'Baby Doc' Duvalier back in Haiti after long exile

By JACOB KUSHNER, Associated Press
Sunday January 16, 2011

PORT-AU-PRINCE, Haiti – Former Haitian dictator Jean-Claude "Baby Doc" Duvalier returned Sunday to Haiti after nearly 25 years in exile, a surprising and perplexing move that comes as his country struggles with a political crisis and the stalled effort to recover from last year's devastating earthquake.

AP – FILE - In this May 25, 1980 file photo,
Haiti's former dictator
Jean-Claude 'Baby Doc' Duvalier gives …

Duvalier, wearing a dark suit and tie, arrived on an Air France jet to hugs from supporters at the Port-au-Prince airport. He was calm as he was led into the immigration office and did not immediately make a statement to a waiting crowd of journalists.

"He is happy to be back in this country, back in his home," said Mona Beruaveau, a candidate for Senate in a Duvalierist party who spoke to the former dictator inside the immigration office. "He is tired after a long trip."

Beruaveau said he would give a news conference on Monday.

There were no immediate protests in reaction to his return and very few people were even aware that the former dictator had come back to Haiti.

In the fall of 2007, President Rene Preval told reporters that Duvalier could return to Haiti but would face justice for the deaths of thousands of people and the theft of millions of dollars.

Haitians danced in the streets to celebrate the overthrow of Duvalier back in 1986, heckling the tubby, boyish tyrant as he was driven to the airport in a black limousine and flown into exile in France. Most Haitians hoped the rapacious strongman known had left for good, closing a dark chapter of terror and repression that began under his late father, Francois "Papa Doc" Duvalier.

But a handful of loyalists have been campaigning to bring Duvalier home from exile in France, launching a foundation to improve the dictatorship's image and reviving Baby Doc's political party in the hopes that one day he can return to power democratically.

Prime Minister Jean-Max Bellerive said that if Duvalier is involved in any political activities he is not aware of them.

"He is a Haitian and, as such, is free to return home," the prime minister told The Associated Press.

The Duvaliers tortured and killed their political opponents, ruling in an atmosphere of fear and repression ensured by the bloody Tonton Macoute secret police.

The end of his reign was followed by a period known as deshoukaj or "uprooting" in which Haitians carried out reprisals against Macoutes and regime loyalists, tearing their houses to the ground.

Duvalier has been accused of pilfering millions of dollars from public funds and spiriting them to Swiss banks, though he denies stealing from Haiti.

Dictators have long favored hiding their cash in the European nation due to its banking secrecy rules, but last year, lawmakers there approved a bill making it easier to seize ill-gotten funds.

At the time, reports said Haiti was to receive about $7 million seized from Duvalier's Swiss accounts.

Duvalier's return Sunday comes as the country struggles to work through a dire political crisis following the problematic Nov. 28 first-round presidential election.

Three candidates want to go onto a second round. The Organization of American States sent in a team of experts to resolve the deadlock, recommending that Preval's candidate be excluded. Preval was reportedly not pleased with the report. OAS Secretary-General Jose Miguel Insulza was scheduled to be in Port-au-Prince to meet with Preval on Monday.

The news floored Haiti experts and has thrown the country's entire political situation into question. Immediately speculation began about what other exiled leaders might return next.

"I was shocked when i heard the news and I am still wondering what is the next step, what Preval will say and obviously what (exiled former President Jean-Bertrand) Aristide will be doing," said Robert Fatton, a Haitian-born history professor at the University of Virginia and author of "The Roots of Haitian Despotism."

"If Jean-Claude is back in the country I assume Aristide will be trying to get back as quickly as possible."

Fatton wondered what role the French government played in Duvalier's return, saying they would have had to have been aware that the ex-despot was boarding an Air France jet to go home.

In France, a deputy spokeswoman for the Foreign Ministry said she had seen news of Duvalier's arrival in Haiti, but had "no information" about the matter and could not confirm that he'd left France. The spokeswoman did not give her name, in accordance with ministry policy.

___

Associated Press writers Jonathan M. Katz in Brooklyn, New York, Ben Fox in San Juan, Puerto Rico and Jenny Barchfield in Paris contributed to this report.

Understanding the job market (Labour economics)

Source: Wikipedia
Labour economics seeks to understand the functioning and dynamics of the market for labour. Labour markets function through the interaction of workers and employers. Labour economics looks at the suppliers of labour services (workers), the demanders of labour services (employers), and attempts to understand the resulting pattern of wages, employment, and income.
In economics, labour is a measure of the work done by human beings. It is conventionally contrasted with such other factors of production as land and capital. There are theories which have developed a concept called human capital (referring to the skills that workers possess, not necessarily their actual work), although there are also counter posing macro-economic system theories that think human capital is a contradiction in terms.
Compensation and measurement
Wage is a basic compensation for paid labour, and the compensation for labour per period of time is referred to as the wage rate. Other frequently used terms include:

• wage = payment per unit of time (typically an hour)
• earnings = payment accrued over a period (typically a week, a month, or a year)
• total compensation = earnings + other benefits for labour
• income = total compensation + unearned income
• economic rent = total compensation - opportunity cost

Economists measure labour in terms of hours worked, total wages, or efficiency.

