Market Talk

Charles Munger explains the virtues of personal responsibility to students recently at the University of Michigan.

If he were better known, Charlie Munger’s comment in Michigan last week could be the kind that sparks riots and possibly even revolutions, because it is absolutely at a “let them eat cake” level of smug arrogance.

If, say Lloyd Blankfein said it. But outside of the financial world, most people have never heard of Munger, so he’ll probably slide, sans the verbal assaults from the blogosphere, which are coming heavy.

What’d he say? Munger, vice-chairman of Berkshire Hathaway and right-hand man of Warren Buffett, did this appearance at the University of Michigan last week, a long, two-hour sitdown with Becky Quick in front of a live audience, which got to ask questions. It was in response to a question about government help/hand-outs/bailouts for individuals that got Munger’s goat. Bailing out people will just make them lazy. It will actually wreck society. “Suck it in and cope, buddy,” he said.

Suck it in and cope, buddy.

Now, poor old Marie had at least two mitigating circumstances Munger doesn’t have. For one thing, there’s scant evidence that she ever actually said “let them eat cake.” For another, even if she did, what got lost in translation, purportedly, is that the cake she was referring to was something even better than bread, so she was really showing profound sympathy for the plight of her starving subjects. Purportedly, at least.

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- Gold hit a fresh record high yesterday just as the euro and stocks also gained, while the VIX fell to a six-week low. “Maybe the strange cross-currents were a sign that some market players were wrapping up their week a day early and heading for the beach,” Tom Petruno says. “In fact, Friday might be a good day to take off.” Spot on – Dow finishes up 16 in a sleepy session.

- Not much action out of Palm since word of acquisition by H-P (HPQ), but expect that to change in the near future, Digital Daily blogger John Paczkowski says. At a developer event yesterday, PALM developer liaison Josh Marinacci offered some of the company’s upcoming plans. “We are working on future devices. And a new version of the OS. So I think you’re going to find the next year very exciting.”

- It appears the White House may be changing its mind on reining in CEO pay, according to The Huffington Post. But the change doesn’t seem to be garnering the attention it deserves. “Well, the BP disaster, in particular the intense press coverage of this week, appears to have provided the Administration with some very useful air cover, by diverting public attention from the final rounds in the battle to reform Wall Street,” Yves Smith says.

- Investor sentiment readings this week were mixed. “Although far from extreme bearishness, this level of optimism is consistent with an oversold market, but does not necessarily signify that all is clear,” Pragmatic Capitalism notes. “The majority of the reliable short-term buy signals have coincided with lower levels of bullishness.”

- Ratings agencies played a prominent role in the financial crisis, but the big three agencies have “escaped much blame, liability and scrutiny for most of the post-crisis period,” FusionIQ CEO Barry Ritholtz writes. But that may be coming to an end.

- Enthusiasm for Apple’s (AAPL) iPad has been obscured by excitement over its new iPhone 4, but DigiTimes says the tablet computer is moving quickly. The Taiwanese technology publication says iPad monthly shipments reached a whopping 1.2M units and could balloon to 2.5M by year’s end.

- Nevada registers the highest monthly state unemployment rate in May, coming in at a staggering 14%, marking the first time in four years Michigan wasn’t awarded the dubious distinction, according to a new Labor Department report (via NYT’s Economix blog). By contrast Michigan’s rate was 13.6%.

- Twitter’s strong growth continues. ComScore reports the microblogging service registered 90.2M unique visitors last month, a 7.6% increase from 83.8M uniques in April. “After a lull in the winter, it’s clear that Twitter is back on track,” TechCrunch says.

- “No one will pay any heed to the now discredited Greenspan who ironically was worshiped for all the things he got wrong and ignored the few times he ever said anything that made any sense,” Mish opines.

- WSJ’s Jim Chairusm writes about why the lost US goal in the Slovenia game today shouldn’t matter.

It looks great, until you're drowning in it.

We’ve been saying for some time now that the budget problems in the states is at some point going to be a big problem, like a tornado-just-blew-my-house-away big. With the wife and kids in it. And the dog.

The 50 states currently face collectively a roughly $140 billion budget shortfall, and while California’s problems have been the most prominent, the Golden State is far from alone.

“The same pressures that drove (California) toward fiscal disaster are wreaking havoc in a number of states, with potentially damaging consequences for the entire country,” the Pew Center said in a fresh report. The report looks at the 10 states in the worst shape: California, Nevada, Arizona, Oregon, Michigan, Wisconsin, Illinois, Florida, Rhode Island and <snif!> my beloved (and often concurrently reviled) New Jersey.

It’s a gathering storm, to be sure, being held back at present only by federal stimulus largesse, as the Journal reported yesterday:

Once stimulus funds have been accounted for, states still face a combined deficit of $142 billion for fiscal 2011, up from $113 billion for the current fiscal year, according to the Center on Budget and Policy Priorities.

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