Subscribe: RSS Feed | Twitter | Facebook | Email
Home | Contact Us

Archive for November, 2009

Obama Socialized Housing Policy: If At First You Don’t Succeed . . . Try, Try, Again

Posted by Larry Doyle on November 30th, 2009 4:13 PM |

The fact that the Obama administration is reticent to release data pertaining to completed mortgage modifications speaks volumes as to the lack of success of this initiative. With almost a third of American homeowners now ‘underwater’ on their mortgages, Obama and team are sticking to their game plan to modify mortgages. Details of Obama’s revised game plan can be accessed at

The U.S. Department of the Treasury and Department of Housing and Urban Development (HUD) today kick off a nationwide campaign to help borrowers who are currently in the trial phase of their modified mortgages under the Obama Administration’s Home Affordable Modification Program (HAMP) convert to permanent modifications. The modification program, which has helped over 650,000 borrowers, is part of the Administration’s broader commitment to stabilize housing markets and to provide relief to struggling homeowners and is a primary focus of financial stability efforts moving forward. Roughly 375,000 of the borrowers who have begun trial modifications since the start of the program are scheduled to convert to permanent modifications by the end of the year.

375,000? I will take the under on that. Why? As I highlighted on October 29th in my commentary “Mortgage Modifications: Statistically Insignificant”, up to that point a whopping 1,080 mortgages had been successfully and permanently modified. Policy makers believe 374,000 mortgages will be successfully and permanently modified in the last ten weeks of the year. Who’s zooming who? Would they like to place a wager on that? I’ll give odds. (more…)

The Echo of John Maynard Keynes

Posted by Larry Doyle on November 30th, 2009 1:14 PM |

British economist John Maynard Keynes

British economist John Maynard Keynes

When in doubt, increase taxes.

Further taxing of the financial industry seems like an appropriate policy given the bailouts provided over the last few years. Screw Wall Street, right? Yeah, hit them harder!! They deserve it. While I understand and appreciate the current rage directed at the financial industry, increasing taxes strikes me as an overly simplistic answer to a complex problem.

Increasing taxes on the financial industry is not a new idea. In fact, the noted economist John Maynard Keynes promoted this idea back in the 1930s. It was neither put into practice then nor again when resurrected in the 1970s. Will it be implemented currently? Bloomberg addresses this topic in writing, Taxing Wall Street Today Wins Support for Keynes Idea:

John Maynard Keynes proposed a tax on financial transactions in the middle of the Great Depression, and another economist, James Tobin, revived the idea in the 1970s as a way to counter currency market speculation. Neither effort gained much acceptance. Now, a growing number of economists and politicians argue that it’s time for a levy on trading stocks, bonds, currencies and derivatives.

U.K. Prime Minister Gordon Brown said on Nov. 7 that a transaction tax might compensate for the billions of dollars that the public has spent on bank bailouts. Government officials in France, Germany and Austria have voiced their backing. U.S. Treasury Secretary Timothy Geithner answered Brown a day later, saying the tax was not something the U.S. would support. House Speaker Nancy Pelosi, on the other hand, says the idea has “substantial currency” among congressional Democrats.

While on the surface increasing taxes on Wall Street seems reasonable, its success presumes that nothing would change in how Wall Street transacts business. We should not be so naive. (more…)

Jobs is Job #1

Posted by Larry Doyle on November 30th, 2009 9:34 AM |

“Kiss me!!”


That’s right, I said, “Kiss me!!”

Many a businessman is familiar with the basic principle of “kiss me,” that is “Keep It Simple, Stupid.”

Regrettably, Washington is not familiar with that simplest of business principles. Legislative bills that run into the thousands of pages and admittedly go unread by our lawmakers prior to vote are often an unmitigated disaster for American business.  How so?

These bills create an environment of uncertainty. What do business leaders do when they’re unsure of what is coming out of Washington and how it might impact their business? “When in doubt, wait it out.”

I witness increasing evidence of this basic business dynamic and believe it will be on full display this coming Thursday. What will happen Thursday? President Obama is hosting a Jobs Summit in Washington. Sounds like a reasonable idea given the domestic employment situation is so bad and getting worse, despite assertions to the contrary by a number of public officials and economists.

How convenient that the summit is being held Thursday. Why? This summit will provide plenty of photo ops and media coverage highlighting that Washington is hard at work addressing the employment situation right before the monthly unemployment report is released on Friday morning. Do not think for a second that the timing of this summit was not strategically scheduled to negate the negative impact of another weak report. (more…)

No Quarter Radio’s Sense on Cents with Larry Doyle Welcomes Rick Smith, Sunday Night at 8pm ET

Posted by Larry Doyle on November 28th, 2009 3:40 PM |

UPDATE: This episode of NQR’s Sense on Cents with Larry Doyle has concluded. You can listen to a recording of the episode in its entirety by clicking the play button on the audio player provided below. Once the audio begins, you can advance or rewind to any portion of the episode by clicking at any point along the play bar.