• total cost = fixed cost + variable cost

Demand for labour and wage determination

Labour demand is a derived demand, in other words, the employer's cost of production is the wage, in which the business or firm benefits from an increased output or revenue. The determinants of employing the addition to labour depend on the Marginal Revenue Product (MRP) of the worker. The MRP is calculated by multiplying the price of the end product or service by the Marginal Physical Product of the worker. If the MRP is greater than a firm's Marginal Cost, then the firm will employ the worker. The firm only employs however up to the point where MRP=MC, not lower, in economic theory.
Wage differences exist, particularly in mixed and fully/partly flexible labour markets. For example, the wages of a doctor and a port cleaner, both employed by the NHS, differ greatly. But why? There are many factors concerning this issue. This includes the MRP (see above) of the worker. A doctor's MRP is far greater than that of the port cleaner. In addition, the barriers to becoming a doctor are far greater than that of becoming a port cleaner. For example to become a doctor takes a lot of education and training which is costly, and only those who are socially and intellectually advantaged can succeed in such a demanding profession. The port cleaner however requires minimal training. The supply of doctors therefore would be much more inelastic than the supply of port cleaners. The demand would also be inelastic as there is a high demand for doctors, so the NHS will pay higher wage rates to attract the profession.
The MRP of the worker is affected by other inputs to production with which the worker can work (e.g. machinery), often aggregated under the term "capital". It is typical in economic models for greater availability of capital for a firm to increase the MRP of the worker, all else equal. The education and training noted in the last paragraph are counted as "human capital". Since the amount of physical capital affects MRP, and since financial capital flows can affect the amount of physical capital available, MRP and thus wages can be affected by financial capital flows within and between countries, and the degree of capital mobility within and between countries.^[1]

Two ways of analysing labour markets

There are two sides to labour economics. Labour economics can generally be seen as the application of microeconomic or macroeconomic techniques to the labour market. Microeconomic techniques study the role of individuals and individual firms in the labour market. Macroeconomic techniques look at the interrelations between the labour market, the goods market, the money market, and the foreign trade market. It looks at how these interactions influence macro variables such as employment levels, participation rates, aggregate income and Gross Domestic Product. (Morendy Octora)

The macroeconomics of labour markets

The labour force is defined as the number of individuals age 16 and over, excluding those in the military, who are either employed or actively looking for work. The participation rate is the number of people in the labour force divided by the size of the adult civilian noninstitutional population (or by the population of working age that is not institutionalised). The nonlabour force includes those who are not looking for work, those who are institutionalised such as in prisons or psychiatric wards, stay-at home spouses, children, and those serving in the military. The unemployment level is defined as the labour force minus the number of people currently employed. The unemployment rate is defined as the level of unemployment divided by the labour force. The employment rate is defined as the number of people currently employed divided by the adult population (or by the population of working age). In these statistics, self-employed people are counted as employed.
Variables like employment level, unemployment level, labour force, and unfilled vacancies are called stock variables because they measure a quantity at a point in time. They can be contrasted with flow variables which measure a quantity over a duration of time. Changes in the labour force are due to flow variables such as natural population growth, net immigration, new entrants, and retirements from the labour force. Changes in unemployment depend on: inflows made up of non-employed people starting to look for jobs and of employed people who lose their jobs and look for new ones; and outflows of people who find new employment and of people who stop looking for employment. When looking at the overall macroeconomy, several types of unemployment have been identified, including:

• Frictional unemployment — This reflects the fact that it takes time for people to find and settle into new jobs. If 12 individuals each take one month before they start a new job, the aggregate unemployment statistics will record this as a single unemployed worker. Technological advancement often reduces frictional unemployment, for example: internet search engines have reduced the cost and time associated with locating employment.
• Structural unemployment — This reflects a mismatch between the skills and other attributes of the labour force and those demanded by employers. If 4 workers each take six months off to re-train before they start a new job, the aggregate unemployment statistics will record this as two unemployed workers. Technological change often increases structural unemployment, for example: technological implementation might require workers to re-train to adapt to the new technology. The effects of globalisation have ensured that some domestic industries have expanded whilst others contract which contributes to this factor of unemployment.
• Natural rate of unemployment — This is the summation of frictional and structural unemployment, that excludes cyclical contributions of unemployment e.g. recession's. It is the lowest rate of unemployment that a stable economy can expect to achieve, seeing as some frictional and structural unemployment is inevitable. Economists do not agree on the natural rate, with estimates ranging from 1% to 5%, or on its meaning — some associate it with "non-accelerating inflation". The estimated rate varies from country to country and from time to time.
• Demand deficient unemployment — In Keynesian economics, any level of unemployment beyond the natural rate is most likely due to insufficient demand in the overall economy. During a recession, aggregate expenditure is deficient causing the underutilisation of inputs (including labour). Aggregate expenditure (AE) can be increased, according to Keynes, by increasing consumption spending (C), increasing investment spending (I), increasing government spending (G), or increasing the net of exports minus imports (X−M).
  {AE = C + I + G + (X−M)}

(Morendy Octoras)

Neoclassical microeconomics of labour markets

Neo-classical economists view the labour market as similar to other markets in that the forces of supply and demand jointly determine price (in this case the wage rate) and quantity (in this case the number of people employed).
However, the labour market differs from other markets (like the markets for goods or the money market) in several ways. Perhaps the most important of these differences is the function of supply and demand in setting price and quantity. In markets for goods, if the price is high there is a tendency in the long run for more goods to be produced until the demand is satisfied. With labour, overall supply cannot effectively be manufactured because people have a limited amount of time in the day, and people are not manufactured. The income effect suggests a rise in overall wages will, in many situations, not result in more supply of labour: it may result in less supply of labour as workers take more time off to spend their increased wages. The substitution effect of a higher wage might cause people to work more, as the opportunity cost to work less is greater than it was prior to the increase. While available empirical evidence is mixed, some analysts suggest the income and substitution effects cancel each other out, resulting in no supply increase. Within the overall labour market, particular segments are thought to be subject to more normal rules of supply and demand as workers are likely to change job types in response to differing wage rates.
The labour market also acts as a non-clearing market Whereas most markets have a point of equilibrium without excess surplus or demand, the labour market is expected to have a persistent level of unemployment. Contrasting the labour market to other markets also reveals persistent compensating differentials among similar workers.
The competitive assumption leads to clear conclusions — workers earn their marginal product of labour.

