Archive for the ‘Employment’ Category
Posted by Larry Doyle on March 18th, 2009 3:50 PM |
A precursor to the turmoil roiling our economy and markets today occurred on a smaller, but certainly very dramatic, scale in 1998. The meltdown of the hedge fund Long Term Capital Management brought the market to its knees at the time. LTCM was effectively taken over by a consortium of Wall Street banks at the behest of New York Federal Reserve Chairman, William McDonough. The firms injected approximately $3 billion dollars in order to stabilize LTCM and then unwound it in an orderly fashion.
The lessons learned in the LTCM crisis were obviously not learned well enough because we are experiencing them again a multiple hundred fold. The centerpiece of our current fiasco is AIG (known here at Sense on Cents as “Ain’t It Great”).
The dramatic story of Long Term Capital Management is captured in a book I strongly recommend for anybody interested in the history of the financial markets. When Genius Failed, by Roger Lowenstein, is a great read and truly captures the intrigue, egos, and tension of that period. As the current turmoil unwinds I look forward to the books published on this period as well. (more…)
Tags: AIG, Goldman Sachs, Long Term Capital Management, quantitative trading, sub-prime mortgages, Wall Street Banks, When Genius Failed, William McDonough
Posted in American Consumers, Commerce, Credit Risk, Current Affairs, Economic Stimulus, Economy, Employment, Equity Markets, Hedge Funds, Risk, Wall Street | 9 Comments »
Posted by Larry Doyle on March 17th, 2009 5:15 AM |
I thank our loyal reader in Michigan, Mr. Fiscal Liberal, for sharing with us a piece written by Simon Johnson, the former chief economist of the International Monetary Fund, a professor at the MIT Sloan School of Management, and a senior fellow at the Peterson Institute for International Economics.
Mr. Johnson writes about the growing problems in Europe. I am hard pressed to see how the European situation, both in the East and West, can not end badly. There are too many economies that are effectively insolvent or on the brink of insolvency. I believe this is the region of the world which will experience increased economic strife leading to social unrest and political change. Can the problems in Europe be contained given the massively interconnected world of global finance?
Thank you again FL for sharing this very enlightening piece from Simon Johnson!!
G-20s Real Agenda Should be Saving Europe from Itself
By Simon Johnson
Last Updated: 10:28AM GMT 16 Mar 2009
The media coverage of the G20 finance ministers meeting this weekend was dominated by the apparent battle between those who support more fiscal stimulus and those who want to impose more regulations on the financial system.
This, we are led to believe, is the big debate facing the full G20 heads of government summit early next month: the US is pushing for a bigger global fiscal stimulus (2pc extra government spending from everyone, to be monitored by the IMF), while the continental Europeans are holding out for greater regulation. Gordon Brown is trying hard to cast himself as the broker for any apparent deal. (more…)
Tags: Austria, Claude trichet, ECB, Europe, European Union, fiscal stimulus, G20, Global Finance, Gordon Brown, Greece, Hungary, IMF, Ireland, Latvia, MIT Sloan School, mortgage market, Peterson Institute for International Economics, Real Estate, regulation, Simon Johnson, Spain, U.K., weakest link
Posted in Banking Institutions, Credit Risk, Economic Stimulus, Economy, Employment, Euro, European Union, Global Finance, Government funds, Mortgage Crisis, Mortgages, Risk, Wall Street | 4 Comments »
Posted by Larry Doyle on March 16th, 2009 6:30 PM |
Monday’s price action in the equity markets was particularly interesting. The market opened firm, up approximately 1%, and continued to trade with a very firm tone all day. What precipitated the strong tone? Fed chair Ben Bernanke was interviewed on 60 Minutes last evening. On that show, Bernanke Defends Recovery Efforts in Rare TV Interview.
