Sense on Cents

European Bank Stress Tests Confirmed as Shams

Posted by Larry Doyle on September 7th, 2010 6:53 AM |

I have long since given up the belief that our government officials and financial regulators will demand real transparency and full disclosure in the pursuit of unquestioned integrity across our economic landscape. While some may deem me overly cynical for that statement, too much proof and too many situations leave me no other choice. Where do we witness more financial artifice this morning? Let’s look across the pond.

In late July, I questioned the integrity of the European Bank Stress Tests and wrote, Will European Bank Stress Tests Be “Garbage In, Garbage Out?”:

All eyes will turn toward Europe this afternoon for the much anticipated release of the Euro-style Bank Stress Tests. Those who truly embrace real ’sense on cents’ know that the process and the data are far more important than the actual results. Why is that? If these tests are charades or nothing more than ‘garbage in,’ then the results will most assuredly be ‘garbage out.’

Well, while gullible investors and government officials worldwide may not care to know the real state of the European banks, those of us who truly treasure ‘sense on cents’ are not surprised to now see European financial sewage streaming across the newswire. Read the rest »

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What Really Matters: Holy Cross Crusaders Football 2010

Posted by Larry Doyle on September 4th, 2010 9:29 AM |

Let’s take a break from the markets, economy, Wall Street, and Washington for a moment. Now, let’s focus on those things that truly matter in life. Do I have your attention? Good. We are due a break from the trials and tribulations navigating our economic landscape and we should think about those items with even deeper meaning. Yes, the pursuit of passions which bring real substance to our lives. These labors of love have little to do with the fact that today kicks off the start of Labor Day Weekend but everything to do with another type of kickoff. I am sure many of you know exactly where I am going with this. Yes, this weekend means one thing, the start of another season of college football. How great!!

I have been looking forward to this day for the last nine months. While I truly enjoy the spirit of college football in general, my real passion is following and supporting my Alma Mater, the Holy Cross Crusaders. This afternoon the 2010 Crusader contingent will kickoff its defense of the 2009 Patriot League Championship versus the Howard University Bison.

What makes Holy Cross Football such a special experience for me? A number of reasons including: Read the rest »

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Health Care Reality Will Be Ongoing Economic Drag

Posted by Larry Doyle on September 3rd, 2010 6:39 AM |

I have often thought that staying physically fit is not only a good way to live but also makes enormous economic sense as well. Not that staying fit will keep one’s healthcare premiums totally in check. The simple fact is the cost of healthcare insurance in our country is downright scary. The pace of change in healthcare premiums has been even scarier. How much so? Do you care to make a best guess as to what the average increase in a family’s annual healthcare premium has been over the last decade? 50%? Keep going? 75%? Still too low? 90%? Getting closer, but still not there. The Wall Street Journal gives us this answer and much more in writing, Employers Sharply Raise Workers’ Share of Health Costs:

Overall, annual premiums for families reached an average of $13,770 this year, up 114% since 2000.

Will Obamacare address and mitigate the underlying forces driving this increase? Honestly, I am not optimistic. I view Obamacare as nothing more than another of the redistribution and rationing programs in which those who can pay will absorb the costs for those who can’t. But how are these increases truly being absorbed? To an ever increasing extent, the cost of healthcare is being shifted from the employer to the employees. The WSJ further highlights this reality in writing: Read the rest »

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What Wall Street Secrets Will FCIC Reveal?

Posted by Larry Doyle on September 2nd, 2010 10:06 AM |

Information is everything.

There is no doubt that the development of the internet and a wide array of websites has led to a significant increase in the amount and quality of information accessed and processed by many. That said, there is also no doubt that there is an equally aggressive, if not public, effort to protect information, privileged or otherwise. Industry and company specific trade secrets can often be the key to developing and maintaining a hard earned competitive edge in the marketplace. I fully support and appreciate those ‘secrets.’ On the other side of this coin, though, there are ‘secrets’ which can often be the key to unlocking bad practices, if not much worse.

On this note, after a day’s worth of travel yesterday, I was particularly intrigued to read the Financial Times’ Probe Chief to Issue Wall Street Data. A few comments. Why is it that the FT’s electronic delivery entitles this article as such, while the hard copy entitled it, Probe Chief to Issue ‘Secret’ Wall Street Data? That one little word, ‘secret,’ is exceptionally powerful. What is Wall Street hiding? Why are they hiding it? Who specifically is hiding it? Do the secrets entail illicit and fraudulent activities? So many questions. Read the rest »

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Afternoon Cartoon

Posted by Larry Doyle on September 1st, 2010 1:08 PM |

A little afternoon humor, courtesy of cartoonist Robert Ariail of the Spartanburg Herald-Journal.

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JP Morgan Shuts Proprietary Trading

Posted by Larry Doyle on September 1st, 2010 5:11 AM |

Two weeks ago on an afternoon visit to New York City, I was struck by the changed tone, atmosphere, and demeanor during the meetings I had with a number of Wall Street professionals. The fact that the tone has changed does not necessarily mean that the industry as a whole is entirely chastened by the failings—if not worse—both going into and coming out of the crisis. Without deeply meaningful efforts and accompanying results to promote real transparency and increased disclosures, the industry will continue to fight to maintain ‘business as usual.’ It is an uphill battle.