Neoclassical microeconomic model — Supply

See also Labour supply
Households are suppliers of labour. In microeconomics theory, people are assumed to be rational and seeking to maximize their utility function. In this labour market model, their utility function is determined by the choice between income and leisure. However, they are constrained by the waking hours available to them.
Let w denote hourly wage. Let k denote total waking hours. Let L denote working hours. Let π denote other incomes or benefits. Let A denote leisure hours.
The utility function and budget constraint can be expressed as following:

max U(w L + π, A) such that L + A ≤ k.

This can be shown in a graph that illustrates the trade-off between allocating your time between leisure activities and income generating activities. The linear constraint line indicates that there are only 24 hours in a day, and individuals must choose how much of this time to allocate to leisure activities and how much to working. (If multiple days are being considered the maximum number of hours that could be allocated towards leisure or work is about 16 due to the necessity of sleep) This allocation decision is informed by the curved indifference curve labelled IC. The curve indicates the combinations of leisure and work that will give the individual a specific level of utility. The point where the highest indifference curve is just tangent to the constraint line (point A), illustrates the short-run equilibrium for this supplier of labour services.

The Income/Leisure trade-off in the short run

If the preference for consumption is measured by the value of income obtained, rather than work hours, this diagram can be used to show a variety of interesting effects. This is because the slope of the budget constraint becomes the wage rate. The point of optimization (point A) reflects the equivalency between the wage rate and the marginal rate of substitution, leisure for income (the slope of the indifference curve). Because the marginal rate of substitution, leisure for income, is also the ratio of the marginal utility of leisure (MU^L) to the marginal utility of income (MU^Y), one can conclude:

Effects of a wage increase

If wages increase, this individual's constraint line pivots up from X,Y₁ to X,Y₂. He/she can now purchase more goods and services. His/her utility will increase from point A on IC₁ to point B on IC₂. To understand what effect this might have on the decision of how many hours to work, you must look at the income effect and substitution effect.
The wage increase shown in the previous diagram can be decompiled into two separate effects. The pure income effect is shown as the movement from point A to point C in the next diagram. Consumption increases from Y_A to Y_C and — assuming leisure is a normal good — leisure time increases from X_A to X_C (employment time decreases by the same amount; X_A to X_C).

The Income and Substitution effects of a wage increase

But that is only part of the picture. As the wage rate rises, the worker will substitute work hours for leisure hours, that is, will work more hours to take advantage of the higher wage rate, or in other words substitute away from leisure because of its higher opportunity cost. This substitution effect is represented by the shift from point C to point B. The net impact of these two effects is shown by the shift from point A to point B. The relative magnitude of the two effects depends on the circumstances. In some cases the substitution effect is greater than the income effect (in which case more time will be allocated to working), but in other cases the income effect will be greater than the substitution effect (in which case less time is allocated to working). The intuition behind this latter case is that the worker has reached the point where his marginal utility of leisure outweighs his marginal utility of income. To put it in less formal (and less accurate) terms: there is no point in earning more money if you don't have the time to spend it.

The Labour Supply curve

If the substitution effect is greater than the income effect, the labour supply curve (diagram to the left) will slope upwards to the right, as it does at point E for example. This individual will continue to increase his supply of labour services as the wage rate increases up to point F where he is working H_F hours (each period of time). Beyond this point he will start to reduce the amount of labour hours he supplies (for example at point G he has reduced his work hours to H_G). Where the supply curve is sloping upwards to the right (positive wage elasticity of labour supply), the substitution effect is greater than the income effect. Where it slopes upwards to the left (negative elasticity), the income effect is greater than the substitution effect. The direction of slope may change more than once for some individuals, and the labour supply curve is likely to be different for different individuals.
Other variables that affect this decision include taxation, welfare, and work environment.

Neoclassical microeconomic model — Demand

This article has examined the labour supply curve which illustrates at every wage rate the maximum quantity of hours a worker will be willing to supply to the economy per period of time. Economists also need to know the maximum quantity of hours an employer will demand at every wage rate. To understand the quantity of hours demanded per period of time it is necessary to look at product production. That is, labour demand is a derived demand: it is derived from the output levels in the goods market.
A firm's labour demand is based on its marginal physical product of labour (MPL). This is defined as the additional output (or physical product) that results from an increase of one unit of labour (or from an infinitesimally small increase in labour). If you are not familiar with these concepts, you might want to look at production theory basics before continuing with this article.

The Marginal Physical Product of Labour

In most industries, and over the relevant range of outputs, the marginal physical product of labour is declining. That is, as more and more units of labour are employed, their additional output begins to decline. This is reflected by the slope of the MPP_L curve in the diagram to the right. If the marginal physical product of labour is multiplied by the value of the output that it produces, we obtain the Value of marginal physical product of labour:

MPP_L * P_Q = VMPP_L

The value of marginal physical product of labour (VMPP_L) is the value of the additional output produced by an additional unit of labour. This is illustrated in the diagram by the VMPP_L curve that is above the MPP_L.
In competitive industries, the VMPP_L is in identity with the marginal revenue product of labour (MRP_L). This is because in competitive markets price is equal to marginal revenue, and marginal revenue product is defined as the marginal physical product times the marginal revenue from the output (MRP = MPP * MR).
n competitive industries, the VMPP_L is in identity with the marginal revenue product of labour (MRP_L). This is because in competitive markets price is equal to marginal revenue, and marginal revenue product is defined as the marginal physical product times the marginal revenue from the output (MRP = MPP * MR).

