lauper_song) is one of those modern classics. “Cyndi Lauper”:http://www.youtube.com/watch?v=xJ5LmQmQZqg did it in 1984. It has a great pop beat and in the original is just wonderful!

The Wikipedia folks claim it has been ocvered by over 120 different artists. It is one of those songs that works well in lots of different genres. I first heard it years ago as a Shawn Colvin cover (Cover Girl is the best).

Latest version I love is from the Body Acoustic that Cyndi does with “Sarah McLaughlin”:http://www.youtube.com/watch?v=EsQYKO01nOQ&feature=related, another favorite of mine. If you can believe it “Martha Stewart”:http://www.youtube.com/watch?v=fQyNjN_yKY0&eurl=http://www.nutsie.com/album/Time%20After%20Time:%20The%20Best%20of%20Cyndi%20Lauper/4999323 has her solo acoustic version. It is great!

The “QuietDrive”:http://www.youtube.com/watch?v=7BD3fF4nVsU version is great.

Remote desktop between Mac and PC

I use Microsoft Remote Desktop between Windows machines and it is very convenient to logon and see the screen of another computer. For Apple, they have something called Share Screen which is the same thing and is based on “VNC”:http://en.wikipedia.org/wiki/VNC protocol that lets you control one computer from another. But what if you want to do this between a Mac to a Windows machine. Very useful if some application only run on a PC and you don’t like the overhead of running Parallels or having to reboot with Basecamp. Just have a Windows machine somewhere and use VNC.

Here is how:

# Use an open source free VNC server and viewer like “RealVNC”:http://realvnc.com. They have paid version, but the free one works for Windows and includes a client and a server.
# On the “Mac”:http://the.taoofmac.com/space/VNC, there is already a VNC server built in. Go to System Preferences/Sharing and turn on Screen Sharing. It nicely gives you the IP address you use if you have Windows, otherwise if you are controlling this computer from another Mac, you can just see it as a button when you go to the sharing section of finder.
# You still need a Mac client to complete the picture, so you can control a PC. And Tao of Mac recommends “JollysFastVNC”:http://the.taoofmac.com/space/apps/JollysFastVNC although “Chicken of the VNC”:http://sourceforge.net/projects/cotvnc/ comes up first in google:”mac vnc client”

The Tao of Mac – Virtual Network Computing (VNC)

Mac OS X includes a VNC server (check the Sharing preference pane, it’s part of Apple Remote Desktop).