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Archive for April, 2010

Would Goldman Sachs Defense Expose the Regulators and Legislators?

Posted by Larry Doyle on April 30th, 2010 2:17 PM |

When faced with significant threats to self-preservation, desperate people will take desperate actions. This reality is not always displayed in public, but the reality is that backroom dealings which lead to legal settlements are truly high stakes poker games.

On this note, for those interested in the markets and economy, who would not want to be a fly on the wall or a bug in the phone as dialogue and discourse flies back and forth between Goldman Sachs and officials from the Securities and Exchange Commission (SEC), Department of Justice (DOJ), Financial Industry Regulatory Authority (FINRA), Congressional subcommittees, and even the White House? (more…)

Goldman Sachs Now Facing Criminal Investigation

Posted by Larry Doyle on April 30th, 2010 10:47 AM |

Goldman Sachs stock is down approximately 8% this morning. What is going on?

The Department of Justice has announced it is launching a criminal investigation of Goldman Sachs. ABC reports, Justice Department Reviewing SEC Case Against Goldman Sachs:

Officials at the U.S. Department of Justice are reviewing whether the Securities and Exchange Commission’s recent fraud charges against Wall Street giant Goldman Sachs warrant a full-scale criminal investigation, two government sources told ABC News. (more…)

1st Quarter GDP is Not a V-Shape

Posted by Larry Doyle on April 30th, 2010 9:14 AM |

The 1st quarter GDP figures were just released and registered a 3.2% gain. This statistic is slightly weaker than consensus expectations of 3.4%. What were the components? The Bureau of Economic Analysis provides insights:

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 3.2 percent in the first quarter of 2010, (that is, from the fourth quarter to the first quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 5.6 percent. (more…)

Is Dick Fuld a Thief and a Liar?

Posted by Larry Doyle on April 29th, 2010 5:58 PM |

While many in America hold former Lehman CEO Dick Fuld in total disregard, few had the catbird seat into the bankster’s lair that Oliver Budde possessed. Who is Budde? What did he do? What did he see?

Budde formerly worked as a Lehman lawyer. For those with even a passing interest on Wall Street intrigue, Budde’s story is a little lengthy but totally riveting. (more…)

Lew Ranieri: Housing Recovery Is Years Away

Posted by Larry Doyle on April 29th, 2010 3:34 PM |

Despite all reports to the contrary, markets in general and housing in particular are ultimately a function of supply and demand. On that note, why isn’t the housing market poised to truly do better anytime soon? The overhang of housing supply due to ongoing strategic mortgage defaults is increasing. These strategic mortgage defaults are much more a factor in the prime-Jumbo market segment than the conforming or sub-prime mortgage market. (more…)

Wall Street Should NOT Have to Defend Itself Against Washington’s and Media’s Ignorance

Posted by Larry Doyle on April 29th, 2010 10:27 AM |

I am not bashful in calling out Wall Street for its shortcomings and transgressions throughout our economic crisis. Similarly, I am happy to take Washington or any other party to task for shoddy performance. I welcome the same treatment if and when readers view Sense on Cents as being off base or out of line. Spirited engagement between and among interested and informed parties is the foundation for real progress.

So while I am willing to call out Wall Street when necessary, I strongly believe that the industry should not need to defend itself from the ignorance, and often abrasive ignorance, heaped upon it by those in Washington or the media. (more…)

Wall Street Self-Evaluations

Posted by Larry Doyle on April 29th, 2010 9:20 AM |

The Goldman Sachs Senate subcommittee hearing the other day included a focus on a Wall Street process I viewed with a significant degree of disdain, that is the self-evaluation and 360 review. Why such disdain? These reviews struck me as a colossal waste of time, not in theory but in practice. Why? A lack of real integrity and honesty encompassing what I define as one of corporate America’s greatest failings, superficial congeniality.

During my tenure on Wall Street, employees always utilized the self-evaluation to promote their case for maximum compensation. Can you blame any employee for doing so? We saw this the other day during the Goldman hearing in which the Goldman employees’ self-evaluations were used against them for their self-aggrandizing tone. I chuckled when the senators referenced these evaluations as I appreciated the fallacies of the process. The senators used the evaluations strictly to score political points. That approach was weak, as the Congressmen neither appreciate nor understand the context of the evaluations themselves. (more…)

Fed Treadmill Continues

Posted by Larry Doyle on April 28th, 2010 2:33 PM |

The Fed just released its regularly scheduled statement reviewing the economy and providing its outlook for monetary policy. What is interesting is not the report from the Fed but the market reaction, or lack thereof. Has the octane in the Fed’s fuel finally been exhausted? Is the engine running in reverse in the EU putting the brakes on the overall market?

The Fed provided a very qualified statement indicating that the economy is improving ever so slightly, that inflation pressures remain subdued, that employment prospects are beginning to improve, but that real slack remains in the overall economy. The Fed gave no hint that it is thinking of selling any assets (mortgages or agency debt). Add it all up and the Fed is in no hurry to make any change in its easy interest rate policy, that is a 0-.25% Fed Funds rate for an extended period. (more…)

Spanish Domino Tipping

Posted by Larry Doyle on April 28th, 2010 11:49 AM |

Spain’s credit rating was just cut by S&P from AA+ to AA. The outlook is negative. The Euro just made new 12 month lows to 1.3137 on this breaking news. Why is this news important? The economic contagion is clearly spreading across the EU. Is Ireland next? What about the granddaddy of them all, that being the United Kingdom? Could the pressures within the EU actually cause some countries to leave and the EU monetary union to crumble?

The size of the Spanish economy, which is considerably larger than both the Greek and Portuguese economies, makes these developments very serious. Is there any doubt the domino effect is well underway?


Greek Bailout Needs Triple

Posted by Larry Doyle on April 28th, 2010 10:44 AM |

Just how big is the financial sinkhole swallowing Greece? Bloomberg just reported that the hole is likely three times the size previously reported. Where does it end? This breaking news is a MAJOR curve on our economic landscape. (more…)

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