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HomeThings You May Have Missed
Posted by Larry Doyle on February 20th, 2009 5:20 PM |
While there is tremendous volatility in the markets and commensurate anxiety as a result, there were some major stories and developments that got less play but deserved more.
Allow me to expound. Robert Shiller, a highly distinguished Economics Professor at Yale Univeristy and co-designer of the Case-Shiller Home Price Index spoke this morning on Bloomberg News. Shiller is the preeminent expert on trends and developments in housing. He made the following assessments:
1. Glad to see that Obama is making an effort to support housing but has serious concerns about the effort.
2. $75 billion allocated for loan modification is not nearly enough to make a truly meaningful impact. (remember there is another $200 billion allocated for Freddie and Fannie to refinance mortgages).
3. No plan or proposal for those holding Jumbo mortgages leaves a large part of the market without benefits. Those homes will likely hang over the market.
(more…)
Tags: Bloomberg News, Case-Shiller Index, Robert Shiller
Posted in American Consumers, Australia, Bad Bank, Bank Nationalization, Bank of America, Banking Institutions, Barack Obama, Christopher Dodd, Citigroup, Economic Stimulus, Fannie Mae, Freddie Mac, General, Housing Crisis, Mortgage Crisis, Mortgages, Nouril Roubini, Stimulus Plan, Tim Geithner | No Comments »
If You Can Keep Your Head
Posted by Larry Doyle on February 20th, 2009 6:00 AM |
These are clearly the times that try our souls. In an attempt to bring a measure of perspective to the markets and economy, let me review some month-to-date stats for February and add economic commentary:
|
DJIA |
-9% |
|
S&P 500 |
-5.7% |
|
Nasdaq |
-2.3% |
|
Bonds |
Flat to -10%, depending on sector |
|
$/Yen |
94.14 vs.89.81 |
|
$/Euro |
1.262 vs. 1.280 |
|
Oil |
38.78 vs. 41.60 |
|
Gold |
975 vs. 929 |
There really has been no place to hide. Why? Very simply because in a “massive margin call” (selling assets purchased with borrowed money) when debt cannot be refinanced, all assets are “on sale” in order to pay down debts!!
We have achieved the objective we were looking for in the DJIA and are about 5% away from the objective on the S&P. If there are people who were outright short the market “nobody ever went broke taking a profit.” The question is where do we go from here? In order to address that question, we need to break it down into its component parts. (more…)
Posted in American Consumers, Bad Bank, Bank Nationalization, Banking Institutions, Barack Obama, China, Current Affairs, Economic Stimulus, Economy, General, Global Finance, Hedge Funds, Obama Administration, Sheila Bair, Tim Geithner | 1 Comment »
Housing and Responsibility
Posted by Larry Doyle on February 19th, 2009 6:00 AM |
President Barack Obama presented an overview of his plans to support the housing market yesterday. Obama highlighted the government would utilize the following methods to support those homeowners in default or close to foreclosure:
1. Support is only provided to those homeowners occupying the residence. No support for speculators or developers.
2. The government will increase the portfolios of Freddie Mac and Fannie Mae to purchase mortgages that are refinanced. These portfolios are currently sink holes swallowing billions in taxpayer funds given irresponsible management and pathetic risk management over the last 15 years.
3. The government will work with and incent mortgage servicers to rewrite mortgages to 31% of income for these homeowners. (more…)
Posted in Abortion, American Consumers, Barack Obama, Current Affairs, Economy, Fannie Mae, Franklin Raines, Freddie Mac, General, Housing Crisis, Jamie Dimon, JP Morgan, Mortgage Cram-Down, Mortgage Crisis, Mortgages, Real Estate | No Comments »
A Fresh and Honest Perspective
Posted by Larry Doyle on February 18th, 2009 11:07 AM |
It is often difficult, if not near impossible, for an individual, company, institution, or even a government to provide a measured, honest, and unbiased perspective of a difficult situation. Given one’s proximity and emotional attachment to the situation, human nature clouds one’s viewpoint and, in turn, one’s reactions and responses.
How great it is when we can receive the sage wisdom of a neighbor, a retired executive, a former coach, or on the international level a true statesman. While we may find it difficult to hear and deal with a tough message, ultimately the greatest form of “tough love” is simple truth and honesty.