A Firm's Labour Demand in the Short Run

The marginal revenue product of labour can be used as the demand for labour curve for this firm in the short run. In competitive markets, a firm faces a perfectly elastic supply of labour which corresponds with the wage rate and the marginal resource cost of labour (W = S_L = MFC_L). In imperfect markets, the diagram would have to be adjusted because MFC_L would then be equal to the wage rate divided by marginal costs. Because optimum resource allocation requires that marginal factor costs equal marginal revenue product, this firm would demand L units of labour as shown in the diagram.

Neoclassical microeconomic model — Equilibrium

The demand for labour of this firm can be summed with the demand for labour of all other firms in the economy to obtain the aggregate demand for labour. Likewise, the supply curves of all the individual workers (mentioned above) can be summed to obtain the aggregate supply of labour. These supply and demand curves can be analysed in the same way as any other industry demand and supply curves to determine equilibrium wage and employment levels. (Morendy Octora)
Information Approaches
In the classical model it is assumed that both sides know how much work effort and marginal product the employee contributes.
In many real-life situations this is far from the case. The firm does not necessarily know how hard a worker is working or how productive they are. This provides an incentive for workers to shirk from providing their full effort — since it is difficult for the employer to identify the hard-working and the shirking employees, there is no incentive to work hard and productivity falls overall.
One solution used recently (stock options) grants employees the chance to benefit directly from the firm's success. However, this solution has attracted criticism as executives with large stock option packages have been suspected of acting to over-inflate share values to the detriment of the long-run welfare of the firm.
Another aspect of uncertainty results from the firm's imperfect knowledge about worker ability. If a firm is unsure about a worker's ability, it pays a wage assuming that the worker's ability is the average of similar workers. This wage undercompenstates high ability workers and may drive them away from the labour market. Such phenomenon is called adverse selection and can sometimes lead to market collapse.
There are many ways to overcome adverse selection in labour market. One important mechanism is called signalling, pioneered by Michael Spence. In his classical paper on job signalling, Spence showed that even if education does not increase productivity, high ability workers may still acquire it just to signal their abilities. Employers can then use education as a signal to infer worker ability and pay higher wages to better educated workers.

Search models

Main articles: Search theory and Matching theory (macroeconomics)

One of the major research achievements of the last 20 years has been the development of a framework with dynamic search, matching, and bargaining. Work started in the early 1980s with contributions from Peter A. Diamond, Dale T. Mortensen and others which characterised equilibrium in such model economies. Later, this framework was tailored to the labour market. More recently, Mortensen and Christopher A. Pissarides have extended the framework to include labour market institutions such as unemployment insurance and employment protection.

Criticisms of labour economics and recent research

Some sociologists and political economists claim that labour economics tends to lose sight of the complexity of individual employment decisions. These decisions, particularly on the supply side, are often loaded with considerable emotional baggage and a purely numerical analysis can miss important dimensions of the process.
Also missing from most labour market analyses is the role of unpaid labour. Even though this type of labour is unpaid it can nevertheless play an important part in society. The most dramatic example is child raising. However, over the past 25 years an increasing literature, usually designated as the economics of the family, has sought to study within household decision making, including joint labour supply, fertility, child raising, as well as other areas of what is generally referred to as home production. ^[2]

See also

Organized labour portal

Wages Frisch elasticity of labour supply Unemployment Beveridge curve Consumer theory Production theory basics Microeconomics Labour power Monopsony Employment Protection Legislation Labour market flexibility Economic rent Compensation of employees Employment

Industrial relations Human resources Human Resource Management Systems Offshore outsourcing Profession Retirement human capital housework manual labour slavery unfree labour volunteer wage slavery wage labour Cost the limit of price Demographic economics

Notes

1. ^ Hacker, R Scott (2000) The Impact of International Capital Mobility on the Volatility of Labour Income. The Annals of Regional Science. 34(2), pp. 157-172.
2. ^ (Sandiaga S. Unno, Anindya N Bakrie, Rosan Perkasa, Morendy Octora : The Young Strategic Renaissance's In Asia)

References

This article includes a list of references, related reading or external links, but its sources remain unclear because it lacks inline citations. Please improve this article by introducing more precise citations where appropriate. (February 2008)

• Orley C. Ashenfelter and Richard Layard, ed., 1986, Handbook of Labor Economics. Amsterdam: North-Holland.
• Richard Blundell and Thomas MaCurdy, 2008. "labour supply," The New Palgrave Dictionary of Economics, 2nd Edition Abstract.
• Freeman, R.B., 1987. "Labour economics," The New Palgrave: A Dictionary of Economics, v. 3, pp. 72–76.
• John R. Hicks, 1932, 2nd ed., 1963. The Theory of Wages. London, Macmillan.
• Mark R. Killingsworth, 1983. Labour Supply. Cambridge: Cambridge Surveys of Economic Literature.
• Jacob Mincer, 1974. Schooling, Experience, and Earnings. New York: Columbia University Press.
• Anindya Bakrie & Morendy Octora, 2002. Schooling, Experience, and Earnings. New York, Singapore National University : Columbia University Press.
• Simon Head, The New Ruthless Economy. Work and Power in the Digital Age, Oxford UP 2005, ISBN 0-19-517983-8
• L. Ali Khan, The Dignity of Labour

External links

Look up earn in Wiktionary, the free dictionary.