How are some people able to see the forest for the trees? Why do certain  individuals look left when everybody else is going right? What drives people to embrace risk?

We can learn so much from studying the career paths, thoughts, and views of those who have achieved remarkable accomplishments. That said, where can we go and what can we study that addresses the common characteristics and highlights the common denominators of these individuals?

You have come to the right place as this Sunday evening (8-9pm ET) No Quarter Radio’s Sense on Cents with Larry Doyle Welcomes Rick Smith.

Who is Rick Smith?

Rick Smith

Rick Smith

Rick Smith is the bestselling author of The Leap: How 3 Simple Changes Can Propel Your Career from Good to Great (Portfolio), and the author of the popular blog,  He is the co-author of the Wall Street Journal and Business Week bestseller The 5 Patterns of Extraordinary Careers, which has been sold into 13 languages and remains one of the top-selling professional career books of all time.

He is the founding CEO of World 50, cited as one of the world’s most influential senior executive networking companies. (more…)

November 28, 2009: Month to Date Review of the Market

Posted by Larry Doyle on November 28th, 2009 4:10 AM |

What a world and what a market.

Despite ongoing economic weakness and now a potential sovereign default (Dubai), the major market equity averages closed the week generally unchanged. The Treasury market benefited the most from the reality that risks remain abundant and, in a flight to safety, capital poured into this sector.  The dollar continued its descent into hell while supporting a large number of market segments, primarily commodities and especially gold.

Despite seeming investor indifference to major fundamental developments over the last six months, we disregard the situation in Dubai at our peril. Why? As Bloomberg writes, Dubai Crisis May End in ‘Major’ Default, BofA Says:

Dubai’s debt woes may worsen to become a “major sovereign default” that roils developing nations and cuts off capital flows to emerging markets, Bank of America Corp. said.

“One cannot rule out — as a tail risk — a case where this would escalate into a major sovereign default problem, which would then resonate across global emerging markets in the same way that Argentina did in the early 2000s or Russia in the late 1990s,” Bank of America strategists Benoit Anne and Daniel Tenengauzer wrote in a report.

A default would lead to a “sudden stop of capital flows into emerging markets” and be a “major step back” in the recovery from the global financial crisis, they wrote.

Let’s address economic data released this week prior to reviewing the month to date market returns.


1. Existing Home Sales: increased by 10.1%. The expectation of Uncle Sam’s tax credit for housing being discontinued has served to pull demand forward in this sector. I’ll believe that health is returning to housing when mortgage delinquencies, defaults, and foreclosures decline on a regular basis. We’re a long way from that happening.

2. GDP: revised lower to a 2.8% increase from last month’s initial reading of 3.5% increase. Things that make you go hmmmm!!

3. Consumer Confidence: registered a reading of 49.5, which does not compare favorably to an August reading of 54.5. Confidence is all about jobs and housing. Unless and until we see signs of real health return to those sectors, do not expect a robust rebound in consumer confidence.

4. Durable Goods: declined by .6% versus an expectation of a .5% increase. This negative reading is offset somewhat by October’s Durable Goods report being revised from a 1.0% increase to a 2.0% increase. Again, I do not expect to see consistent growth in these figures without real consistency in the housing and automotive sectors.  

Let’s move along to market performance. The figures I provide are the weekly close and the month-to-date returns on a percentage basis: (more…)

Lessons from Coach Wooden

Posted by Larry Doyle on November 27th, 2009 12:47 PM |

The measure of real value is whether something can stand the test of time. While certain individuals, products, or principles appreciate over time, others dim as time passes. Society also has a funny way of embracing new and valued concepts in an attempt to market and materialize definitions of happiness.

In the midst of the noise and volatility of our current financial market and economic landscape, I treasure those principles which are often overlooked and under-appreciated. These principles include: discipline, simplicity, selflessness, loyalty, drive, humility, relationships, integrity, love. While without being judgmental it is not difficult to identify individuals or situations lacking these timeless traits, how often are we able to identify individuals or situations embracing these characteristics?

This morning, I witnessed just such an individual. Who might that be? My favorite coach of all-time, John Wooden. I have not only read most of Coach Wooden’s works, but I have had the good fortune of chatting with one of his former players, Gail Goodrich (UCLA ’65, 14 year NBA career, Basketball Hall of Fame inductee ’96), about Coach Wooden. While I wish I knew Coach Wooden personally, I cherish the character of the man. In fact, in this day and age of immediate gratification, John Wooden’s lessons should be highlighted as a path to long-term success and happiness.