First and foremost, it is very uncharacteristic for anybody from the Fed to consent to an interview targeted at a general audience. I view this as Bernanke trying to make the case for himself, the Fed, and the economy during these challenging times. In fairly short order, Bernanke has gained significantly greater credibility than his colleague, Secretary Geithner. Bernanke also spoke well of the economy turning around later this year IF the financial system recovers. That is a mighty big IF!! (more…)
Tags: Ben Bernanke, Bernie Madoff, commercial real estate, Economy, Equity Markets, FASB, Federal Reserve, Mark-to-Market, REITs, Tim Geithner
Posted in Bernie Madoff, Current Affairs, Economy, Employment, Equity Markets, Real Estate, Risk, Wall Street | 11 Comments »
Posted by Larry Doyle on March 16th, 2009 4:17 PM |
A loyal reader shared with me a recent posting from former Clinton Labor Secretary Robert Reich. Earlier today I cross posted a piece from No Quarter in which Reich was less than complimentary of Secretary Geithner. Well, let’s see what Mr. Reich has to say about President Obama’s economic program: Is Obamanomics Conservative or Revolutionary?
Prior to delving into my thoughts and commentary on Reich (or anybody), I always find it useful to consider the perspective of the writer. In regard to Mr. Reich, let us not forget that Robert Reich Excludes White Male Construction Workers from Obama Stimulus Plan. Utilizing that perspective, Mr. Reich would be considered to be more than slightly left of center. Additionally, in considering the Obama economic plans, I think it is critically important to incorporate the economic plans and agenda of the Democrats in Congress. These Congressional leaders have a major influence in this process. These Democrats, including David Obey (D-WI), Nancy Pelosi (D-CA), Harry Reid (D-NV), Barney Frank (D-MA), Chuck Schumer (D-NY), Chris Dodd (D-CT), and Steny Hoyer (D-MD) amongst others are major players in the stimulus, budget, and Omnibus bill that have come down from Congress. It is not totally clear where the lines are drawn between the White House and Congress on all the economic issues. That said, let’s see what Mr. Reich has to say and then critique his assessments of Obamanomics. (more…)
Tags: Barack Obama, Barney Frank, cap and trade, Chris Dodd, Chuck Schumer, David Obey, Democrats, Education, Harry Reid, Nancy Pelosi, Obamanomics, Reaganomics, regulatory structure, Robert reich, Steny Hoyer, taxes, Tim Geithner, universal health care, vouchers
Posted in American Consumers, Barack Obama, Christopher Dodd, Chuck Schumer, Commerce, Congress, Current Affairs, Democratic Party, Economic Stimulus, Economy, Education, Employment, Equity Markets, Nancy Pelosi, Obama Administration, Real Estate, Republicans, Risk | 4 Comments »
Posted by Larry Doyle on March 16th, 2009 8:44 AM |
Cross Posted from No Quarter!! Thanks!
Major h/t Andy!!
Since this pretty much speaks for itself, I’m just going to step out of the way.
From Robert Reich’s Blog:
(Robert Reich was the nation’s 22nd Secretary of Labor and is a professor at the University of California at Berkeley. His latest book is “Supercapitalism.” This is his personal journal.)
FRIDAY, MARCH 13, 2009
Paul Volcker to Barack Obama
Former Fed Chair Paul Volcker is briefing President Obama today on how well the stimulus package is doing. I have no inside knowledge of what he’s saying, but if I were Volcker (and I’m not — he’s almost two feet taller than I am), I’d say the following:
Mr. President, it’s way too early to know exactly what the stimulus is doing because the money is barely out the door, but I’ve got to tell you I’m worried as hell. Unemployment is at 8 percent, and underemployment is over 14 percent of the workforce. The economy is shrinking much faster than it was when you put the stimulus together. It will be more than a trillion dollars short of its full capacity this year, and I have every reason to believe the same next. State governments alone are hundreds of billions in the hole, creating a huge drag. So your $787 billion over two years, only two-thirds of which is direct spending, isn’t going to get us nearly far enough. I’d strongly recommend you make ready a second stimulus, about the same size, and get it enacted as soon as possible, with the proviso that it will be implemented if and when unemplyment hits 8.5 percent or underemployment reaches 15 percent.
