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HomeMore Legalized Bribery!!!
Posted by Larry Doyle on February 21st, 2009 6:43 PM |
Why do I believe we will see a wave of material on this topic? Well, whenever I see it I plan on updating my post Legalized Bribery so that Former Senator Chuck Hagel (R-NE) and current CIA head Leon Panetta are continually vindicated.
Who lived rent free for 5 years in the Washington townhouse of a CT Congressman, directed hundreds of thousands of dollars to that Congressman’s husband’s lobbying effort, served on the board of Freddie Mac when it stifled Republican overtures, and now serves one door away from the Oval office?
Did Rahm Emanuel declare that rent-free arrangement as income? Did he pay taxes on it? Did he share that arrangement with the Congressional ethics committee? Rahm’s ‘Rent’ Is Just the Tip of Ethics Iceberg.
Change? No, this Legalized Bribery has been going on for a while.
LD
Let’s Not Forget About Insurance Exposures
Posted by Larry Doyle on February 20th, 2009 11:47 AM |
While the markets and media are focusing predominantly on the banks and their capitalization needs, there are significant problems throughout the insurance industry as well. The primary exposures within insurance companies causing concerns lie within their commercial real estate holdings.
We have yet to see the actual defaults and foreclosures on a large swath of the commercial real estate market, but they are out there and they are coming. Let’s review the insurance industry along with some personal finance tips from an interview I had on my weekly No Quarter Radio program with an expert in these spaces, Sean D’Arcy. A lot of what Sean highlighted during his interview on January 11th is happening currently and likely will occur in the weeks and months ahead!!
You can listen to the archived audio of the January 11th interview on No Quarter Radio. In addition, I transcribed the interview in my piece “Got Insurance? 529 Plans? Financial Planning? Read On . . .”
LD
The Securitization Model
Posted by Larry Doyle on February 20th, 2009 8:49 AM |
In today’s NY Times, there is a front page article, U.S. Tries a Trillion-Dollar Key for Locked Lending, enlightening readers on the breakdown of the Wall Street securitization model.
Or you could review my piece from November 12th, “The Wall Street Model is Broken….and Won’t Soon Be Fixed,” for an even more in depth review of the development of the securitization model and resulting breakdown.
Trying to stay ahead of the curve for you here at Sense on Cents!!
Midday Market Update
Posted by Larry Doyle on February 19th, 2009 12:37 PM |
Very interesting price action in today’s markets:
The day started off with stock markets higher by 1.5-2% given a little bit of a relief rally in overseas markets.
At 8:30AM, the Producer Price Index was released and it was significnatly higher than expected (it rose .8 and, without the volatile food and energy components, it rose .4; the consensus was for an increase of .3 and ex-food and energy .1). Unemployment claims were also released and remain at the elevated level of 627K.
Concerns about inflation along with concerns about an ongoing supply of government debt have driven bonds across all sectors down by .5-1%. High yield bonds are down more than that with concerns of the deepening recession leading to an increase in defaults.
All sectors of the stock market have reversed course and are now down .5-1%. The fact that the stock market could not hold earlier gains reinforces the strength of the bear market. We should look for a further selloff of another 4% to retest lows in the DJIA seen back in late 2002.
Currency markets are having a little bit of a reversal today with the Euro strengthening on indications of potential German intervention. The dollar is strengthening versus the Japanese yen.
LD
The Fed Speaks
Posted by Larry Doyle on February 18th, 2009 2:53 PM |
Fed chairman Ben Bernanke spoke at the National Press Club this afternoon and offered revisions for the Fed’s economic statistics for 2009. What do the numbers mean? Here’s a recap:
— the Fed expects GDP for 2009 to end up between -.5% to -1.3%, revised from -.2% to +1.1%. The Fed obviously is expecting a contraction in our economy for all of 2009 and further added it does not see much of a pickup in 2010.
— the Fed is setting a long term inflation target of 2% but does not expect to see a pickup in inflationary pressures for a protracted period.
— increasing its expectation for the unemployment rate in 4th quarter of 2009 to 8.5% to 8.8%.
— the Fed has seen no indication of stability in residential housing markets in January 2009.
— some Fed governors have increased concerns about defaults and foreclosures in the commercial real estate markets.
— the Fed believes long term growth potential for GDP is 2.5% to 2.7%.
— the Fed realizes that at some point it will need to contract the growth in its balance sheet to mitigate chances of increased inflation.
What does all this mean?
In summary, the Fed is publicly acknowledging that the economic recession will be longer, deeper, and more painful. They are also offering that they are determined not to let deflation or the threat of deflation impede the economy.
I see no reason to rush into adding risk assets (equities or speculative credits) on the heels of this report. It is actually very interesting to see that some high profile individuals and institutions have actually been selling assets:
T. Boone Pickens
Pickens Reduces Energy Investments, Holdings Fall 97%
Warren Buffet
Berkshire Reduces J&J Stake, Turns to Fixed-Income
Harvard University
Harvard Retreated From U.S. Stocks as Market Tumbled
LD
Legalized Bribery ***UPDATE***
Posted by Larry Doyle on February 18th, 2009 8:55 AM |
(Editor’s Note: This post is an update to the piece Legalized Bribery, which was originally published on 2/16/09)
***Update*** After Bernie Madoff, it appears the next largest, fraudulent investment scheme is centered on an entity known as Stanford Financial. This company has offices in Houston and also operated an offshore bank in the Caribbean. While this story is developing, it is not surprising that the main principal, Allen Stanford, knew how to play the “Legalized Bribery” game I highlighted on February 16th. Who benefitted from his millions in gifts and lobbying? Charlie Rangel (D-NY), Greg Meeks (D-NY), Bill Nelson (D-FL), Pete Sessions (R-TX), former CA governor Gray Davis, and the Democratic Party. Check it out: Texas Businessman Sought Influence in Corridors of Capitol
I will continue to update this story on an ongoing basis. In the meantime, you can access my original piece entitled Legalized Bribery.