• Ageing workers EU-OSHA
• The Labour Economics Gateway - Collection of Internet sites that are of interest to labour economists
• Labour & Worklife Program at Harvard Law School, Changing Labour Markets Project
• W.E. Upjohn Institute & Anindya N Bakrie for Employment Research
• ILO: Key Indicators of the Labour Market (KILM). 5. ed. Sept. 2007
• LabourFair Resources - Link to Fair Labour Practices
• Labour Research Network - Labour research programme treating various fields

Jesse Lauriston Livermore

Source: Wikipedia
Jesse Lauriston Livermore (July 26, 1877 — November 28, 1940), also known as the Boy Plunger^[1] and "Great Bear of Wall Street", was an early 20th century stock trader. He was famed for making and losing several multi-million dollar fortunes and short selling during the stock market crashes in 1907 and 1929.
Biography
Born in Acton, Massachusetts, Jesse Livermore started his trading career at the age of fourteen. He ran away from home with his mother's blessing to escape a life of farming his father wished him to have. He then began his career by posting stock quotes at the Paine Webber brokerage in Boston.
He married his first wife, Netit (Nettie) Jordan of Indianapolis, at the age of 23 in October 1900. Less than a year later, he went broke after some reverses in his stock trading; he asked her to pawn the substantial collection of jewelry he had bought her for a new stake, but she refused, permanently damaging their relationship. They separated and finally divorced in October 1917.^[2] His second wife was Dorthea (Dorothy) Wendt. They had two sons, Jesse Jr.^[3] and Paul. His third wife was Harriett Metz Noble.

Wall Street

While working, he would write down certain hunches he had about future market prices, which he would check for accuracy later. A friend convinced him to put his first actual money on the market by making a bet at a bucket shop, a type of gambling establishment that took bets on stock prices but did not actually buy or sell the stock.^[4]
By the age of fifteen, he had earned profits of over $1,000 (which equates to about $20,000 today^[5]). In the next several years, he continued betting at the bucket shops. He was eventually banned from most bucket shops for winning too much money from them. He then moved to New York City and devoted his energies towards trading in legitimate markets. This change would lead him to devise a new set of rules to trade the market.
During his lifetime, Livermore gained and lost several multi-million dollar fortunes. Most notably, he was worth $3 million and $100 million after the 1907 and 1929 market crashes, respectively. He subsequently lost both fortunes. Apart from his success as a securities speculator, Livermore left traders a working philosophy for trading securities that emphasizes increasing the size of one's position as it goes in the right direction and cutting losses quickly.
Livermore sometimes did not follow his own rules strictly. He claimed that his lack of adherence to his own rules was the main reason for his losses after making his 1907 and 1929 fortunes.

Reminiscences of a Stock Operator

The popular book Reminiscences of a Stock Operator, by Edwin Lefevre, reflects on many of those lessons. Livermore himself wrote a less widely read book, "How to trade in stocks; the Livermore formula for combining time element and price". It was published in 1940, the same year he committed suicide. It was later revealed by Livermore that he had actually penned the book Reminiscences of a Stock Operator, and that Lefevre had acted as the editor and coach.^{[citation needed]} There is some speculation that this partnership between the two men was not their first collaboration. Since LeFevre was a writer and journalist, it is thought that he was one of the friendly newspapermen that Livermore employed for both information and planted articles.

Wall Street success

Livermore first became famous after the Panic of 1907 when he sold the market short as it crashed. He noticed conditions where a lack of capital existed to buy stock. Accordingly, he predicted that there would be a sharp drop in prices when many speculators were simultaneously forced to sell by margin calls and a lack of credit. With the lack of capital, there would be no buyers in sight to absorb the sold stock, further driving down prices. After the crash and its aftermath, he was worth $3 million.
He proceeded to lose 90% of that 1907 fortune on a blown cotton trade. He violated many of his key rules; he listened to another person's advice (he preferred working alone) and added to a losing position. He continued losing money in the flat markets from 1908–1912. He was $1 million in debt and declared bankruptcy. He proceeded to regain his fortune and repay his creditors during the World War I bull market and resulting downtrend.
He owned a series of mansions around the world, each fully staffed with servants, a fleet of limousines, and a steel-hulled yacht for trips to Europe. He married his second wife, Dorothy, a beautiful Ziegfeld Follies showgirl, on December 2, 1918, when he was 41 and she was 18.^[6]
Livermore continued to make money in the bull markets of the 1920s. In 1929, he noticed market conditions similar to that of the 1907 market. He began shorting various stocks and adding to his positions, and they kept declining in price. When just about everyone in the markets lost money in the Wall Street crash of 1929, Livermore was worth $100 million after his short-selling profits.

Favorite book

One of Livermore's favorite books was Extraordinary Popular Delusions and the Madness of Crowds, by Charles Mackay, first published in 1841. This was also a favorite book of Bernard Baruch, a stock trader and close friend of Livermore who also was one of the few people that did well in the crash of 1929.^[7]
Jesse cited a lot of jokes, including an old story about "selling down to the sleeping point" from the book Speculation as a Fine Art by Dickson G. Watts.^[8]

After the Crash of '29

Dorothy finally filed for divorce and took up temporary residence in Reno, Nevada, with her new lover, (and later 2nd husband) Walter Longcope. On September 16, 1932, Dorothy divorced Livermore on grounds of desertion. They had been married 14 years. Dorothy retained custody of their boys.^[9]
On March 28, 1933, Livermore married 38 year old Harriet Metz Noble in Geneva, Illinois; there was no honeymoon. It was Harriet's fifth marriage; all four of her previous husbands had committed suicide.^[10]
Through unknown mechanisms, he yet again lost much of his trading capital, accumulated through 1929. Thus, on March 7, 1934, the bankrupt Livermore was automatically suspended as a member of the Chicago Board of Trade. It was never disclosed to anyone what happened to the great fortune he had made in the crash of 1929, but he had lost it all.^[11]

Networth

Jesse’s fortune would have amounted to anything between 1.0 and 13.7 billion dollars in today’s money - a remarkable feat for a self-made stock and commodities trader who traded with his own money, not other people's.