Oh, and by the way, Mr. President. You may not want to hear this, but your Treasury Secretary is making things worse. His dithering on what to do about Wall Street, and his incapacity to speak clearly to the Street and to the public about what needs to be done, is spooking everyone. Why doesn’t he just put the irrevocably insolvent banks into receivership under the FDIC, sell off their assets, protect depositors, and reimburse taxpayers with whatever remains? Let the rest of the banks fend for themselves — working out their bad loans with their creditors. As to AIG, well, that’s a complete basketcase. Put it out of its suffering. Take it over, sell its assets, protect policy holders (you’ll need to create a big co-insurance plan with every other major insurer in the world), then get out.
Want a cigar?
I don’t smoke, but a cigar and a health shot of tequila is sounding good about now. And it couldn’t make the sick feeling in the pit of my stomach any worse.
Tags: AIG, Barack Obama, FDIC, Paul Volcker, Robert reich, stimulus, Tim Geithner, underemployment, Unemployment
Posted in Barack Obama, Economic Stimulus, Economy, Employment, General | 8 Comments »
Posted by Larry Doyle on March 14th, 2009 6:00 PM |
David Darst may not be a household name for the general public, but for those involved in the world of finance he is held in very high regard. In fact, I think so highly of David that in the Sense on Cents Reading Room, I included his book:
The Complete Bond Book: A Guide to All Types of Fixed-Income Securities
by David Darst
– the Wall Street insider’s Bible to all types of fixed income securities.
David was interviewed yesterday on Bloomberg News. He touches on issues I have recently addressed here at Sense on Cents. I appreciated his commentary on the fact that the equity market rally this week was a “psychological” bounce in the context of a bear market. I addressed the particulars of the current market psychology in my piece, Is the Market Oversold? UPDATE.
Darst also offers enlightening color on overall market outlook, inflation, and places to hide amidst this turmoil. I know you will not be disappointed in viewing Morgan Stanley’s Darst Sees Psychology Driving Stocks. It’s a 5 minute clip from a man with a lifetime of experience!! I am happy to bring it to you as we collectively navigate the economic landscape.
LD
Tags: Bloomberg News, David Darst, equity market, fixed-income securities, Inflation, market psychology, TIPS
Posted in American Consumers, Bailout, Economy, Education, Employment, Equity Markets, Global Finance, Technology, Wall Street | 1 Comment »
Posted by Larry Doyle on March 12th, 2009 7:07 AM |
At the core of most, if not all, of our economic problems lies housing. I do not need to replay the tape of low rates, shoddy underwriting, and Wall Street securitizations that all played a dramatic role in creating a bubble the likes of which we have never seen and hopefully never will again. All that said, housing is an enormous market with a wide array of factors impacting it. How does one track it? Are we supposed to rely on our local brokers telling us things feel better? Should we ask contractors if they are bidding on jobs? Dare we rely on our local or national media outlets to provide their expertise and pandering? If we did, housing may have bottomed 14 different times in the last 10 months. In all seriousness, how can we track housing? Welcome to Sense on Cents.
There are two indexes that have developed over the last few years and are enormously respected by market participants. One index, the S&P/Case-Shiller Home Price Indexes, is released on a monthly basis. This index tracks a variety of regions in the country but not every region. Still, all things considered, this index is widely watched as a reliable indicator of health in housing. The index is typically released toward the end of each month. The most recently released report was on February 24th, A Look at Case-Shiller Numbers, by Metro Area. In this report, all indications are that housing has yet to see any support. (more…)
Tags: ABX, Case-Shiller, Economy, housing, Real Estate, stock market, Tim Geithner, Wall Street
Posted in American Consumers, Economic Stimulus, Economy, Employment, Equity Markets, Home Loan, Housing Crisis, Mortgage Crisis, Mortgages, Real Estate, Stimulus Plan, Wall Street | 11 Comments »
Posted by Larry Doyle on March 10th, 2009 2:37 PM |
The stock markets are having a very robust, broad based rally today. All major market averages are up almost 5% or better. Gold is down approximately 3%. Foreign stock markets also had significant rallies. Can we put this pain behind us? Is it finally over?
