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HomeLaurence Kotlikoff: “The U.S. Is Bankrupt”
Posted by Larry Doyle on August 12th, 2010 1:20 PM |
Nobody likes being told they are broke. While the truth may hurt, when you’re broke, you’re broke. Are we as a nation broke? Laurence Kotlikoff believes we are and expresses as much today in a Bloomberg commentary, U.S. Is Bankrupt and We Don’t Even Know It,
Let’s get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills.
What it can and must do is radically simplify its tax, health-care, retirement and financial systems, each of which is a complete mess. But this is the good news. It means they can each be redesigned to achieve their legitimate purposes at much lower cost and, in the process, revitalize the economy.
Last month, the International Monetary Fund released its annual review of U.S. economic policy. Its summary contained these bland words about U.S. fiscal policy: “Directors welcomed the authorities’ commitment to fiscal stabilization, but noted that a larger than budgeted adjustment would be required to stabilize debt-to-GDP.”
But delve deeper, and you will find that the IMF has effectively pronounced the U.S. bankrupt. (more…)
Bill Clinton Makes Case for Sense on Cents
Posted by Larry Doyle on August 12th, 2010 10:35 AM |
Bill Clinton could be a spokesman for Sense on Cents. How so? As 5 News in Ft. Smith-Fayetteveille, Arkansas attests, Bill Clinton Says Country In “Mess” In Part Due to Lack of Economic Education,
The biggest names in Arkansas politics, including President Clinton and Governor Beebe, stopped by Northwest Arkansas today to promote economic education. Today President Bill Clinton joined the state’s political and business leaders at the Economics Arkansas luncheon to celebrate growth in Northwest Arkansas and the importance of economic education. (more…)
What Will We Learn from FINRA’s Annual Meeting on 8-12-10?
Posted by Larry Doyle on August 11th, 2010 12:20 PM |
Wall Street’s self-regulatory organization, FINRA, holds its annual meeting tomorrow inWashington D.C.. What will we learn? Will FINRA’s member firms vote for a number of non-binding proposals which would shine real light on the inner workings of this organization? America deserves to learn so much more than has ever been revealed about FINRA.
I have shared with many people that I believe the underlying tone of our markets would improve if FINRA were compelled to open its books and records. Why do I so strongly believe that? True transparency inherently breeds investor confidence. I made this very point to Joe Giannone of Reuters just the other day. Regular readers of Sense on Cents are fully aware of my feelings. Joe highlights the topics surrounding FINRA for a wider audience as he writes, FINRA Faces Calls to Lift Veil on Finances, Pay:
Wall Street regulator FINRA, which demands disclosure and openness from brokers, is under pressure to lift the veil on its own affairs.
The Financial Industry Regulatory Authority, a private corporation that regulates the nation’s 4,700 brokerages, will learns at its annual meeting on Thursday how many support a dissident’s call for more transparency. (more…)
Caroline Herron’s Lawsuit Targets Fannie Mae’s Mismanagement of Mortgage Modification Program
Posted by Larry Doyle on August 11th, 2010 7:17 AM |
Have executives at Fannie Mae worked to benefit their own financial interests versus promoting the well being of American taxpayers and homeowners looking to permanently modify their mortgages? Is Fannie Mae merely a perpetual train wreck or has something even more nefarious gone on inside the halls of our national stepchild?
In recently reviewing The Center for Public Integrity, I was not shocked — but certainly dismayed — to read Whistleblower: Fannie Mae Bungled HAMP Anti-Foreclosure Program,
Fannie Mae executives bungled their stewardship of the federal government’s massive foreclosure-prevention campaign, creating a bureaucratic muddle characterized by “mismanagement and gross waste of public funds,” according to a whistleblower lawsuit by a former Fannie Mae executive and consultant. (more…)
Ben Bernanke Is Running out of Ammo
Posted by Larry Doyle on August 10th, 2010 4:24 PM |
What if you were playing a round of golf with a set number of balls and were restricted by how often you might be able to use specific clubs? Might feel somewhat overwhelmed, no? What if you faced this predicament when you realized that you were still many holes away from the clubhouse? Might feel increasingly overwhelmed, no? Why do I have this mental image of Ben Bernanke and his fellow Fed governors standing out on the farthest point of a golf course wondering just how the heck they are going to finish their round–that is, navigate the economy–and get back to the clubhouse.
Let’s quickly review the Federal Reserve’s statement released today. In the process, let’s take the pulse of the economy and the Fed’s ability to impact it. From the Federal Reserve’s website, (more…)
Calling All Auction-Rate Securities Holders
Posted by Larry Doyle on August 10th, 2010 6:42 AM |
Without information there can be no real truth. Without truth there can be no real justice. Without justice, what is the quality of our nation and ultimately our civilization?
