Sense on Cents

Irish Bailout Is a Backdoor Bailout of European Banking System

Posted by Larry Doyle on November 18th, 2010 6:20 AM |

What is going on in Ireland? Those forty shades of green look so inviting. How could it be that the Emerald Isle is the center of the current financial turmoil? Well it is…and it isn’t.

How is it that a variety of Irish officials can claim that they neither need nor want a bailout from the EU but a bailout is assuredly on the way? Are we witnessing a sovereign nation losing the ability to control its own affairs? There is no doubt the Irish are a proud people but are they also being overly stubborn at this juncture (believe me, I know proud and stubborn…!!)? Are the Irish failing to accept the inevitable? Hadn’t the Irish attempted a Swedish style approach in terms of aggressively recognizing losses within their financial sector?

While the answer to all of these questions is a varying degree of the affirmative (especially the proud and stubborn..!!), to truly understand what is happening in Ireland, we actually need to shift our focus to the European mainland. Really? Why’s that? Let’s navigate the tangled web and interconnectedness of the global banking system circa 2010. Read the rest »

Comments (5)

“Executives Typically Refrain from Criticizing FINRA or its Policies Publicly”

Posted by Larry Doyle on November 17th, 2010 7:25 AM |

When I worked at JP Morgan, we had a year end review process that I believe was largely a joke. Why? It lacked integrity and honesty. How so? Individuals largely gamed the system by not being forthright with each other. As a result, the overall assessment of individuals, departments, divisions, and the firm itself were skewed. I recall looking at the composite and average scores and remarking to my boss, “Our people and our firm are NOT this good.”

Mind you, JP Morgan had and still has some real strengths — but it also had some real weaknesses. Excessively bureaucratic would be a good start on the ‘weakness’ list.

I did try to grade myself and others in an honest and constructively critical fashion. Some of my reports would come to me after the fact inquiring about my assessments of them. They would often be concerned. I would respond that I had little interest in ‘gaming the system’ but I had every interest in making them a stronger and more productive employee. My being forthright and honest was “the means,” their improving and becoming more productive was “the ends.”

I raise this topic today because every individual and every organization needs a very healthy dose of constructive criticism. Read the rest »

Comments (12)

The Credibility of the Federal Reserve

Posted by Larry Doyle on November 16th, 2010 7:12 AM |

The Federal Reserve is arguably the most powerful institution in the world. Additionally, it is one of the least understood.

In the midst of the ongoing financial experiment known as quantitative easing are we supposed to blindly trust the abilities of our central bankers within the Fed, especially Fed chair Ben Bernanke? I know of no institution, especially with the size and scope of the Fed, that has so much power in one man’s hands and simultaneously so little transparency and accountability.

Yet, despite that lack of transparency and accountability, at this very point in time our nation’s future largely rests in the hands of one Ben Bernanke and his control of the Federal Reserve. Should we have reason for concern? We should. Read the rest »

Comments (8)

Calling All Auction-Rate Securities Holders

Posted by Larry Doyle on November 15th, 2010 7:15 AM |

Information is everything!!

A nation of laws will prosper if and only if the adjudication of disputes is handled in a truly robust fashion. This adjudication process should theoretically lead to the drafting and implementation of new legislation if and when necessary. While industry insiders will often lobby to influence this process both in the courts and in our legislative bodies, America needs real statesmen and true heroes who will champion worthy causes and pursue total truth, real transparency, and unbridled integrity.

The media can play a large role in highlighting and exposing injustices if it cares to perform its duties. Regrettably during our economic crisis of the last few years, the media has often largely shown itself to be as much part of the problem as part of the solution. Why do I write on this topic today? For the very simple reason that tens of thousands of our fellow Americans have largely been disowned and disenfranchised by our nation. Really? Unaccustomed hyperbole, LD? I think not. Let’s navigate further.

I have been an ardent supporter of all those in our nation today who continue to be stuck holding auction-rate securities. These people number in the many tens of thousands and their holdings run upwards of $140 BILLION. Ponder that for a second. How is it that with numbers of this magnitude, the hue and cry of the accompanying injustice is not ringing loudly across our nation. It should. Read the rest »

Comments (34)

The November Employment Report: “Upon Further Review, The Play on the Field…”

Posted by Larry Doyle on November 13th, 2010 7:01 AM |

Who would not admit that the ability to review plays in athletic contests has made for an overall better product? While continually questioning calls and plays would obviously detract from the pleasure of the game, I think most – if not all – fans truly appreciate the benefit of reviewing critically important plays so the outcome and integrity of the game are not compromised.

Can you imagine if we had the same ability to review the release of economic statistics?