In dealing with markets and the economy, it is never over. The critical, mental acuity in dealing with the markets and economy is understanding the dynamics at work and the associated risks. Along with a host of other goals, I firmly hope that my work here at Sense on Cents is able to help people understand those dynamics and the accompanying risks. It is a process, but I will keep after it and I hope you find it enlightening and informative. If so, please comment and share Sense on Cents with your friends. (In fact, you can share this piece, and any other piece here at S o C by using the “ShareThis” link underneath the title line of each story). Let’s assess today’s market action. (more…)
Tags: day trading, earnings, Economy, EU, foreign stock markets, global economy, gold, government bonds, housing, Martin Feldstein, rallying market, Risk, Sense on Cents, Unemployment, Vikram Pandit
Posted in American Consumers, Business, Citigroup, Commerce, Credit Risk, Economic Stimulus, Economy, Employment, Equity Markets, European Union, Global Finance, Housing Crisis, Insurance Industry, Real Estate, Risk, S&P 500, Stimulus Tax Package, Wall Street | 8 Comments »
Posted by Larry Doyle on March 10th, 2009 11:19 AM |
I very much appreciate reading material written by people whom I perceive as having no agenda. I have tried to bring people like this (including Ray Dalio, Paul Keating, Bob Rodriguez, Steve Rehm, Kevin Doyle, Vaclav Klaus, and many others) to Sense on Cents because I firmly believe we all become more educated and informed in the process. Please let me know if and when you perceive me, any of the pieces to which I link, or radio guests on NQR’s Sense on Cents as not dealing totally in the truth. Constructive criticism is always appreciated and will make for a better site.
Along with the aformentioned, I have also previously remarked on my high regard for John Mauldin, one of our Economic All-Stars. John himself possesses an insightful global perspective and has a circle of friends and confidantes that are simply off the charts.
In John’s weekly Outside the Box, he shares with us the perceptions of Michael E. Lewitt. Mr. Lewitt writes at length on topics we have covered here previously, but his level of detail and thoughtful analysis are well worth the read.
Topics covered include: (more…)
Tags: Bank Nationalization, bankruptcy, Bob Rodriguez, depression, eastern Eurrope, economic policies, GM, John Mauldin, Kevin Doyle, market outlook, Merrill LYnch, Michael Lewitt, Obama budget, Outside The Box, Paul Keating, Ray Dalio, recession, Steve rehm, Vaclav Klaus
Posted in American Consumers, Auto Industry, Bailout, Bank Nationalization, Banking Institutions, Barack Obama, Bob Rodriguez, Business, Commerce, Economic Stimulus, Economy, Education, Employment, Equity Markets, Obama Administration, Risk, Stimulus Plan, Stimulus Tax Package, Unemployment, Wall Street | 6 Comments »
Posted by Larry Doyle on March 8th, 2009 7:22 AM |
I had a conversation last week with a recent college graduate working in the finance industry. He was recently laid off. Understandably, he was somewhat miffed and unsettled. I was happy to talk to him. My first statement to him was that he has approximately another 40 work years in front of him. Given the length of time and the dramatic changes ongoing in our economic landscape, I offered that this was actually an interesting time to be in the job market because change creates opportunity. His initial deadpan response was not unexpected and actually hoped for. I did not want to be merely a shoulder for him to lean on and commiserate. I advised him that his next job would not necessarily find him, he must find it. In that spirit, I enthusiastically apprised him to actively engage people in dialogue and conversations.
I told him to not even look for interviews but first and foremost to gather information. Utilizing a variety of networks (friends, family, college alums, neighbors, cold calls), I strongly impressed upon him that he needed to remain engaged. (more…)
Tags: career planning, cold calls, college graduate, discipline, downsizing, Economy, interviews, networks, resume, upgrade, Wall Street Journal, work
Posted in American Consumers, Commerce, Economy, Education, Employment, Unemployment, Wall Street | 5 Comments »
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