Thu05282015

News

LASD opens registration for online strategy sessions

As the Los Altos School District plans how to spend its $150 million in Measure N bond funds, its initial goal is to broaden community input.

Following an April 22 meeting, the district is casting a wider net in the hopes of soliciting feedback from...

Read more:

Loading...

Schools

Students discuss academic, social pressure in CHAC forum

Students discuss academic, social pressure in CHAC forum


Traci Newell/Town Crier
Community Health Awareness Council hosted a forum earlier this month where local students discussed the varied pressures they face.

Local students face enormous pressures in their lives, ranging from academic to social, but s...

Read more:

Loading...

Community

Alan Alda discusses career, family and science at the Celebrity Forum

Alan Alda discusses career, family and science at the Celebrity Forum


Alda

Those who laughed along with Hawkeye Pierce on the long-running TV program “M*A*S*H*” would have enjoyed the recent Foothill College Celebrity Forum Speakers Series featuring actor Alan Alda.

Alda appeared May 13-15 at the Flint Center for...

Read more:

Loading...

Sports

Eagles, Spartans advance

Eagles, Spartans advance


Town Crier file photo
Los Altos High’s Lizzy Beutter registered three hits in last week’s playoff win over Watsonville. She was also the winning pitcher.

Led by Lizzy Beutter, host Los Altos High whipped Watsonville 9-0 in the opening ro...

Read more:

Loading...

Comment

Giving the thumb to what's done: Editorial

In the wake of recent Los Altos-area news events, we’re all thumbs.

Thumbs-down: To the Los Altos City Council’s decision to put the Walter Singer bust in storage. This is wrong on so many levels – even worse than the initial council decision to tra...

Read more:

Loading...

Special Sections

Planting is possible despite drought

Planting is possible despite drought


Tanya Kucak/Special to the Town Crier
Wash the soilless mix off the root ball into the same container in which you have placed the clay soil from the planting hole. Remove at least an inch from the top and sides of the plant.

In this continuing dro...

Read more:

Loading...

Business

Los Altos-based startup eyes digital makeup color-matching

Los Altos-based startup eyes digital makeup color-matching


Alicia Castro/Town Crier
Kokko Inc. Makeup Director Meli Pennington, standing, tests different shades of foundation on Los Altos resident Karen Melchior.

Meli Pennington knows cosmetics.

She has painted faces for the pages of Vogue and Glamour,...

Read more:

Loading...

Books

Horan's 'Loving Frank' offers fictionalized account of famed architect's illicit affair

Horan's 'Loving Frank' offers fictionalized account of famed architect's illicit affair


In the 1920s, two married people fall in love, leave their spouses and children and set about living and traveling together. Affairs of this sort were considered shocking at the time. But the scandal was heightened given that the man was Frank Lloy...

Read more:

Loading...

People

GUY WILSON SHOUP

Guy Wilson Shoup, 80, died on April 28, 2015, at his Palo Alto apartment, after a long period of ill health. Born on November 22, 1934, to Margaret Owen Shoup and to Jack Wilson Shoup (the second son of Paul Shoup, widely considered the founder of Lo...

Read more:

Loading...

Travel

Flying south for the winter: Antarctica trips are not just for the birds

Flying south for the winter: Antarctica trips are not just for the birds


Photos Courtesy of Dave Hadden
Los Altos residents Dave and Joan Hadden watched the scenery from the large boat and a smaller Zodiac.

Standing on the beach with hundreds of thousands of penguins is “the experience of a lifetime,” according to Ga...

Read more:

Loading...

Stepping Out

LA Stage Co. goes to 'town'

LA Stage Co. goes to 'town'


courtesy of Los Altos Stage Company
The Los Altos Stage Company production of “Urinetown: The Musical” opens this weekend.

The Los Altos Stage Company caps its 19th season with the musical comedy “Urinetown: The Musical,” scheduled to preview Th...

Read more:

Loading...

