The New Gilded Age

From: http://www.nytimes.com/2016/04/24/business/economy/velvet-rope-economy.html

"With disparities in wealth greater than at any time since the Gilded Age, the gap is widening between the highly affluent — who find themselves behind the velvet ropes of today’s economy — and everyone else."

Taken for a ride

The failed Washington Metro subway

The First Keynesian - Alexander Hamilton

Alexander Hamilton was the first Keynesian, although he lived a couple hundred years before Lord Keynes.  In 1790, he promoted redeeming government debt at full-face value to the current holders, who had paid as little as 10% of the value to the original holders, who were usually soldiers who had been given the notes in exchange for the service.

Representative James Madison vigorously led the opposition to Hamilton’s “redemption”, though he fully supported the development of good credit. In his address to the House on February 11, 1790, he characterized Secretary Hamilton’s “redemption” as a formula to defraud “battle-worn veterans of the war for independence”  and a handout to well-to-do speculators, mostly rich northerners, including some members of Congress. Madison’s “discrimination” promised to correct these abuses in the names of financial rectitude and natural justice. --wikipedia

Why did Hamilton want to do this?  To promote confidence in the public debt to and promote crony capitalism (my words), err, to strengthen commercial investment by concentrating capital into fewer hands and to give wealthy, influential investors a stake in the national government.  Also to make debt "answer most of the purpose of money".

He was the father of centralized government.  Of course the federal government was a vast improvement over the Articles of Confederation, but he made it this omnipotent entity in a financial sense.  I don't know his position on the gold standard, but he wanted debt-backed money to be equivalent to hard currency.

That is why he will survive on the ten dollar bill and Andrew Jackson will be banished into the Hall of Shame of racist, white supremacists.

See also In Hamilton's Debt by Paul Krugman.  Krugman adores Hamilton and uses the occasion to argue for MOAR DEBT and to damn the fiscal scolds.  "it would be better for almost everyone, the story goes, if governments were to issue more debt, investing the proceeds in much-needed infrastructure even while providing the private sector with the collateral it needs to function. And it’s a very persuasive story to just about everyone [except the global warming/debt "deniers"] who has looked hard at the evidence."

Dire Straits

What if you had an emergency and had to come up with $400 within two hours?  Furthermore, you are not allowed to use credit cards, borrow, or sell anything to come up with the cash.  Would you be able to?  47% of Americans would not.

http://davidstockmanscontracorner.com/desperate-straits-the-secret-financial-crisis-of-middle-class-americans/

The Secret Shame of Middle Class Americans

See also: 47 Percent Of Americans Cannot Even Come Up With $400 To Cover An Emergency Room Visit

Ya Te Olvide

April 19 is Bicycle Day

Bicycle Day celebrates Swiss scientist Albert Hofmann's discovery of lysergic acid diethylamide or LSD in 1943, and the subsequent, and at times harrowing, ride home on his bicycle after deliberately ingesting a dose of the drug.
http://www.abc.net.au/news/2016-04-19/bicycle-day-albert-hoffman-lsd-psychotherapy-research/7336712

Note: This is a different person from Abbot "Abbie" Hoffman who was an anarchist and social activist in the '60s and '70s. He died on April 12, 1989.

World's tallest tower to be built .. in Dubai

Emaar Properties PJSC plans to build a $1 billion skyscraper in Dubai that will exceed the height of the Burj Khalifa, currently the world’s tallest building.   Construction will start at the end of June and will finish before Dubai hosts the World Expo in 2020.
http://www.bloomberg.com/news/articles/2016-04-10/dubai-developer-of-world-s-tallest-tower-going-to-new-heights

The Diamond Empire

The next recession in 2018 will cause trillion dollar deficits as far as the eye can see

... implicit in the CBO projections is the assumption that we will not have a recession in the next 10 years. Plus, the CBO assumes growth above what we’ve seen in the last year or so. We randomly decided that we would hypothesize our next recession to occur in 2018. Whether it happens in 2017 or 2019, the relative numbers are the same. Entitlement spending and interest would greatly exceed revenue.  The deficit would balloon to $1.3 trillion. And if the recovery occurs along the lines of our last (ongoing) recovery, we will not see deficits below $1 trillion over the following 10 years—unless we reduce spending or raise revenues.
--http://www.zerohedge.com/news/2016-04-09/these-2-charts-show-next-recession-will-blow-out-us-budget

Forevermark Diamonds

Berkshire Hathaway Value

Berkshire Hathaway has two classes of stock, Class A and Class B.  Class A has never been split.  Class B originally was worth 1/30th of Class A and was split 50 to 1 in 2010, so they are now worth 1/1500th of the value of Class A.  Each Class A share can be split into 1500 Class B shares, but not the reverse.  The current value as of April 6 is as follows:

Berkshire Hathaway Valuation
As of April 6, 2016
	Symbol	Shares O/S	Price/Share	Total (M)
Class A	BRK-A	0.80724	212990.00	171,934.05
Class B	BRK-B	1250	141.70	177,125.00
Total				349,059.05

Facebook Value

What is the value of Facebook Inc?  The stock is split into 2 classes, with Class A sold on the market under FB and Class B being privately owned, but each share having 10 voting rights.  The number of Class B shares is listed as 551,589,813 as of 12/31/15 here, so I am using the number 551.6 million. Here is the calculated value:

Facebook Stock Valuation
As of April 6, 2016
	Symbol	Shares O/S	Price/Share	Total (M)
Class A	FB	2380	113.71	270,629.80
Class B	(Private)	551.6	113.71	62,722.44
Total				333,352.24

Google Value

What is the total market value of Alphabet, Inc, the parent company of Google?  It is very confusing. I like a simple answer: just multiple number of shares outstanding time the price per share.  With Alphabet, however, there are three classes of shares, A,B and C.  Class A shares have voting rights and have the ticker symbol GOOGL, Class B stock is the same except each share has 10 voting rights and they are privately owned, Class C shares have no voting rights and have the ticker symbol GOOG.  The number of Class B stock is unknown, except I saw the number of 52 million shares here.  The price of Class B stock is also unknown, except for this purpose I will use the same number as Class A stock.  So here is the value I come up with as of today (April 6):

Alphabet Stock Valuation
As of April 6, 2016
	Symbol	Shares O/S	Price/Share	Total (M)
Class A	GOOGL	292.58	768.07	224,721.92
Class B	(Private)	52	768.07	39,939.64
Class C	GOOG	345.54	745.69	257,665.72
Total				522,327.28

Now I need to do the same analysis for Berkshire Hathaway and Facebook, whose valuation is also confusing.

How to buy a diamond

Vintage video from the early 90s

100 carat emerald diamond

Antwerp

Blue Nile

Brian Gavin Diamonds

Astralis Diamonds