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HomeWall Street’s Oligopoly Flexes Its Muscle
Posted by Larry Doyle on March 15th, 2010 12:51 PM |
Pricing power is everything.
What businessman wouldn’t like greater control and influence over the pricing of his goods and services? How are prices determined? In a capitalist system, prices are a function of the competitive forces of supply and demand. What happens when competition dwindles? Pricing power for the suppliers increases. How does competition dwindle? When barriers to entry are so high, or competitors go out of business. This economic reality is also known as an oligopoly and it defines the current state of our financial industry known as Wall Street.
Is Wall Street taking advantage of the lessened competition and flexing its muscle to drive revenue? Is the Pope Catholic? (more…)
WSJ Hits Mary Schapiro Hard on ‘Say on Pay’ but That’s Only Tip of the Iceberg
Posted by Larry Doyle on February 20th, 2010 11:58 AM |
The target on SEC Chair Mary Schapiro’s back is getting larger and gaining more focus. How so?
The lead editorial in this weekend’s edition of The Wall Street Journal goes after Schapiro hard in writing, Mary Schapiro’s Say on Pay. While the editorial leads with the ongoing battle Schapiro and the SEC are having with Bank of America’s lack of disclosure during its merger with Merrill Lynch, the Journal quickly turns the tables on Ms. Schapiro and addresses the lack of disclosure at Ms. Schapiro’s former haunt, FINRA.
Come to papa.
Regular readers of Sense on Cents are well aware of how consistently and steadily I have been banging this FINRA drum. It is long past due that America is truly introduced to Wall Street’s self-regulatory organization, the Financial Industry Regulatory Authority (FINRA). (more…)
A Windfall Profit Tax for Wall Street?
Posted by Larry Doyle on January 12th, 2010 8:42 AM |
The American taxpayer bailed out Wall Street. How does Wall Street return the favor and refund the American taxpayer? Why is Washington pursuing this topic now? The Washington establishment feels the beating pulse of rage from the American public.
I guess it would have been too much to expect the Washington crowd to proactively address the topic of repayment from its incestuous partners on Wall Street. In fact, we should expect to hear the Wall Street establishment bellow that they have paid back the TARP funds and that should be sufficient. Wall Street should not be so naive. The American taxpayer bailed out the entire industry as much as it bailed out any single specific firm. Washington should not be so cute in structuring a repayment program where the costs are conveniently passed along to the American public. American taxpayers should not be easily placated. (more…)
Wall Street Economic and Market Outlook 2010
Posted by Larry Doyle on January 6th, 2010 12:06 PM |
The New Year brings us the traditional economic and market outlooks from Wall Street firms. High five to a loyal Sense on Cents reader for sharing this recap collated by Birinyi Associates. (Click on image to access full report)
>> LD’s SUMMARY
The overall average calls across the economic and market landscape are as follows:
GDP: +3.1% increase
S&P 500 close at year end 2010: 1222, a 9.6% increase
S&P 500 earnings: $76/share
Oil: $80/barrel, effectively flat on the year
Dollar/Euro: 1.45, effectively flat on the year
The overall outlook does project that analysts believe better opportunities for growth lie outside the United States.
With all due respect to the analysts making these calls, there are no major market calls and especially outliers in this report. Why? Analysts know they have more downside in being bold and wrong. Additionally, the analysts are ultimately a public face for Wall Street salespeople trying to collect assets and sell products. What environment characteristics are most conducive for those pursuits? Low volatility with positive bias and trend. What have the analysts provided? Exactly that.
Wall Street is truly an oligopoly. Group think and coordinated — if not collusive — pricing and projections are simply how the game is played.
LD
Who’s The Boss?
Posted by Larry Doyle on December 28th, 2009 12:04 PM |
I almost vomited this morning upon reading the lead article in The Wall Street Journal. The principles and values I cherish and which I believe are the keys to our long term economic prosperity are under continual siege. The American dream is under siege, as well. Our nation’s economic future has never looked so cloudy and uncertain. Why? As The WSJ writes, After the Bailouts, Washington’s the Boss:
Only as the recession recedes will it become fully evident how permanently the state’s role has expanded and whether, as a consequence, a new, hybrid strain of American capitalism is emerging.
