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HomeHow Long Can Uncle Sam Rig the Game?
Posted by Larry Doyle on May 13th, 2010 5:32 PM |
Is the market rigged?
Actually, the question of whether our markets are rigged or not is becoming less and less a question and more widely accepted as fact. This reality is evidenced by the totally incredulous evidence that four major banks on Wall Street had perfect (not one negative trading day) first quarters.
Some may think this is good for our economy. I am not one of them. Why? (more…)
The World of Wall Street CDOs or “Don’t Lie to Me”
Posted by Larry Doyle on May 13th, 2010 2:18 PM |
News that the SEC and federal prosecutors are further investigating Wall Street firms involved in the structuring and distribution of CDOs (collateralized debt obligations) is not a surprise. Although Goldman Sachs has been targeted initially for its marketing of an Abacus transaction in conjunction with Paulson and Co., the simple fact is Goldman was not anywhere close to the largest player in this space. Who was? Well, I should more appropriately ask, “Who wasn’t?” All of Wall Street jumped on the CDO gravy train. (more…)
ARS Investors Targeting Andrew Cuomo
Posted by Larry Doyle on May 13th, 2010 7:30 AM |
I know fraud when I see it. I also know a miscarriage of justice when I see it. The manner in which auction-rate securities were distributed was a fraud. The manner in which this fraud has been largely adjudicated has been a massive miscarriage of justice. No miscarriage has been greater than that laid at the feet of those auction-rate securities investors who purchased ARS from Oppenheimer and Company.
In true American patriotic spirit, these ARS investors are not taking this injustice sitting down. I have never owned an auction-rate security, but I welcome joining their fight and highlighting their cause. On that note, Andrew Cuomo should watch out. A group of Oppeneheimer ARS investors just released the following statement: (more…)
What is Driving the Gold Market?
Posted by Larry Doyle on May 12th, 2010 3:22 PM |
While equities are rebounding nicely today, overall equity volumes remain generally light. That said, there is a bigger development in the markets today. What is it? The shiny yellow stuff is on fire.
Gold is trading close to 1250/oz. and making new highs in the process.
What is driving the gold market? As The Wall Street Journal reports in writing, Gold Prices Extend Climb:
“The gold price is being driven by … the rising concern of the ‘exit strategy’ for central banks given that the ECB is the latest agency to join the (quantitative easing) bandwagon,” JP Morgan analyst Michael Jansen said in a note.
“Indeed, the perceived breach of the ECB’s independence … adds to the view that in the long-term monetary and fiscal authorities will be forced to choose between anemic economic conditions or monetary-driven inflation.”
Anemic economic conditions or monetary-driven inflation? Little wonder why we are witnessing civil unrest in Greece today. What about other Euro-zone nations? What about the UK? The US?
LD
Barack, Do You Hear What David Cameron Is Saying?
Posted by Larry Doyle on May 12th, 2010 2:07 PM |
Does anybody believe Barack Obama, or anybody in his cabinet, when it comes to fiscal discipline? I mean, really. I have no doubt that Barack and team know what is coming in November so they are working feverishly to get programs passed now.
How do you think the crowd in Washington is feeling today listening to the winds whip across the Atlantic from the UK? What is in those winds? Let’s review a Bloomberg report, U.K Coalition Government Plans Deficit Cuts, Bank Bonus Curbs:
Prime Minister David Cameron’s Conservative Party and his Liberal Democrat partners put cutting Britain’s record budget deficit and tighter banking regulation at the heart of their coalition agreement. (more…)
David Roche Provides Sense on Cents
Posted by Larry Doyle on May 12th, 2010 10:22 AM |
Does the world have the political will to impose the necessary disciplines in drafting and implementing meaningful fiscal and monetary policies? Anybody? Each and every country in the world is certainly not in the dire straits of some nations within the EU, but plenty are.
David Roche, president and global strategist at Independent Strategy, addresses this very topic in a recent commentary in the Financial Times, This Is Not the Way to Solve the Euro-zone Debt Crisis:
The aim of the emergency European Union financial stabilisation package was to create “shock and awe” in financial markets. It is designed to convince markets that they cannot win in forcing any eurozone state into defaulting on its debt. (more…)
The Euro Is Retreating like Napoleon from Moscow
Posted by Larry Doyle on May 11th, 2010 12:28 PM |
If those involved in the European bailout thought the trillion dollar package would quickly support the Euro and, in turn, the economies of the EU, well guess what? After a quick, short covering rally for the Euro yesterday, the common currency for the EU has turned tail and is retreating faster than Napoleon from Moscow.
The Wall Street Journal addresses the Euro’s retreat in writing, Euro Falls as Aid-Plan Euphoria Fades:
Unnerved by the euro zone’s giant bailout mechanism and the prospect of patchwork politics in the U.K., investors herded back into the safety of the dollar and yen Tuesday, sending the euro and the pound lower. (more…)
How Big Are These PIIGS?
Posted by Larry Doyle on May 11th, 2010 10:41 AM |
The bailout package provided for the EU yesterday is not quite a trillion dollars. Lot of money, right? Yes, even in this day and age a trillion is a large number, although our friends in Washington may not appreciate that.
Will the bailout be enough to buy time for the economies of the PIIGS to recover and stop the spread of contagion across the EU and then the world at large? In order to address that question, we need to assess just how big and fat these PIIGS are in terms of their outstanding debt and their fiscal deficits, as well. To this end, I thank a loyal Sense on Cents reader for sharing a chart drawn up by Bank of America which highlights the size of these PIIGS:
Will the PIIGS economies be able to generate sufficient economic growth to finance their debts and deficits at reasonable rates? Great question. We will not learn the answer to it anytime soon, but do not think that the bailout provided to the EU yesterday is an “all clear” signal. The mountain of debt and fiscal deficits within these PIIGS will provide a real drag on these countries and the EU as a whole for the foreseeable future.
The violation of moral hazard involved in this bailout will also serve as an economic drag as well. That concept is quite familiar to those of us in America who appreciate fiscal discipline.
LD
What We Learned from the May 6th Market Plunge
Posted by Larry Doyle on May 11th, 2010 7:55 AM |
Like leading sheep to the wolves, the manner in which high frequency trading activity has grown to dominate our equity markets is nothing more than a trap. How has that trap worked? Stay on message and continue to promote the premise that high frequency trading adds liquidity to the market. Time and time again, America would hear from quantitative traders and their analysts engaged in high frequency trading that these programs would provide consistent liquidity from which retail investors would benefit.
What a crock!! That said, the HFT activity itself is not to blame for the market plunge. The programs behaved as they were designed. That is, during periods of extreme volatility, those running the programs would simply shut down the machine. Is that liquidity? No, I don’t think so.
Never again should America have to listen to anybody engaged in high frequency trading and hear them say these systems provide liquidity to the market. They don’t. (more…)
Is the Federal Reserve Behind the European Bailout? Audit the Fed!! [UPDATED with video]
Posted by Larry Doyle on May 10th, 2010 12:52 PM |
Is the American taxpayer ultimately bailing out the European Union? Far fetched? Don’t be so sure.
While the focus of the European bailout has been on the European Central Bank, the European Union, and the IMF, little attention is being given to swap lines which were reopened between the Federal Reserve and the European Central Bank.
The ECB has steadfastly fought the idea of breeching the principles which formed the European common currency (the Euro) in order to fashion a bailout for the EU. Did the ECB crater to political pressure by the EU? Or, did the risks of the bailout shift from the ECB to another large central bank? Such as? The Federal Reserve! (more…)