Picture this. A key economic statistic is set to be released at 8:30am. Traders and investors the world over are hanging on the edge of their seats in anticipation. The number is released and commentators immediately hype the ‘headline’. But then, as those very commentators take their cameras to the floors of respective exchanges and trading floors, all of a sudden we witness a number of red flags thrown on the ‘field’ – that is, the trading floor – calling for a further review. In the hope of getting the call right, would our nation and our economy be better off if we allowed just such a process to occur? Why do I ask? Read the rest »

Comments (6)

The New World Order

Posted by Larry Doyle on November 12th, 2010 8:12 AM |

After three years of economic turmoil, why do I believe we are just now entering the second phase of a protracted economic drag here in the United States? While many economists and analysts would like to parse each and every bit of data that comes across the tape—that is what they do for a living—I believe we are better served to focus on the larger waves and currents at play across our global economic landscape. What do I see? A New World Order.

Do not think for a second that this reality does not have real long term implications for our economy and our people. I am not saying that there will not be enormous economic opportunities for individuals and businesses alike, but the skeletons in our American closet can only be hidden so long. Let’s navigate. Read the rest »

Comments (22)

Bloomberg Poll Casts Doubt on Barack and Ben

Posted by Larry Doyle on November 11th, 2010 10:51 AM |

That haze hanging over Washington DC is not the residue of last week’s elections, it is the less than sanguine outlook of investors on the policies and programs being put forth by President Barack Obama and our lead central banker, Fed chair Ben Bernanke. How hazy? Well, close to two thirds of those polled recently by Bloomberg are pessimistic about Barack’s policies and how they affect the investment climate in the United States. More than three quarters of those polled believe the Fed’s newly launched round of quantitative easing will have little or no benefit on unemployment. Ouch!!

In regard to the greenback, almost seven in ten polled believe the U.S. is deliberately trying to weaken the value of our dollar relative to other currencies. Who else believes this? Read the rest »

Comments (0)

Looking Inside “The Great Recession”

Posted by Larry Doyle on November 10th, 2010 7:47 AM |

Economic data is typically released and then reviewed in aggregate fashion. As such, understanding the dynamics at work within our economy is often clouded by the inability to access and analyse ‘the trees’ as opposed to ‘the forest.’ What happens as a result of this reality? Economic programs to address issues are typically crafted while looking through the rear view mirror. Regrettably results generated are often sub-standard and fraught with unintended consequences.

How might we change our perspective? Let’s check in with Rick Davis of Consumer Metrics Institute who projects what will occur in our economy based on a forward looking process that captures real-time consumer activity. As a longstanding admirer of Rick and his work, I welcome sharing his recent fabulous piece, Revisiting The Character of “The Great Recession”

We have commented before about how the “Great Recession” has changed character over time, evolving from a relatively normal “garden variety” and V-shaped consumer confidence recession into something far more persistent — where a lack of jobs and negative home equity has transformed it into a “new frugality.” But we haven’t previously discussed how the “Great Recession” has been an uneven experience among even those living in “Main Street” America. A recent review of our data has convinced us that this has not been a recession of shared pain, but one that has cut much deeper in some demographics than in others. Read the rest »

Comments (0)

“We’re Not Prosecuting the Bad Guys”

Posted by Larry Doyle on November 9th, 2010 7:44 AM |

Who needs major print media which will not aggressively report on stories deserving real exposure when we have Sense on Cents to spread the faith while pursuing truth, transparency, and integrity? Regular readers hopefully appreciate that I do not easily engage in hyperbole but I am compelled to highlight the virtues of my blog this morning based on a comment left here last evening at 11:58pm.

A reader by the name of Nancy shed light on her less than satisfying Finra arbitration process. In the body of her comment, Nancy alludes to a retiring CFTC administrative Judge George Painter’s very serious allegations of misconduct by a fellow CFTC administrative Judge Bruce Levine. How serious is Painter’s allegation? As Nancy highlighted,

As George H. Painter was preparing to retire recently as one of two administrative law judges presiding over investor complaints at the Commodity Futures Trading Commission, he issued an extraordinary request: Read the rest »

Comments (25)

What is the Fed Really Buying?

Posted by Larry Doyle on November 8th, 2010 7:41 AM |

Quantitative easing is merely another tool to adjust monetary policy, correct? Perhaps. The question begs, then, after an initial round of a trillion-plus quantitative easing failed to stimulate the economy why should we expect any differently this time. Great question. Let’s navigate.

Quantitative easing involves the purchase of Treasury and mortgage securities by the Federal Reserve in an attempt to inject liquidity into the system, prop asset prices, and spur consumer demand. Or so they say. Well how is the overall level of credit in our economy trending?

The downward slope in the graph is an indication of both lessened credit availability and also lessened credit demand. The quantitative easing should directly address this reality, correct? I am not so sure about the “directly” aspect of that statement. In fact, I will go a step further and say I think the Fed is being less than forthright with the nation. If the Fed truly wanted to inject liquidity and capital into our economy and allow it to flow through to small businesses directly there are much better ways of doing it than by purchasing overvalued Treasury and mortgage securities. Read the rest »

Comments (5)

« Newer Posts — Older Posts »