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HomeKeystone Kops
Posted by Larry Doyle on March 9th, 2009 5:40 PM |
On the heels of the Bernie Madoff fiasco, there was massive pressure on the gross incompetence displayed by the SEC. Not unlike a police department that is under fire, the SEC needed a high profile case to gain a measure of vindication. Enter Allen Stanford and Stanford Financial.
I am not here to defend Allen Stanford nor any of the activities that transpired in his offshore bank located in Antigua. However, the SEC also froze the assets of all clients housed in Stanford Financial’s brokerage operation based in Houston. Unlike Bernie Madoff, who did not employ a custodian, the bulk of Stanford Financial’s assets were housed at Pershing Financial, one of the largest custodians in the business. While the concerns revolving around Stanford are in the Caribbean, the SEC’s act of freezing ALL customer accounts has been the death of this brokerage entity. Hundreds of legitimate jobs have been eliminated. Thousands of customers have faced unnecessary and undue financial hardships since February 17th as a result. (more…)
Keating Undresses Geithner
Posted by Larry Doyle on March 9th, 2009 12:37 PM |
One of the few countries in the world to escape the worst of this economic tsunami is Australia. I introduced you to former Australian Prime Minister and Treasurer Paul Keating on February 18th in my piece entitled A Fresh and Honest Perspective. Keating was brutally honest in the video clip (thank you SR for providing it!!) included in that article .
I love an honest man!!
Former Australian Prime Minister and Treasurer Paul Keating
Well, Mr. Keating has spoken again and I am listening to him very closely as I strongly believe I am more educated and informed as a result. Our domestic officials and media outlets should take heed.
In an article published in this past Saturday’s Sydney Morning Herald, Obama’s Economic Saviour Savaged as Keating Let’s Rip. Keating offers a piercing review of then Treasury Officer Geithner’s structuring of an IMF led rescue plan of the Southeast Asian crisis in 1997-98. For those unaware, many countries in SE Asia had massive infusions of foreign capital in the form of debt to facilitate infrastructure development. Geithner and then IMF Chief Michael Camdessus structured a plan that injected $200 billion dollars in the form of IMF loans to refloat the economy. Keating maintains that Geithner and Camdessus totally misdiagnosed the problem and in turn the solution. (more…)
No Justice!! No Confidence!!
Posted by Larry Doyle on March 9th, 2009 10:38 AM |
All indications point to a plea deal this week with Bernie Madoff. In my opinion, Bernie Madoff seems to have been treated with kid gloves to this point. House arrest for a purported crime of this magnitude defies logic. One can only assume the government
Bernie Madoff
utilized this approach, even after Bernie shipped jewels and assets overseas, as they were trying to extract as much information as possible. This week’s news will give the public the first hint as to what kind of information the government has extracted.
My father was an assistant district attorney in Suffolk County, MA and has often made the point that white collar crime never received the degree of justice it deserved. The crime that Bernie and team propagated not only directly impacted his investors but also massively impacted the public at large. How is that? Bernie’s Ponzi scheme, perpetrated over such an extended period of time, has caused a crisis of confidence in our markets, our regulatory system, and ultimately our country.
It defies logic that this Ponzi scheme was not executed without enormous cooperation and involvement by a number of individuals both inside and outside the Madoff organization. There is no doubt in my mind that many of those individuals have information, that if revealed, can and will be extremely embarrassing for some high profile people within our regulatory bodies and our government. (more…)
It’s All About Relationships
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…)
Fed Releases Names of AIG’s Creditors
Posted by Larry Doyle on March 6th, 2009 9:03 PM |
Under pressure from Congress this week to release the names of AIG’s creditors, the Federal Reserve’s Vice Chairman Donald Kohn clearly got the message. The Fed has acquiesced in releasing that Top U.S., European Banks Got $50 Billion in AIG AID.
My immediate reaction to this news is how interesting that the bulk of these institutions are European. What does that tell me? These European banks were getting plowed by Wall Street with a lot of sub-prime backed CDOs and when the dam was breaking they wanted to hedge their position. Market speculation is that European institutions own twice the amount of toxic assets as U.S. based institutions. That exposure on top of their delinquent loans in eastern Europe is crushing a number of western European banks. Who are they? Start by looking at the list, included in the above-referenced article, of AIG creditors.
In providing the hedge – which is the insurance – AIG received a fat premium but has been paying for it ever since. Actually, AIG only truly paid for it up until last September . . . the American taxpayer has been and will continue to be paying for it for a long time. Where were the regulators when we really needed them?
LD
Fibonacci Retracements
Posted by Larry Doyle on March 6th, 2009 12:40 PM |
I am going to assume that for the general public, the term Fibonacci Retracements is not part of the normal vocabulary. In helping people navigate the economic landscape, allow me to introduce you to a basic Wall Street practice utilized by many traders. Every investor can benefit from a basic understanding of this concept.
Major market indices trade based on fundamental analysis (cash flow, asset/liability, earnings ), technical analysis (price regressions), and psychology (measure of bullishness vs bearishness). Our friend Fibonacci falls into the technical analysis camp. I do not want to get overly involved in the arcane aspects of this concept, but it can be very useful in assessing market levels and market directions. (more…)
Unemployment Report 3-6-09
Posted by Larry Doyle on March 6th, 2009 9:21 AM |
The highly anticipated monthly unemployment report was just released. On the surface, the numbers may appear to be in line with expectations, but looking deeper into the numbers the report is actually worse than expected. Let’s dive into the numbers and comment on what they mean for our economy and markets.
The Unemployment Rate jumped from 7.6% to 8.1%. The rate was expected to move to 7.9%. The 8.1% rate is a 25 year high.
Non-farm Payrolls lost 651k jobs against an expectation of a loss of 650k jobs. In line with expectations, right? Well, one needs to look at the revisions to the prior two months to get the full picture. Non-farm payroll revisions from the prior two months show a further loss of 161k jobs over and above initial reports. That’s ugly!! Total jobs lost since December 2007, when the recession officially began, are 4.4 million!! More than half of those jobs have been lost in the last 4 months.
Average hourly earnings only rose .2. This number is not exactly robust and will further pressure consumers who are already cash constrained. (more…)