One thing is clear: The government is a much bigger force in today’s U.S. economy than it was before the financial crisis. “The frontier between the state and market has shifted,” says Daniel Yergin, whose 1998 book “Commanding Heights” chronicled the ascent of free-market forces starting in the 1980s. “The realm of the state has been enlarged.”
Why am I so concerned? For the following reasons: (more…)
The Best of Wall Street
Posted by Larry Doyle on December 23rd, 2009 9:39 AM |
Regular readers of Sense on Cents are well aware that I have not been bashful to call out the financial industry whenever or wherever I thought it was deficient. Those deficiencies have been on the regulatory front, investor protection, abusive sales practices, questionable accounting, and more. Although these shortcomings have been highlighted in the midst of the recent economic crisis, the fact is many of them have been prevalent for a protracted period. In light of that, I am often asked the question as to why I pursued a career on Wall Street? How could I reconcile working within an industry that perpetuated such shortcomings?
My answer to those who ask such questions is the following:
1. In the course of day to day activities, the rank and file on Wall Street are not truly impacted by the overarching financial regulatory system. That system clearly has a major influence on the industry, but for those who kept their nose clean the regulators were a non-event.
From my current perch, I have a dramatically different view of the regulators and am happy to expose their shortcomings.
2. I loved the challenge of the industry! How could I utilize my intellect along with my instincts to assess how the market would move? This challenge was a daily event and was unbelievably stimulating.
3. The single greatest factor which drove my career and why I loved working on Wall Street was the competition. Regardless of where I was working at the time, I so badly wanted to compete and beat my counterparts at the other shops. How did this competition play out? I wanted to develop relationships with institutional customers so that whenever they had business to transact, they felt compelled to engage me. The competition was the daily adrenaline. There was nothing like it. The competition and results were only rewarding from the standpoint that my core values of honesty and integrity were never compromised.
I loved it.
LD
Will Wall Street Banks be Compelled to Compensate Madoff Investors?
Posted by Larry Doyle on December 15th, 2009 11:46 AM |
Will Congress hit the Wall Street banks with a one-time assessment in order to compensate Madoff investors? Why might that happen? Very simply because SIPC (Securities Investor Protection Corporation) was woefully underfunded given the fact that SIPC member-firms, including all the large Wall Street banks, paid a token $150 (yes, that is not a misprint, a token $150) annual premium from 1996 until April 2009 for SIPC coverage.
Each and every investor in America should be livid at the insurance scam perpetrated by SIPC and its member firms, but especially by the largest firms taking the greatest risks!
I will address this insurance scam in a post later today, but for now I want to highlight an engagement between Rep. Paul Kanjorski (D-PA) and Stephen Harbeck, the head of SIPC that occurred last week during a hearing on securities investor protection reform.
This interaction should have received massive coverage by the mainstream media. Regrettably, but not surprisingly, it did not. Why? If it received the appropriate coverage, it would shine a laser beam on the incestuous nature of the relationship between Wall Street firms and its regulators (SEC and FINRA) and insurer (SIPC).
From the transcript of the hearing last week: (more…)
If Wall Street Wants a Fight, Obama Should…
Posted by Larry Doyle on January 21st, 2010 3:59 PM |
Earthquakes always lead to after-shocks.
With all due respect and sensitivity to the residents of Haiti, the earthquake felt in the Massachusetts Senate election on Tuesday has led to the after-shock dropped on Wall Street today by President Obama. Obama’s call to limit the size and risk-taking of Wall Street banks is meant to address the rage and anxiety of the American public. Any vision, however, will only be as effective as those commanders charged with its execution.
Who on Obama’s team will ultimately be in the position to execute this vision to reconstruct Wall Street? Tim Geithner, Ben Bernanke, Larry Summers, and Mary Schapiro. Each of these individuals is badly scarred as a result of the crisis that started on Wall Street and, in turn, crushed Main Street. (more…)
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Posted in Barack Obama, General, Obama Administration, Wall Street | 8 Comments »