Further evidence of this reality is provided today with the news that JP Morgan is shutting down its proprietary trading operations. Bloomberg reports, JP Morgan Said to End Proprietary Trading to Meet Volcker Rule:

JPMorgan Chase & Co. told traders who bet on commodities for the firm’s account that their unit will be closed as the company, the second-biggest U.S. bank by assets, starts to shut down all proprietary trading, according to a person briefed on the matter.

The bank eventually will close all in-house trading to comply with new U.S. curbs on investment banks, said the person, who asked not to be identified because New York-based JPMorgan’s decision hasn’t been made public. Read the rest »

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Truth, Transparency, and Accountability

Posted by Larry Doyle on August 31st, 2010 1:44 PM |

Regular readers of Sense on Cents are more than well aware of the amount of focus and attention I have directed toward Wall Street’s self-regulatory organization, FINRA. That said, I am compelled to highlight a recent press release for the simple reason that if even one new person learns of this information then I deem that real and ongoing progress. Even for those somewhat familiar with FINRA and recent developments emanating from its Annual Meeting, this release paints a stark picture of the questions which America deserves to have answered.

Where is the general media and the financial media on this story? Is anybody home??

“TRUTH, TRANSPARENCY AND ACCOUNTABILITY INITIATIVE” PASSED BY MEMBERS AT ANNUAL MEETING

FINRA’s Board of Governors Should Act at September 20 Meeting

Led by a decorated former U.S. Army Green Beret and Iraqi War combat veteran who heads a small securities firm, member broker-dealers of the Financial Industry Regulatory Authority (FINRA) decisively overrode management opposition to approve proxy proposals to investigate alleged corporate wrongdoing and substantially reform governance at the Wall Street self-regulatory organization. Read the rest »

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Our Ongoing Recession

Posted by Larry Doyle on August 31st, 2010 5:56 AM |

I have informed more people than I care to count that I do not believe we are going to have an economic double dip. Am I turning positive on the economy? Do I see blue skies and fair winds on our economic horizon? No, regrettably not. The reason I do not believe we will have an economic double dip is very simply I do not believe that our “real” economy, not the government sponsored version, ever really came out of the initial recession.

People may care to debate or challenge me on my premise, but my ‘sense on cents’ leads me to believe that we have been experiencing one long and ongoing recession. I definitely sense that more people are now coming to accept this reality as well. This ‘walking pneumonia’ economic syndrome is captured in a recent commentary by Rick Davis of Consumer Metrics Institute,

The “Great Recession” that began in 2008 has had many nuances, but among the most important are that many of the observed changes in consumer behavior have begun to linger, much as the recession itself now appears to have done. If a new consumer thrift paradigm becomes endemic — either because of natural demographic processes or scarred generational memories of upside-down loans — the lingering recession might well end up being measured in years, not quarters as commonly expected. Read the rest »

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What Really Happened at Stanford Financial?

Posted by Larry Doyle on August 30th, 2010 11:05 AM |

Is this game of life a total mystery? In many respects, life is a mystery. While there are many aspects of life we may never fully understand, there are those elements for which we can gain greater understanding through research, study, transparency and disclosure.

Along these same lines, to what degree is the world of financial frauds a mystery? How much of what transpired to lead us into our current economic crisis will we never truly learn? While our financial regulators and legal representatives may work toward providing transparency and disclosure, will the American public ever learn the full extent of the two largest financial frauds of the last few years–those being the Bernard Madoff and Allen Stanford travesties.

I ask this critically important question in light of the Freedom of Information Act exemption provided to the SEC in the recently enacted Financial Regulatory Reform package. Will that exemption inhibit transparency and disclosure? Should the American public blindly accept and trust the SEC at each and every turn? How might we ever know? Read the rest »

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Ben Bernanke’s “Hail Mary”

Posted by Larry Doyle on August 29th, 2010 11:12 AM |

Hail Mary passes are typically thrown late in a game in an attempt to clutch victory from the jaws of defeat. Ben Bernanke’s statement at the Fed’s Jackson Hole conference this past week is an indication that he is getting ready to throw his “Hail Mary.” The problem that I see, though, is that our ‘game’ is only somewhere in the second quarter.

Have you ever witnessed a football game where one team literally has to scrap its game plan because it finds itself in such a huge hole in the first quarter? That, my friends, is analogous to the state of the U.S. economy going into 2008. While we could debate whether the calls made by our coaching staff in Washington have helped or hurt our recovery, the fact is Ben and his fellow coaches have thrown everything and the kitchen sink at the economy and the results are anything but robust.

For a review of the game to date and the uncertain prognosis going forward, The New York Times’ Peter Goodman provides a wealth of ‘sense on cents’ in his fabulous and comprehensive commentary, Read the rest »

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