As we collectively navigate the economic landscape and look for examples and exemplars of ‘how then shall we live,’ John Wooden is a great model. I welcome sharing a video clip recently produced of this 99 year old marvel. I hope you enjoy it as much as I did. In reviewing it, I hope you can see that Wooden’s love story is not merely a sweet tale of an elderly man. Look deeper and see that Wooden is providing insights and lessons on life itself.

If you care to learn more about the greatest coach ever, check out Wooden’s book, They Call Me Coach, which I have highlighted here at Sense on Cents from the very first day I started this blog. That’s how highly I think of Coach Wooden.


Shop Till You Drop

Posted by Larry Doyle on November 27th, 2009 10:23 AM |

The idea of people flocking to shopping malls in the wee hours on the Friday after Thanksgiving always baffled me. To this male’s mind, just thinking about the shopping experience is unsettling. Going up and down the parking lot lanes looking for spot, darting in and out of different stores, dealing with impatient, if not rude, individuals. These activities are deemed to be enjoyable?

I define a successful shopping experience as how quickly I can get in and out of a store.

Having broached this topic with my beloved year after year, she finally simplified it by comparing the shopping experience for those who love to shop to the football experience for those who love football. In thinking of it from that standpoint, I gained a fuller appreciation. Getting to the stadium early to tailgate. Dealing with the crowds entering and exiting the stadium. The ebb and flow of the game as your team gains and loses momentum. Okay, now I get it. (more…)

Will Dubai Default?

Posted by Larry Doyle on November 27th, 2009 8:29 AM |

Will the government of Dubai default on its debt? Will that trigger a wave of defaults in other nations or in selected companies? With Dubai situated in the oil-rich Middle East, how could this nation be on the precipice of default?

Thanks to kbdabear for sharing with us this unsettling story from The, Dubai in Deep Water as Debt Crisis Spreads:

Fears of a dangerous new phase in the economic crisis swept around the globe yesterday as traders responded to the shock announcement that a debt-laden Dubai state corporation was unable to meet its interest bill.

Shares plunged, weak currencies were battered and more than £14 billion was wiped from the value of British banks on fears that they would be left nursing new losses.

Nervous traders transferred the focus of their anxieties from the risk of companies failing to the risk of nation states defaulting. Investors owed money by Mexico, Russia and Greece saw the price of insuring themselves against default rocket.

If Dubai were to default, it would be the first nation to default on its debt since Argentina in 2001. Whether Russia in 1998, Argentina in 2001, Dubai currently, or a number of countries in the future, the weight of unbearable debt forces default. The fact is, this overwhelming debt burden is not localized but truly global in nature. Situations like Dubai should not surprise us. In fact, I would be surprised if we do not witness more nations facing default. (more…)

Reasons to be Thankful

Posted by Larry Doyle on November 25th, 2009 12:54 PM |

With offices emptying out and people headed home or off to visit relatives for the traditional Thanksgiving feast, we are left to pause and reflect.

Personally,  I immensely enjoy quiet time when I can both reflect and project. Where have we been and where are we going? How are we going to get there? Who will we meet along the way? How can we most effectively navigate the economic landscape in the process? Have we ever lived through such a challenging period? The ability to think about a wide array of topics and share my feelings with readers here at Sense on Cents is both tremendously gratifying and humbling.

The fact that you are willing to share your feelings back with me is even more humbling and deeply appreciated.

While I am most thankful for my family and all that they mean to me, I am also extremely grateful to all those who take the time to read my work.

I wish you safe travels if you are taking to the roads over this holiday and a truly blessed Thanksgiving.


How Many Days Does Tim Geithner Have Left?

Posted by Larry Doyle on November 25th, 2009 8:51 AM |

Is Treasury Secretary Geithner on the hot seat? With populist anger rising in the land, will Geithner be Obama’s sacrificial lamb to appease the masses? Why is Geithner in the line of fire?

1. the economy.

2. perception that he is the chair of the “Wall Street-Washington Incest Club.”

3. the disregard for our currency.

4. does not command full respect in the international community.

Geithner is getting hit with volleys from both sides of the aisle. Is the tepid support provided by the White House an indication that Tim is being readied to be fed to the wolves or simply an unwillingness to acknowledge the topic?

The fact is, the economy is not going to improve anytime soon. Obama’s approval ratings have declined along with the economy. Obama has already indicated his support for Ben Bernanke’s return as Fed chair. While the administration would prefer the topic of Geithner’s fate to go away, it is picking up momentum. Bloomberg discussed Geithner’s potential dismissal this morning.

Who would be Geithner’s likely replacement? JP Morgan’s CEO Jamie Dimon. (more…)

Recent Posts