A good friend of mine was gracious enough to share some video clips of a recent interview with Paul Keating, former Prime Minister and Treasurer of Australia. Mr. Keating speaks from experience and does not sugar coat the current economic turmoil. While the three video clips (listed below) run approximately 20 minutes in total length, please allow me to provide a bullet point overview of some of the highlights. When you do have some spare time, I strongly encourage you to view these clips and gain the benefits of his wisdom. I do not think you will be disappointed, although you may be a bit dismayed as to his blunt honesty. In the meantime, here’s a brief overview: (more…)
Posted in American Consumers, Australia, Bad Bank, Banking Institutions, Barack Obama, China, Current Affairs, Democratic Party, Economy, Foreign Affairs, Foreign Policy, General, Global Finance | 3 Comments »
An $800 Billion Mistake
Posted by Larry Doyle on February 7th, 2009 4:40 PM |
The American populace knows that the primary architects in the formulation of the Stimulus Plan working its way through Congress are Rahm Emanuel, Nancy Pelosi, and Harry Reid. This contingent, along with President Obama, have not been bashful in stating they view the November election results as effectively a mandate to change policies emanating from Washington. Against that backdrop, the initially proposed Stimulus Plan was so loaded with pork that the Republicans and the American population at large slammed it as more a promotion of the Democratic agenda than a true stimulus plan.
I will give President Obama credit for formulating a Panel to Advise Obama on Economy. This panel will be known as the White House Economic Recovery Advisory Board. The Board will be headed by former Fed chair Paul Volcker. He will be joined by Jeff Immelt of GE, James Owens of Caterpillar, William Donaldson, former SEC chair, Roger Ferguson Jr. of TIAA-CREF, Richard Trumka of AFL-CIO, Anna Burger of SEIU, and Martin Feldstein, renowned Harvard economist. The group will be guided by Austan Goolsbee, an economic adviser to the White House.
Do you think President Obama and his economic team would listen to Mr. Feldstein or is that a “mere courtesy” having him on the board. Let’s review what Mr. Feldstein said about the Stimulus Plan just last week.
Posted in American Consumers, Austan Goolsbee, Barack Obama, Commerce, Congress, Current Affairs, Democratic Party, Economic Stimulus, Economy, General, Harry Reid, Nancy Pelosi, Obama Administration, Rahm Emanuel, Republicans, Tax Stimulus Package, Unemployment, Washington Post | No Comments »
Economic/Market Highlights 1/5/09 . . . “Bad and Getting Worse”
Posted by Larry Doyle on January 6th, 2009 10:00 AM |
On the first real day of business after the holidays, I will tip my hat to PEBO and his economic team. Obama opened his press briefing this morning with his take that the economy is “bad and getting worse.” In deft fashion, he then caught almost everybody off guard by leading his proposed economic stimulus plan with focus on a significant level of tax cuts and tax credits. In my opinion, this was a very, very strong first move. Well done, Barack!!
The general outline of these cuts and credits include:
1. tax cuts for those paying taxes or with an earned-income credit. Likely for families earning up to 200k, although that is not yet defined.
2. businesses can retroactively reduce tax bills going back 5 years by writing off losses from 2008 and 2009.
3. offer tax credits to entice firms to plow money back into new investments.
4. provide a one year tax credit for companies that make new hires or forego layoffs.
5. increase write-offs for a wide array of expenditures for small business.
Tags: Education, funding for agriculture, Homeland security, HUD, Kevin Doyle of 12th Street Capital, Obama proposes tax cuts in January 2009, Obama says economy bad and getting worsen, stimulus details
Posted in Barack Obama, Bernie Madoff, Bob Rodriguez, Economy, Jeff Gundlach, Laszlo Birinyi, Mark Carney, Meredith Whitney, Nouril Roubini, Sheila Bair, Tax Stimulus Package | No Comments »
Economic/Market Highlights 11/10/08
Posted by Larry Doyle on November 11th, 2008 2:30 PM |
I will admit that, given the current dynamics at work in the economy and the markets, I have become somewhat numbed as to the magnitude of some of the developments. Many of the highlights that I will offer from yesterday’s news would be enormous stories in and of themselves. Taken collectively, they do become overwhelming if we let them.
The markets are down 5-6% on the month. Given the stream of negative news, one might think that the market could be even lower. The fact that markets aren’t even lower is testament to the trillions of dollars that have been put to work by governments around the world.
Let’s review the major stories of November 10, 2008:
1. China implemented a $563bln economic stimulus plan primarily to further develop infrastructure in the country. That figure represents 1/5th of their total GDP. I was surprised to hear that, but it also indicates to me how much growth potential that country possesses. This package had an immediate impact on our equity markets this morning when our markets were up 3%. This package also supported commodities, especially copper which bounced about 5% on the day. Aside from infrastructure, China directed this stimulus package to an area that was badly damaged in a recent earthquake. Last but not least, China offered “tax deductions” on the purchase of certain hard assets. (Are you listening, Barack??)