Why do so many Americans remain enraged at the economic travesty of the last few years? For the very simple reason that those regulators who were charged to protect American investors not only failed in their initial charge but to a large extent have continued to fail investors by not aggressively pursuing justice where financial improprieties–if not outright fraud–transpired.
To this end, why am I not surprised that many auction-rate securities holders have quickly directed their attention and focus to the state of Colorado where securities commissioner Fred Joseph has filed a complaint against E*Trade for improperly marketing and distributing auction-rate securities. Other ARS holders are hoping Commissioner Joseph will take a similar tact on their behalf against other firms for the same reason.
In order for the Colorado state securities commissioner to pursue the truth, he needs the information. (more…)
What Was Mark Hurd Thinking?
Posted by Larry Doyle on August 9th, 2010 3:39 PM |
High school kids do stupid things all the time. With little appreciation of the risks involved, stupid pranks or immature behavior can often have serious consequences. Hopefully by the time the high schooler heads off to college, the days of immaturity are in the rear view mirror. What is the lesson many high schoolers learn? Actions have consequences.
This lesson is certainly not restricted to those in high school. That said, how is it that a CEO of a Fortune 500 company, in this case Hewlett-Packard’s Mark Hurd, can engage in behaviors that lend themselves to those of high school sophomores?
There are real lessons in this professional soap opera for all of us. What do those lessons include? The Wall Street Journal addresses them in writing, Mark Hurd Neglected to Follow H-P Code,
Hewlett-Packard Co.’s standards of business conduct suggest that employees pose themselves a simple test to decide whether an action is appropriate: “Before I make a decision, I consider how it would look in a news story,” the document states. (more…)
Now More Than Ever, ‘Caveat Emptor’
Posted by Larry Doyle on August 9th, 2010 6:29 AM |
A resounding theme on Wall Street currently is the decline in overall volumes. This reality is not only happening in the equity markets but in virtually every corner of the financial services industry. What happens as a result? Pressure from management increases to ‘make the numbers.’ That pressure is transferred to clients in a subtle or often not so subtle fashion. In addition to the pressure to transact, investors need to be increasingly on guard against practices which will generate greater margins and revenue for brokers and financial planners but leave you with nothing more than larger fees and expenses.
Once again, ‘caveat emptor’ is the order of the day. What are some of the practices investors need to be particularly attuned to at this time? Our friendly Investing Primer, Investopedia provides a nice summation of 4 Dishonest Broker Tactics and How to Avoid Them,
Here we look at the most unscrupulous practices brokers have used to boost their commissions and push poor-quality investments onto unsuspecting investors. (more…)
Thank You!
Posted by Larry Doyle on August 7th, 2010 7:50 AM |
I am forever humbled when people read and comment at Sense on Cents.
What is the fuel that drives Sense on Cents? An insatiable competitiveness on my part. My desire to help people. My personal intellectual curiousity to learn more about a wide array of market and economic topics. That said, the fact that people continue to read, share, and comment on my writing is the ultimate fuel that drives this blog/website. Your interests drive my interests. In short, we are helping each other.
Given my recent professional move to Greenwich Investment Management, along with my ongoing desire to maintain and grow my blog/website, I am even more indebted to those who provide an extra set of eyes and ears to topics that fall under the heading of real “sense on cents.” This form of leverage is truly a practice in which there are no losers. Thank you!
I reference this point of leveraging based on the recent letters and commentary I have had with the likes of Gary Aguirre, various auction-rate securities holders, and many others. Please do not be bashful in writing me and sharing your stories and situations, especially if they may help a wider audience. While obviously protecting personal identities, I am happy to run commentary that serves all our interests.
On that note, thank you again! Now, I am off for the day as my better half and I are going to pick up our 11 year old son at camp. I can’t wait to see our boy!!
Have a great day . . . and keep spreading the ‘sense on cents.’
THANK YOU!
LD
What Happens When Investors Lack Trust?
Posted by Larry Doyle on August 6th, 2010 1:05 PM |
Think the structure of the equity markets is broken? With the preponderance of equity volume now dominated by high frequency trading and true retail investors fleeing in droves, what do people think the chances are that we could experience another Flash Crash as we saw on May 6th?
Last evening, The Wall Street Journal ran an online poll on this topic in Legacy of the ‘Flash Crash.’ I have to admit, I was surprised by the results. Did you get concerned witnessing the 1000 point ‘whoosh’ in a very short time period on May 6th? An overwheming number of pollsters believe it can happen again.
With our computer-drive stock market, could a “flash crash’ happen again?