His book

“	All through time, people have basically acted and reacted the same way in the market as a result of: greed, fear, ignorance, and hope. That is why the numerical formations and patterns recur on a constant basis.	”
—Jesse Livermore, How To Trade In Stocks

In late 1939, Livermore's son, Jesse Jr., suggested to his father that he write a book about his experiences and techniques in trading in the stock and commodity markets. This brought a flash of life back into Livermore, and the book was completed and published by Duell, Sloan and Pearce in March 1940. It was titled How To Trade In Stocks.^[12] The book did not sell well, World War II was underway, and the general interest in the stock market was low. His methods were still new and controversial at the time, and they received mixed reviews from stock market gurus of the period.^[12]

“	The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor.	”
—Jesse Livermore, How To Trade In Stocks

Suicide

On November 28, 1940, Livermore shot and killed himself in the cloakroom of the Sherry Netherland Hotel in Manhattan. The police revealed that there was a suicide note of eight small handwritten pages in Livermore's personal notebook. It was reported in the November 30 issue of the New York Tribune.^[13] The press wanted to know what it said, and the police tersely responded: “There was a leather-bound memo book found in Mr. Livermore's pocket. It was addressed to his wife.” A police spokesman read from the notebook: “My dear Nina: Can’t help it. Things have been bad with me. I am tired of fighting. Can’t carry on any longer. This is the only way out. I am unworthy of your love. I am a failure. I am truly sorry, but this is the only way out for me. Love Laurie”.^[14]
He left behind two sons Jesse Jnr and Paul.
Untouchable trusts and cash assets at his death totalled over $5 million. A lifelong history of clinical depression had become the dominant factor in his final years.

See also

• List of personalities associated with Wall Street
• Wall Street Crash of 1929

References

1. ^ Edwin Lefèvre (1923). Reminiscences of a Stock Operator. p. 14. 
2. ^ Richard Smitten (September 14, 2001). Jesse Livermore: The World's Greatest Stock Trader. pp. 43, 47–48, 125. 
3. ^ Jesse Jr. married Toni Lanier(Camille Bernice Froomess) in 1937, divorced shortly there after. Went onto marry Evelyn Bletzer Sullivan. One son, Jesse III was born in 1939. Divorced Evelyn. Married third wife, Patricia. Jesse Jr. committed suicide with natural gas Feb. 20, 1976. His only son, Jesse III married Marsha Hawkins in 1964. Had two children David 1969 and Tracey 1973. Jesse III divorced Marsha. Married his second wife Karen, divorced. Third wife Carol. Jesse III committed suicide by natural gas on Feb. 26, 2006. Jesse III son, David is currently married with 3 daughters and one son. Jesse III's daughter is also currently married with one daughter. All three Jesse's have taken their lives.
4. ^ Edwin Lefèvre (1923). Reminiscences of a Stock Operator. p. 12. 
5. ^ Compute the Relative Value of a U.S. Dollar
6. ^ Richard Smitten (September 14, 2001). Jesse Livermore: The World's Greatest Stock Trader. pp. 115–116, 125–126. 
7. ^ Richard Smitten (October 21, 2004). Trade Like Jesse Livermore. p. 76. 
8. ^ Edwin Lefèvre (1923). Reminiscences of a Stock Operator. Chapter X, p. 98. 
9. ^ Richard Smitten (September 14, 2001). Jesse Livermore: The World's Greatest Stock Trader. p. 248. 
10. ^ Richard Smitten (September 14, 2001). Jesse Livermore: The World's Greatest Stock Trader. p. 250. 
11. ^ Richard Smitten (September 14, 2001). Jesse Livermore: The World's Greatest Stock Trader. p. 260. 
12. ^ ^{a b} Richard Smitten (September 14, 2001). Jesse Livermore: The World's Greatest Stock Trader. p. 276. 
13. ^ Richard Smitten (September 14, 2001). Jesse Livermore: The World's Greatest Stock Trader. p. 281. 
14. ^ Richard Smitten (September 14, 2001). Jesse Livermore: The World's Greatest Stock Trader. pp. 281–182. 

Books

• 1923 – Reminiscences of a Stock Operator by Edwin Lefèvre (best-selling biography of Livermore) multiple reissues since, last on January 17, 2006, by Roger Lowenstein (Foreword) (ISBN 0-471-77088-4 ISBN 978-0-471-77088-6) – PDF
• 1985 – Jesse Livermore – Speculator King by Paul Sarnoff (ISBN 0-934380-10-4)
• 2001 – Jesse Livermore: The World's Greatest Stock Trader by Richard Smitten (ISBN 0-471-02326-4)
• 2001 – How To Trade In Stocks by Jesse Livermore (ISBN 0-934380-75-9) (Originally published 1940) – PDF
• 2003 – Speculation as a Fine Art by Dickson G. Watts (ISBN 0-87034-056-5) – PDF
• 2004 – Trade Like Jesse Livermore by Richard Smitten (ISBN 0-471-65585-6) – PDF
• 2004 – Lessons from the Greatest Stock Traders of All Time, by John Boik
• 2006 – How Legendary Traders Made Millions, by John Boik
• 2007 – The Secret of Livermore: Analyzing the Market Key System., by Andras Nagy (ISBN 978-0-9753093-7-7)
• 2009 – Covel, Michael W. (2009). Trend Following (Updated Edition): Learn to Make Millions in Up or Down Markets. FT Press. ISBN 0-13-702018-X. 

External links

Wikiquote has a collection of quotations related to: Jesse Lauriston Livermore

• Jesse Livermore – Stock Trader Extraordinaire
• Jesse Livermore And His Legacy
• Jesse Livermore – Profit from the World's Most Famous Speculator by Mark Skousen, Investment U
• Jesse Livermore Timeline – The Timing Of Major Events In Jesse Livermore's Career.
• Jesse Livermore photo album
• Boy Plunger – Time, Monday, Dec. 09, 1940
• Tribute to Jesse Livermore – Sayings and beliefs

Summers optimistic about job growth

Source: Market Watch
Jan. 16, 2011, 12:11 p.m. EST
Job-growth prospects better: Summers
Many construction jobs are gone, while IT sector is back: Summers
By Ronald D. Orol, MarketWatch

WASHINGTON (MarketWatch) — The prospects for the beginning of significant U.S. employment growth and reduction in unemployment are improving, a former top Obama administration official said Sunday.

