Bulls, Bears, Donkeys, and Elephants

This chart from the New York Times seems too amazing to be true. It appears that the Republicans, the party of the rich, are historically not too successful at boosting stock market returns. (By showing the Republican figures in red-state red, the Times emphasizes the underperformance even further, perhaps a bit unfairly.)

As of Friday, a $10,000 investment in the S.& P. stock market index would have grown to $11,733 if invested under Republican presidents only, although that would be $51,211 if we exclude Herbert Hoover’s presidency during the Great Depression. Invested under Democratic presidents only, $10,000 would have grown to $300,671 at a compound rate of 8.9 percent over nearly 40 years.

Warren Buffett is buying American

At times like these, it’s good to get a reality check from someone like Warren Buffett, who understands the current financial crisis, doesn’t underestimate it, yet is able to see beyond short-term panic to long-term opportunity. The day after this op-ed appeared, it was the most-emailed item at the New York Times website.

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

A run on the banks

October has been a perilous month for the economy for many years, it seems. Here’s what Thoreau had to say on October 14, 1857, contrasting the panic among those who rely on the commercial banks with the security of the crickets who rely on the banks of sand near Thoreau’s cabin.

I’ve read this passage several times before, but it was only this time that I noticed the neat pun on Suffolk Bank and suffocation. 

Corporate rat

At the corner of Broadway and Howard Street, someone has painted this marvelous corporate rat on a wall facing a vacant lot. Presumably it’s connected with the Wall Street credit crisis and the impending bailout or “rescue.” A close look reveals that the rat has blood on his hands.

Update: On October 15 I spotted another rat painted in similar style on the side of building on Houston Street. Some intentionally half-obscured type that accompanied the rat makes it look as though this is part of a viral campaign for some kind of new gossip show on Fox. Too bad: I preferred to think that it was the work of a freelance social critic. At any rate, I liked it better than the viral campaign for the new TrueBlood vampire show, which was initially intriguing but soon became exhausting. These guys are trying too hard.

The Jungle by Upton Sinclair

The Jungle seems to be one of those books that is often referred to but rarely read. I knew that it contained graphic descriptions of filthy and unsafe working conditions in the meat industry of the early 20th century, but it somehow escaped me that this was a novel and not a journalistic exposé.

One of my colleagues recently read The Jungle as well as Upton Sinclair’s Oil! (the basis of the Daniel Day-Lewis film There Will Be Blood) and spoke highly of them. The Jungle turns out to be not only a well-researched look into the horrors of the Chicago stockyards but a grim, relentless, and well-told story of immigrants ground down by an unregulated and unscrupulous business monopoly.

The book does have some memorable descriptions of how cattle and pigs are converted into meat. Not surprisingly, one of the worst concerns the making of sausage (p. 134 of the Bantam edition):

There was never the least attention paid to what was cut up for sausage; there would come all the way back from Europe old sausage that had been rejected, and that was moldy and white — it would be dosed with borax and glycerine, and dumped into the hoppers, and made over again for home consumption. There would be meat that had tumbled out on the floor, in the dirt and sawdust, where the workers had tramped and spit uncounted billions of consumption germs. There would be meat stored in great piles in rooms; and the water from leaky roofs would drip over it, and thousands of rats would race about on it. It was too dark in these storage places to see well, but a man could run his hand over these piles of meat and sweep off handfuls of the dried dung of rats. These rats were nuisances, and the packers would put poisoned bread out for them; they would die, and then rats, bread, and meat would go into the hoppers together. This is no fairy story and no joke; the meat would be shoveled into carts, and the man who did the shoveling would not trouble to lift out a rat when he saw one — there were things that went into the sausage in comparison with which a poisoned rat was a tidbit.

What struck me just as much, however, were the scenes describing how the hero, a Lithuanian immigrant named Jurgis, and his family are victimized by a century-old version of deceptive mortgage lending. Hoping to avoid the trap of endless rent, Jurgis buys what he is told is a brand-new house for a down payment of three hundred dollars and a monthly payment of twelve dollars until the full price of fifteen hundred dollars has been paid.

It is only after the contract has been signed that he finds out about the charges for interest and insurance, and learns that the supposedly new house has been sold again and again to buyers who could not keep up with the payments and were put out on the street when they fell behind. Each time the house is simply repainted, and some superficial repairs made.

One of the most wrenching scenes in The Jungle comes when Jurgis is released after a month in jail and walks homes for miles across Chicago in bitter winter weather. At last he arrives at his own street:

Jurgis went closer yet, but keeping on the other side of the street. A sudden and horrible spasm of fear had come over him. His knees were shaking beneath him, and his mind was in a whirl. New paint on the house, and new weatherboards, where the old had begun to rot off, and the agent had got after them! New shingles over the hole in the roof, too, the hole that had for six months been the bane of his soul — he having no money to have it fixed and no time to fix it himself, and the rain leaking in, and overflowing the pots and pans he put to catch it, and flooding the attic and loosening the plaster. And now it was fixed! And the broken windowpane replaced! And curtains in the windows! New, white curtains, stiff and shiny!

Then suddenly the front door opened. Jurgis stood, his chest heaving as he struggled to catch his breath. A boy had come out, a stranger to him; a big, fat, rosy-cheeked youngster, such as had never been seen in his home before.