This stimulus package though indicates to me that it is not likely that many of our domestic companies will likely be receiving capital injections from sovereign wealth funds. With oil at $60, oil producing countries (such as Dubai) may need to support the real estate developers and exporters in their own countries.
2. Fannie Mae reported a loss of $29bln (I’m not going to say earnings when companies lose money) which equates to $12.96 a share vs an expected loss of $1.40 a share. (How can Wall St. analysts maintain credibility when they miss a call by almost 1000%?).
It is amazing how Fannie can rack up losses like this when their own incentive bonuses are not on the line and when collectively Uncle Sam owns them. Aside from this loss, Fannie did announce that they expect losses to continue and to increase into 2009. This to me means they see foreclosures increasing over the next 6 months. More than likely Fannie will have a negative net worth by the end of 2008 requiring an increased capital injection by the U.S. taxpayer. Where does it end!!
Again, this model is broken. The American consumer who is able to get a mortgage is being subsidized at the expense of the taxpayers. Let the private market set the mortgage rates and if the housing market re-prices, so be it. Enough socialized housing finance. (more…)
Tags: China stimulus November 2008, economic and market review 11/10/08, Fannie MAe earnings November 2008
Posted in American Consumers, Banking Institutions, Barack Obama, China, Credit Card companies, Current Affairs, Dubai, Economic Stimulus, Economy, Meredith Whitney, Mortgage Crisis, Real Estate, Retail Business, Warren Buffet | No Comments »
What Does Barack Know That 375 Leading Economists Don’t??
Posted by Larry Doyle on November 1st, 2008 8:00 PM |
While there are a host of topics that deserve and have received significant attention in this election cycle, there is little doubt that the focus on our current economic condition and our future economic path is the issue that will carry the day and determine our next President-elect.
Regrettable or not, our political system promotes a level of confusion through misinformaton and disinformation. Where does one turn for solid advice and insight? Well, when we’re sick we’d all want access to and advice from the best doctors. When we have a legal issue, we’d all want access to and advice from the best lawyers. When we want the best education for our children, we’d all want access to and advice from the best teachers and professors. When we need spiritual guidance, we’d all want access to and advice from the best ministers. When we need input on what is going on in our business and economy, we’d all want access to and advice from the top economists. Well, guess what…..we do have that access!!!!!
ECONOMISTS FOR McCAIN IS AN INDEPENDENT, VOLUNTARY ASSOCIATION FOR ECONOMISTS WHO SUPPORT SENATOR JOHN McCAIN’S PLAN FOR AMERICA. IT IS NOT AN OFFICIAL ARM OF THE JOHN McCAIN 2008 CAMPAIGN. ECONOMISTS FOR McCAIN ACCEPTS NO FEES, DUES, DONATIONS, OR CONTRIBUTIONS.
WOW!! A forum that addresses the economic issues confronting our country and our world that is not biased or corrupted by money. Yes….do you feel better already?? I thought so.
Posted in Barack Obama, Economy, John McCain | No Comments »
“Give a Man a Fish, Feed Him for a Day . . .
Posted by Larry Doyle on October 21st, 2008 7:00 AM |
. . . TEACH A MAN TO FISH, FEED HIM FOR A LIFETIME!”
While there are so many issues being debated during this election, it seems clear to me that the relative merits of our current tax system as highlighted by “that one’s” interaction with “Joe the Plumber” will carry the day.
Amidst all the rhetoric and spin that is giving me a headache, I thought it may be helpful for all of us to take a deep breath and merely “review” some data so that we can make as informed and thoughtful a decision as possible.
Let’s lay out some data that I collected from a variety of reputable sources (Kiplingers, U.S. Census Bureau, WSJ) and then go from there. To be fair, the numbers are taken from the last few years but for our argument here, the big picture will be very much in focus.
BREAKDOWN OF INCOME AND TAXES PAID BY CATEGORY (more…)
Tags: 50% dropout rate in urban schools, America's Promise Alliance, birth rates, birth rates and education levels, birth rates of single parent families, bureaucracy of urban teachers unionscu, charter schools, correlation of dropout rate and income, delinquent inner city schools, dropout rate, dropout rates of urban scshools, family structure, feed him for a day, give a man a fish, graduation rate, graduation rate and income level, how are we doing in urban education, income and education, income level, income levels and taxes paid, income levels correlated to education levels, is redistributing welath throwing good money after bad, Joe the Plumber, redistribution of wealth and urban schools, taxes paid, teach a man to fish feed him for a lifetime, urban education, vouchers for students
Posted in Barack Obama, Economy, Education | 1 Comment »
