Sense on Cents

While many on Wall Street and Washington may care to proselytize about the impact of different programs implemented during our economic crisis, one individual provided a condensed but brutally honest assessment of the various initiatives implemented to ‘save’ our economy. Who is this purveyor of wisdom or ‘sense on cents’ savant? None other than Edward Kane. Who is that? Let’s navigate as The New York Times’ Gretchen Morgenson once again distinguished herself in writing, Count on Sequels to TARP:

“THE crisis is about loss redistribution,” said Edward J. Kane, professor of finance at Boston College and an authority on regulatory failures. “In a crisis, these institutions have much more power with the government than taxpayers do and they will make it seem in the interests of responsible officials to rescue them, whether that’s Congress, the Treasury or the Federal Reserve. But the notion that you can always throw these losses on the taxpayer in the long run is very, very dangerous. There will come a time when the taxpayers will come close to revolt.”

Redistributing stress points does not eliminate them. Each and every day is thus one day closer to that reality for American taxpayers. We would be foolhardy to think that reality is not a very real possibility.

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. As President of Greenwich Investment Management, an SEC regulated privately held registered investment adviser, I am merely a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

Thanks to the friend of Sense on Cents who shared this commentary on our economy and markets. This commentary for clients emanated from a major Wall Street bank. I believe the writer’s sentiments are consistent with mine in terms of my assessment of a ‘walking pneumonia’ economy.  The writer’s comparison of our economic recovery to a Pyrrhic victory is very interesting. I appreciate his utilization of another ancient Greek lesson as we try to recover, move forward, and live to fight another day.

>More work to do for monetary policymakers.

>Global economic activity unlikely to relapse, but expect growth to stay lackluster.

>Markets more likely to climb than collapse under the wall of worry.

The military victories of ancient Greek King Pyrrhus over the Romans during the third century B.C. were notable for the devastating losses that his armies suffered in the process. Indeed it is said that after his triumph at Asculum, Pyrrhus remarked to his officers that “another such victory and we are undone”. In many ways, last week’s formal pronouncement by the National Bureau of Economic Research that the U.S. recession ended in June 2009 had the distinct feel of a Pyrrhic victory, underlined by the sickly figures released on housing demand. Read the rest »