Spiritual Life

Mercifully in His grip: Exploring our true position in Christ

I recently read a wonderful analogy about our true position in Christ. It was shockingly contrary to the messages impressed upon me in church, but deeply rooted in the Bible. The analogy is that of child and a parent. If you have ever taken a small ...

Read more:

Loading...

Magazine

Practice prudent pruning: Maintaining manzanita, ceanothus and toyon

Practice prudent pruning: Maintaining manzanita, ceanothus and toyon


tanya kucak/Special to the Town Crier
Shrub manzanitas are known for their sinuous mahogany trunks and branches. If the foliage hides the bark, prune selectively to open the center so that the bark is visible year-round. This Montara manzanita is ...

Read more:

Loading...

Inside Mountain View

How to prevent future economic crises

Author and economist Horace “Woody” Brock, Ph.D., is founder and president of Strategic Economic Decisions Inc., an economic think tank. He believes that the growth of “bubbles”– such as the real estate bubble that had such a devastating effect on world economies in 2008 – can easily be controlled.

In a recent interview with Bob Veres, a financial services writer and commentator, Brock explained how the economic crises we’ve encountered over the past 20 years – the housing downturn, the tech bubble, etc. – have been caused not by normal manufacturing cycles such as companies overproducing products and laying off workers, but by leverage and speculation in asset prices. Brock asserts that financial bubbles have replaced inventory bubbles as the primary cause of economic recessions.

Unfortunately, if that is true, then the primary monetary policy lever the federal government uses to regulate booms and busts in the manufacturing sector is too blunt to work effectively on asset bubbles. Take the housing sector prior to 2007, for example. If the Federal Reserve had decided that it wanted to discourage thousands of Americans from flipping homes or buying them with zero money down, it could have dramatically raised interest rates.

There is, according to Brock, a better way to control excesses in asset pricing without clobbering the corporate/manufacturing sector: Simply raise margin requirements on any financial asset – stocks, real estate, etc. – as its price increases beyond its average historical valuation. In other words, reduce the amount of permissible leverage in proportion to the degree of deviation from the mean.

Deflating the housing bubble

Take last decade’s housing bubble. Using this methodology, as housing prices continued to climb, the government would have increased the minimum down payment required for a mortgage. Imagine in 2007 having to put down 25 or 30 percent of the price of a home in cash. That certainly would have discouraged most of the speculators who were buying fully leveraged properties at the time, and would very likely have deflated the bubble.

The same requirement would have prevented Lehman Brothers and other investment banks from buying and selling stocks and other assets with margins leveraged as high as 50 to 1. They might even have avoided bankruptcy, not to mention contributing to the economic wreckage that resulted.

Although the details of such a methodology need to be worked out, there is no shortage of historical data on most asset classes for someone to come up with an appropriate mean value and trigger point for decreasing leverage requirements. In the case of the S&P 500, the average price-earnings ratio (P/E) has totaled approximately 15 for the past century. So when stock prices rise to the point where the market P/E ratio becomes 20, then you have to put more down if you want to buy stocks.

Interestingly, there is even historical precedent for this proposal. A review of margin requirements shows that investors who could put virtually nothing down to buy shares of stocks before the 1929 crash were later required to limit their margin accounts as high as 55 percent, with the number moving around as the markets did. According to Brock, in January 1958, when the Dow was at 440, an investor could buy stock with 50 percent down. By December, when the Dow was trading around 580, the requirement had grown to 90 percent.

Unfortunately, the Dodd-Frank Wall Street Reform and Consumer Protection Act includes none of this. If you believe that it’s the government’s role to prevent manufacturers from polluting rivers and poisoning citizens, why not additionally prevent financial institutions from making huge gains and avoiding huge losses during asset bubbles that cause millions of people to lose their jobs?

Los Altos resident Artie Green is a Certified Financial Planner with Cognizant Wealth Advisors. For more information, call 209-4062.

Schools »

Schools
Read More

Sports »

sports
Read More

People »

people
Read More

Special Sections »

Special Sections
Read More

Photos of Los Altos

photoshelter
Browse and buy photos