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Archive for February, 2011

Oscar Winner Charles Ferguson Rips Wall Street and Washington

Posted by Larry Doyle on February 28th, 2011 5:28 AM |

Charles Ferguson

“Forgive me, I must start by pointing out that three years after our horrific financial crisis caused by financial fraud, not a single financial executive has gone to jail, and that’s wrong.”

With those words last evening, Charles Ferguson, the winner of the Academy Award for Best Documentary for his film Inside Job, did a lot more than merely begin an acceptance speech. Ferguson touched the third rail and made a political statement. But did he really? Really? Not in my opinion. Ferguson spoke the truth.

When did the mere voicing of the truth become political? Perhaps in America 2011 those who speak the truth actually stand out because we hear so little of the prized virtue. That reality is a sad commentary on our society.

I commend Ferguson. Backstage he had even more to say. (more…)

Guest Post: Corporate Profits Soaring Thanks to Record Unemployment

Posted by Larry Doyle on February 27th, 2011 2:37 PM |

I encourage anybody and everybody who reads Sense on Cents to submit guest commentary for potential publication. Detailed and informative opinion is always constructive to engender necessary ongoing debate.

Corporate profits have seemingly rebounded strongly. Unemployment levels remain elevated. Are the profits soaring because of the unemployment or in spite of them? What gives? Mark Provost of The Economic Populist has strong opinions. I thank him for sharing them in this extensively researched piece, Corporate Profits Soaring Thanks to Record Unemployment.

In a January 2009 ABC interview with George Stephanopoulos, then President-elect Barack Obama said fixing the economy required shared sacrifice, “Everybody’s going to have to give. Everybody’s going to have to have some skin in the game.” (1) (more…)

America Needs to Listen to Thomas Hoenig

Posted by Larry Doyle on February 26th, 2011 2:07 PM |

I am not sure if anybody got the license plate of the truck that ran over me and then backed over me this past Wednesday. In any event, in between my various rounds of medication for the flu during the last few days, I watched a man whom I have referenced previously but to whom America needs to really pay attention. I am speaking of Thomas Hoenig, Chair of the Kansas City Federal Reserve.

I think very highly of Mr. Hoenig. He embodies the essence of ‘sense on cents.’ I welcome sharing a recent interview Hoenig provided to The Wall Street Journal’s Market Watch.

Savor this like a fine wine. Unlike most in Washington or around our nation, Hoenig not only ‘gets it’ but he has no problem in ‘telling it like it is.’ (more…)

Just Because You’re Paranoid…

Posted by Larry Doyle on February 23rd, 2011 12:35 AM |

Real life is better than the movies.

I can not imagine how some people sleep at night wondering if their phones are tapped at work or at home. That said, as we all know, “just because you’re paranoid, does not mean that they are not out to get you.”

To what do I refer? The new twist in the ongoing insider trading scandal on Wall Street has the hedge fund crowd playing defense against the use of wiretaps on the part of the Feds.

Really? What kind of defense?

Bring in the firepower and check to see if your phones at home and work are being tapped. (more…)

From Madison, Wisconsin to the Shores of Tripoli

Posted by Larry Doyle on February 22nd, 2011 7:22 AM |

What do I see as recurring themes on our global economic landscape? Unrecognized financial losses lead to overreaching economic programs. Those programs influence political change, but also ultimately varying degrees of social and civil unrest.

Over the course of the last year, we have witnessed differing iterations of this scenario play out in Greece, England, Ireland, and elsewhere. The current hotspots on our global map are Middle Eastern and northern African nations, specifically Libya. The distance from Tripoli, Libya and Cairo, Egypt to Madison, Wisconsin is approximately 5000 miles and 6000 miles respectively. Is the distance between these locales actually much closer than that?  Are there any similarities to the bloodshed being experienced in Tripoli, and previously Cairo to the tame protests on the university town of Madison, Wisconsin?

I believe there are. Recently, Wisconsin Representative Paul Ryan made this comparison as well. Let’s view Ryan’s comment and then navigate further.

Regardless of what you think of Ryan, I do believe there are real similarities between the unrest in the Middle East and that on display in Madison. How so? Well, what is the basis for the unrest in the Middle East? Rent.

