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HomeWhat Is Going On In the Bond Market?
Posted by Larry Doyle on December 15th, 2010 7:02 AM |
Interest rates globally have moved up approximately 50 basis points (.5%) over the last month with the bulk of that move having occurred in the last week. What is going on? What is driving this move higher? A harbinger of better days ahead or an indication that the massive deficits in selected nations will require higher rates to attract capital? Or both of these reasons and a lot more. Let’s navigate. (more…)
A ‘Graphic’ View of the U.S. Credit Collapse
Posted by Larry Doyle on December 14th, 2010 6:28 AM |
If a picture paints a thousand words, then the graphs I am highlighting today would encompass many volumes. I thank the regular reader of Sense on Cents who brought them to my attention. Major prop to Barry Ritholtz of The Big Picture who ran this commentary yesterday. Major credit to the writer at the Global Macro Monitor blog.
The Global Macro Monitor blog was started by an independent trader and economist and, in a prior life, was a global macro hedge fund PM/trader, headed emerging market bond trading desks on Wall Street, and an economist/global strategist, beginning his career at the World Bank in the mid 1980’s. His unique and unconventional views are reflected on his website at marcromon.wordpress.com.
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We constructed these charts with data from today’s release of the Federal Reserve’s Flow of Funds. They are both stunning and frightening as they illustrate the cardiac arrest that took place in the credit markets. The collapse in credit issuance/borrowing began in 2008 and would have been net negative without the Federal government. In 2009, for example, the Federal government was 141 percent of total net credit borrowings. (more…)
Illinois and Loan Sharks
Posted by Larry Doyle on December 13th, 2010 7:10 AM |
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Those strapped for cash will go to great lengths to buy time and seek relief. This reality is not pleasant but it is reality. In a world awash in a sea of debt, the debtors will continually be faced with the prospects of devaluing, defaulting, or restructuring their debts. Prior to defaulting or restructuring, debtors will often resort to “unique strategies” to postpone the day of reckoning.
This reality very often plays out at the individual level or the small business level. When large corporate entities are forced to “unique strategies” to continue operations, that typically is not a very good sign. But what about municipalities? What does it mean when a city, state, or town is forced to a “unique strategy” in order to continue operations? Not a very good sign either, right? Right.
Well, indications are that the state of Illinois is resorting to a “unique strategy” and “paying up” in order to get short term financing. (more…)
Mark Madoff’s Suicide
Posted by Larry Doyle on December 11th, 2010 2:44 PM |
Bernie Madoff may currently be housed in the Butner Federal Correction Complex in Butner, North Carolina but with news this morning that his son Mark took his own life is there really any doubt that Bernie ‘killed’ his own son? I think not.
I feel sorry for the Madoff family and all those impacted by Mark Madoff’s suicide. Although I believe Bernie is evil incarnate, my faith principles hold that every life is precious. The loss of life–especially a relatively young life–is truly tragic. The taking of one’s own life strikes me as the most tragic. Why do I feel that?
Anybody impacted by death knows that the healing process requires closure. With suicide, there never truly is real closure.
“Why?” “Why?” “Why?” (more…)
“The Lack of Transparency and Accountability at FINRA Is Absurd”
Posted by Larry Doyle on December 10th, 2010 6:46 AM |
I detest those people and organizations paying mere lip service to issues needing real transparency and accountability.
I love having the voice provided by Sense on Cents so I can highlight a wide array of these issues and so people can more effectively navigate the economic landscape. I also love being able to ask the hard questions and call out those whom I think are not serving the public interest.
What else do I love? I love when a voice far stronger than my own echoes my thoughts, shares my opinion, and blasts away in pursuit of real truth, transparency, and integrity along our economic landscape.
With only a few exceptions, the media as a whole has shown itself unwilling to truly take the gloves off and go after the aforementioned ‘lip serving’ individuals and institutions. Independent watchdogs in pursuit of good government are far more aggressive.
On this note and against this backdrop, I have to admit my adrenaline picked up yesterday. How so? Let’s navigate as I was informed of the following: (more…)
Who Really Deserves to ‘Pay’ for Bernie Madoff’s Fraud?
Posted by Larry Doyle on December 9th, 2010 8:04 AM |
Bernie Madoff is back.
While news of deficits, tax packages, currency devaluation, and the like capture the business headlines, is there any doubt that far more people in our nation are interested and intrigued by what is going on with the Madoff scam? I have no doubt.
I have very mixed feelings about Irving Picard, the trustee assigned to recover funds for those victimized by Madoff’s Ponzi scam, going after Wall Street institutions and foreign banks who knew or should have known of Madoff’s operation. Mixed feelings? Am I going soft? Shouldn’t these institutions be held to account? Let’s navigate. (more…)
Operation Broken Trust Missed “The Big One”
Posted by Larry Doyle on December 8th, 2010 7:55 AM |
$8 billion is a lot of money, right? Right.
But when is $8 billion NOT a lot of money?
$8 billion is NOT a lot of money when it is compared to $35 billion, $135 billion, or $335 billion. Agreed?
Agreed. Thank you. Let’s continue.
Sense on Cents is a huge proponent of exposing and prosecuting financial fraud wherever it occurs. To this end, I was happy to see that the Feds have had their ‘street cleaners’ operating overtime the last few months. The results of the Fed’s ‘street cleaning’, also known as Operation Broken Trust, is a not insignificant collection of 231 cases totaling $8 billion in losses. Well done. In all sincerity, I commend each and every individual involved in this effort. While those arrested deserve due process, they also deserve to be prosecuted to the fullest extent of the law. If guilty, I hope they receive maximum sentences.
Regrettably, though, the street cleaners missed “The Big One.” Which scam is that? A scam which by any measure could reasonably be described by any of those much larger figures referenced above. (more…)
Fooling Some of the People All of the Time
Posted by Larry Doyle on December 7th, 2010 9:21 AM |
Who is willing to stand up and call out the companies, the financial regulators, and others who both enabled and embodied the practices which brought about our financial crisis?
There have been and will continue to be many well written books highlighting some of the finer points from this economic period. Will there be any books written which truly take off the gloves and call out the individuals and institutions deeply involved in the ‘Wall Street-Washington incest’ central to our economic demise? One book I plan to read seems to address this very theme. I thank a regular reader of Sense on Cents for bringing David Einhorn’s Fooling Some of the People All of the Time to my attention.
To those involved in the financial industry, Einhorn needs no introduction. To those in the general public, let me inform you that David Einhorn–more than any other individual– publicly called out Lehman Bros. as a disaster waiting to happen, and well in advance of anybody saying the same. What does Einhorn have to say now? What does he address in this book? Let’s navigate. (more…)
Will Ireland Deliver a ‘Bomb’shell on December 7th?
Posted by Larry Doyle on December 6th, 2010 5:14 AM |
December 7, 1941
A day which will live in infamy.
The course of world events changed forever that day.
Although there is no meaningful comparison between the loss of life and any amount of turmoil in the markets and global economy, we should be fully aware that December 7, 2010 has the potential to be an earth shattering day on our global financial and economic landscape.
The military ‘bombshells’ delivered 69 years ago on our military base at Pearl Harbor had ramifications far and wide. Financial and economic ‘bombshells’ may very well be delivered in the Emerald Isle this coming Tuesday, December 7, 2010.
Anybody with even a passing interest in our markets and economy would be well advised to watch results of this coming Tuesday’s budget vote in Ireland very closely. What are the consequences of this vote? (more…)