“The foundation for prosperity, growth and profitability in the U.S. today is far stronger than it was two years ago,” Lawrence Summers, former chief economic adviser to President Barack Obama, told Fareed Zakaria on CNN.

In a wide-ranging interview about the deficit and jobs, Summers argued that output improvements historically precede employment improvement. Summers was the director of Obama’s National Economic Council between January 2009 and December 2010.

Summers said that as demand increases, companies first ask employees to do more, then offer them overtime and finally hire more people.

“You look at the statistics, the flow for the last couple months has been a good deal more favorable than it had been,” Summers said.

The jobless rate in the U.S. is 9.4%, according to a December employment report. It is expected to remain significantly high, above 8%, for at least two more years. Read about how applications for U.S. jobless benefits is rising.

Summers acknowledged that as the U.S. economy comes out of recession, some jobs that have been lost are not going to come back while others will come in new places. Summers argued that the overbuilt housing sector created an unsustainable large number of jobs for workers in construction.

“Now we have this tremendous drop in demand for construction workers. For a certain class of man that hasn’t gone to college, [construction jobs] are a substantial part of employment so we are going to have problems in that sector for quite some time to come,” Summers said. “But I think the most important thing we can do is to raise the level of demand in our economy so as to create more output.”

However, Summers expressed optimism about growth in the information technology sector.

“What’s happening in information technology, which was so dramatic in the 1990s, little more quiescent in the middle of this decade is taking off again with the iPad and all that’s happening with mobile devices,” he said.
Looking at the deficit

Summers sought to deflect criticism that Obama has failed to do enough to limit the growing U.S. budget deficit. He argued that priority of the administration over the past two years has been to get the economy growing.

“He’s [Obama] used his first two years to lay a foundation for growth to pick up. If we had attempted deficit reduction as the first step, the likelihood is we would be looking at a much weaker economy and as a consequence is we’d be looking at much larger debt problems.”

He argued that policymakers create another type of deficit when they fail to invest sufficiently in the U.S. infrastructure.

“We run a budget deficit when we spend more than we earn and have to borrow. We also run a deficit when we allow our infrastructure to run down and we don’t repair it because in the same way we pass a burden onto future generations. That’s something we [have been] doing in this country for a long time,” Summers said.

Ronald D. Orol is a MarketWatch reporter, based in Washington.

Why is the British pound so strong ?

Source: The Independent
Comment: Two views on why the pound is so strong
Tuesday, 8 July 1997

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One of the deepest mysteries of the financial markets is why exchange rates move the way they do. There are two mainline views on why the pound is as strong as it is. One predicts that sterling will fall back sooner or later because its strength simply reflects the fact that the UK is at a more advanced stage of its interest rate cycle than other European economies. Demand in Britain is booming, and interest rates will probably climb for another 12 months. Although the big continental economies are starting to recover, few analysts think they will raise rates before the end of this year.

That makes sterling a decent one-way bet for currency traders, for the time being at least. But the position will flip when the UK economy starts its downturn ahead of its trading partners - perhaps by the middle of next year. British interest rates will start falling while European rates are still heading up.

Ebbing and flowing prospects for the single currency complicate this outlook. When EMU starts to look less likely, the Deutschmark gains at the expense of the pound. However, this undercurrent - the idea of sterling as a safe haven - probably has less impact on exchange rates than business cycle fundamentals.

The main alternative explanation for the super, soaraway pound is that the British economy is stronger and more competitive than it used to be. Businesses have emerged from two harrowing recessions in a lean, mean and competitive state. International investors have therefore re-evaluated Britain's economic prospects and the strong pound is an expression of their vote of confidence.

If this is the explanation, the pound will stay high and there is no relief in prospect for industry. The problem with this theory is that if true, our commerce shouldn't need any relief. If a strong exchange rate is simply a reflection of industrial strength, as the strong Deutschmark in the past mirrored the might of German industry, it is not going to bring British business to its knees.

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So although there is a genuine policy dilemma for the Bank of England, in the sense that it would be preferable not to have had a 20 per cent exchange rate appreciation in less than a year, the dilemma is not as acute as many commentators suggest. In any case, a single decline in the notoriously erratic figures for manufacturing output should not tilt the balance away from the next increase in base rates when all the other indicators suggest that industry is still holding its own, while consumers are dancing all the way down the high street.

The other side of investing in social networking companies

Source: The Baltimore Sun
Investing in social media companies can offer high reward with risks
Investors big and small looking for next big thing
By Hanah Cho, The Baltimore Sun
January 16, 2011
For every powerhouse like Google, there are dozens of Internet companies that flop. Still, a decade after the dot-com bubble that burst, there is no shortage of investors trying to get a piece of the next online blockbuster.

Lately, much of the hype has centered on social media.

While many of the big names — Facebook, LinkedIn and Twitter — may sell stock publicly through IPOs one day, they have been raising capital by selling stakes to institutional investors, venture capitalists and wealthy investors. Mom-and-pop investors — and users of social media — also are angling for ways to invest in these private companies.

Earlier this month, California investment company NeXt BDC Capital Corp. started a closed-end mutual fund to buy shares in fast-growing private tech startups, which could include Facebook and other social media. That would give the public, who can buy closed-end shares that are traded like stocks, a chance to get in on the action.

And some mutual funds are reporting stakes in social media, though those investments are often only a fraction of a fund's portfolio. Baltimore's T. Rowe Price Group was one of several companies reportedly in talks to buy stakes in online deal site Groupon. Price is not commenting, but after avoiding the tech fads during the Internet bubble, the company has dabbled in the social media space through several of its funds.