What are you talking about, LD? What the hell is rent? (more…)

America Needs to Stop The Lies and The Liars

Posted by Larry Doyle on February 19th, 2011 12:20 PM |

Real long term success and greatness are founded upon the principles that people do not lie, cheat, or steal. Our nation is neither succeeding nor is great at this point in time because we have allowed these vices to grow and spread throughout our society. Shame on us.

Our nation does have the potential to be a fabulous nation again; however, let’s stop kidding ourselves in thinking that we are a great nation currently. How is it that America has lost its greatness? Where are the aforementioned vices on display? (more…)

Rick Davis Addresses “The Broken Window Fallacy”

Posted by Larry Doyle on February 18th, 2011 5:33 AM |

I recently commented to Rick Davis of Consumer Metrics Institute that I love his site because each and every time I visit, I learn something. How good is that? Outstanding and further reason why Rick continues to elevate himself within the Sense on Cents Hall of Fame. Do yourself a favor and throw Consumer Metrics Institute in your favorites. You will not be disappointed.

What does Rick bring us lately? A great piece hearkening back to the mid-1800s. Let’s navigate as Rick writes,

We have received a number of thought provoking responses to our back-of-the-envelope calculations about the impact of mortgage delinquencies (and so-called “strategic defaults”) on consumer spending. One such correspondence has been with Jeff Harding at The Daily Capitalist. Jeff correctly pointed out that our calculations ignored the offsetting damages that the defaults were inflicting on banks, making the spending gains that we calculated a present-day example of Bastiat’s “Broken Window Fallacy.” (more…)

Matt Taibbi Exposes Wall Street’s Regulatory Capture Strongly Recommended

Posted by Larry Doyle on February 17th, 2011 6:30 AM |

Regular readers may be accustomed to my designating the relationship between our financial industry and the political crowd as the “Wall Street-Washington incest.” The technical term for this relationship is regulatory capture, as defined by our investing primer:

…the process by which regulatory agencies eventually come to be dominated by the very industries they were charged with regulating. Regulatory capture happens when a regulatory agency, formed to act in the public’s interest, eventually acts in ways that benefit the industry it is supposed to be regulating, rather than the public.

Bingo!! That’s the incestuous relationship we’re talking about.

Is the game really on the up and up? How does regulatory capture work? Who are the financial cops really protecting?

Thank you to the number of readers who pointed out to me an amazing expose of regulatory capture written by Matt Taibbi in Rolling Stone. Taibbi provides extensive detail in writing, Why Isn’t Wall Street in Jail? This article is a must read. (more…)

Bernie Madoff Targets Banks and Hedge Funds: “They Had to Know”

Posted by Larry Doyle on February 16th, 2011 7:04 AM |

Bernie Madoff Bernie Madoff BiographyBernie Madoff deserves zero sympathy and less attention. On the other hand, those seriously impacted by his crimes deserve not only sympathy but also recompense. Irving Picard, the trustee pursuing that recompense on behalf of Madoff investors, is making some high profile claims and has generated substantial results. That said, selected Madoff investors have informed me that they give Picard very mixed reviews.

While Bernie rots away, he did speak out recently and slightly opened the window into his scheme. In the process, Madoff made an assertion that I think anybody with half a brain would have already assumed. The New York Times reports, From Prison, Madoff Says Banks ‘Had to Know’ of Fraud: (more…)

Connecting the Dots: Our Dollar Continues Multi-Year Decline as Both Political Parties Are “On the Take”

Posted by Larry Doyle on February 15th, 2011 8:55 AM |

In the course of my regular early morning reading (thank you to the regular readers who feed me these resources), I came across some fabulous work.

1. The Dallas Federal Reserve puts forth an enlightening piece entitled Global Economic Conditions. The 43 page treatise covers a wealth of information but my attention was grabbed primarily by the graph highlighting the continued decline in the core rate of inflation on page 11, and the ~20% decline in the value of our U.S. dollar over the last decade versus other major currencies on page 38.

While skyrocketing food and energy costs globally will likely continue to foment civil unrest in selected nations, Fed chair Bernanke is assuredly singularly focused on that continued decline in the core rate of inflation. How will he respond? Many individuals whom I respect believe Bernanke will continue to flood our economy with more and more dollars via quantitative easing. What does that portend for the value of our greenback? It ain’t good. What do others think of our Federal Reserve and fiscal fiascos? Let’s navigate further. (more…)

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