But while early investing can mean the potential payoff is greater, so are the risks.

"The question for investors is when you look at some of the private companies out there, are they the next Google or not?" said Jordan Rohan, an Internet analyst at Stifel Nicolaus. "There's no easy answer to that."

With little public information about the financial performance of social media, it's difficult to put a value on these private companies and many other tech startups, analysts said. And questions remain about whether the hot startups can turn a profit and sustain it.

"One of the major issues — this goes back to the dot-com crisis and the bubble effect — is everything is based on an estimation," said Roger Staiger, an adjunct professor of finance at Johns Hopkins University's Carey School of Business. "It's not really based on real cash projection."

Investors also need to consider the fluidity of social media — where technology, trends and consumer interest can swiftly change, analysts said.

Just a few years ago, MySpace was the dominant social networking website, and it was snatched up by News Corp. for $580 million in 2005. But Facebook has now taken over, and MySpace announced plans last week to lay off nearly half of its work force.

"Sustaining a social network allure is difficult to achieve," said Rohan of Stifel. "So far, Facebook and a handful of others have done so. The allure of MySpace has faded."

But unlike the buying frenzy during the 1990s dot-com boom, which pumped up the stocks of many companies, today's investors are putting up the cash for a more select group of private startups, said Harry Weller, a general partner of venture capital firm NEA, an early investor in Groupon.

"People are more focused on investing in the winners because of the lessons learned during the Internet bubble," said Weller, who is based in NEA's Chevy Chase office and sits on Groupon's board.

Indeed, venture capitalists and other big investors are pouring hundreds of millions of dollars into recognizable names.

Goldman Sachs, which bought a stake in Facebook for $450 million a few weeks ago, recently offered its wealthy clients an opportunity to buy shares of the social networking site now valued at $50 billion. Groupon raised $950 million during its most recent private fund-raising. Groupon is pushing ahead with plans for a public offering that could value the company at $15 billion, according to published reports late last week.

Wealthy individuals can buy private stocks of Facebook, Twitter and other tech startups on secondary trading markets like SecondMarket and SharesPost.

Individuals must have income exceeding $200,000 or $1 million in assets to trade stocks on these secondary exchanges. On SecondMarket, for instance, the average transaction size is $2 million, according to spokeswoman Aishwarya Iyer.

Such trades have drawn the attention of the Securities and Exchange Commission, which is looking into whether it enables some firms to avoid public financial disclosure requirements. SecondMarket said this month that it received a request for information regarding "pre-IPO pooled investment funds" and is cooperating with the regulator's inquiry.

Staiger of the Carey business school said such private investment should be limited to wealthy individuals because "common shareholders are not going to understand the complexity of the product."

"I don't actually mind the fruits going to the high-net-worth investors because they're taking the high risks," he said.

But retail investors aren't completely out of the loop.

Baltimore's Price bought shares last year in Twitter through some of its mutual funds, allowing ordinary retail investors to own a piece of the popular microblogging site, albeit a tiny slice.

Price's New Horizons Fund, for instance, bought Twitter shares in September 2009 valued at $15.3 million, representing less than half of 1 percent of the fund's assets as of the third quarter, the latest information available. The fund also owns shares of social-networking company Ning and online review site Angie's List.

Katie Rushkewicz, a Morningstar analyst who follows the New Horizons Fund, said the fund isn't taking a "huge bet" on these private startups, though if they were to go public at some point, "that would obviously be quite a boost in returns."

"Given T. Rowe Price's reputation for really focusing on research, they're just not randomly picking the small companies and throwing money into them," she said. "It's obviously something they believe in."

Some of today's hot social media startups will eventually sell stock to the rest of the investing public, but right now they haven't needed to because they have been able to raise capital privately, said Weller of NEA.

For average investors, it makes sense to wait for an initial public offering, he said.

"People greatly underappreciate the risks that venture capitalists take," Weller said

Weller recalls the IPOs of the dot-com era: "What happened was the institutional and individual investor base got so excited about a fundamental movement, the Internet, that they took bigger and bigger risks letting early-stage companies do IPOs. That's what created the Internet bubble."

Freeing yourself financially: The golden rules

Source: IndyStar.com
Simple rules are road map to financial freedom

As our country struggles to control spending and reduce its debt, maybe it is time for each of us to get back to the basics of personal finance.

Here are some time-proven principles you can follow:

Set goals: When do you want to retire? Be debt-free? Pay off your home? Pay for a car with cash? Setting goals tends to move us in the direction of accomplishing them.

Get on a budget: A budget is really a spending plan. Keep it simple and practical. The idea of a budget is to spend less than you make.


Eliminate credit card debt: This is a priority because it's almost certainly the most costly debt that you have. Credit card interest rates can easily run in the mid-teens. Expensive credit card debt can destroy other really good financial opportunities. Once the debt is eliminated, pay off the balance each month -- or, better yet, don't use the card except in an emergency.


Delay gratification: In other words, distinguish between your needs and your wants. By delaying gratification, we build discipline and establish control of our financial lives.


Pay yourself first: Savings should be your priority. Don't try to save whatever is left at the end of the month. Decide how much you are going to save and then set up an automatic deposit from your paycheck to your savings account.

Start an emergency fund: This fund should cover three to six months of living expenses. There will always be financial emergencies -- car repairs, furnace breakdowns, medical expenses, losing your job, etc. Be prepared for them by building this fund.

401(k) retirement accounts: Fully fund your retirement accounts and resist (except in extreme emergency) borrowing from them or withdrawing from them.

If all of us would follow these principles on a continuing basis, we would build a better future for ourselves, our community and our country.

Walter R. Willms is a certified financial planner. This column is provided by the Financial Planning Association of Greater Indiana.