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Archive for the ‘Families’ Category

Let’s Listen to Sheila Bair

Posted by Larry Doyle on March 10th, 2009 5:50 AM |

I thoroughly respect Sheila Bair (see my list of Economic All-Stars in the left sidebar). Our Head of the FDIC has been an honest broker each and every time I have heard her speak. I looked forward to her interview with Paul Gigot of The Wall Street Journal. 

Ms. Bair addresses the finer points of the Obama Foreclosure Mitigation Plan which is targeted at helping 9 million homeowners stay in their homes. Specifically she touches on:

1. how this program will not reward bad behavior;
2. how it can be viewed as helping people who have managed their finances appropriately;
3. expectations of redefaults given her experience with the failed institution Indymac.

As I initially mentioned, I believe Sheila Bair is an honest broker in an impossible position. Her seeming lack of enthusiasm does not strike me as not believing in the benefits of this program, but rather a subtle acceptance that this program can only go so far. Additionally, this type of program will have plenty of unintended consequences. Will people who are currently paying their mortgages on schedule start to become delinquent on their mortgages in order to gain the benefits of this program?

I think Ms. Bair will make the best of a bad situation. That said, no program will be totally effective. I am fully supportive of programs that will assist Americans, but don’t be fooled to think that we will get 100% return on all dollars spent.

Let’s go to the video . . .

No Justice!! No Confidence!!

Posted by Larry Doyle on March 9th, 2009 10:38 AM |

All indications point to a plea deal this week with Bernie Madoff. In my opinion, Bernie Madoff seems to have been treated with kid gloves to this point. House arrest for a purported crime of this magnitude defies logic. One can only assume the government

Bernie Madoff

Bernie Madoff

utilized this approach, even after Bernie shipped jewels and assets overseas, as they were trying to extract as much information as possible. This week’s news will give the public the first hint as to what kind of information the government has extracted.

My father was an assistant district attorney in Suffolk County, MA and has often made the point that white collar crime never received the degree of justice it deserved. The crime that Bernie and team propagated not only directly impacted his investors but also massively impacted the public at large. How is that? Bernie’s Ponzi scheme, perpetrated over such an extended period of time, has caused a crisis of confidence in our markets, our regulatory system, and ultimately our country.

It defies logic that this Ponzi scheme was not executed without enormous cooperation and involvement by a number of individuals both inside and outside the Madoff organization. There is no doubt in my mind that many of those individuals have information, that if revealed, can and will be extremely embarrassing for some high profile people within our regulatory bodies and our government. (more…)

Control Your Finances

Posted by Larry Doyle on March 2nd, 2009 7:43 PM |

For those who have been tracking my work for the last few months, you have heard me repeat the theme, “control your finances, so that your finances do not control you.”  Effectively, I am trying to address the financial disciplines that are less a series of individual transactions and more a way of life.

These disciplines are more easily formed at the earliest stages of one’s financial life and then reinforced throughout life. On that note, this piece is primarily targeted to our younger readers, although it certainly has applications for everybody.  

Our social customs have relegated the virtue of thrift to the back burner. In the process, our massive debt burdens are crippling us. Well, let’s move that virtue of thrift front and center and get very specific on this topic. Sense on Cents provides a link to a great investing primer (found in the right sidebar). There’s a wealth of information included in the link, but for now check out  Eight Financial Tips for Young Adults .

While reading the playbook is a good start, ultimately winning the game is all about execution. These plays may not be the answer to all your financial issues, but they are certainly a solid start in controlling your finances, so they do not control you!!


The Case for Sense on Cents

Posted by Larry Doyle on February 27th, 2009 10:24 PM |

Welcome to Sense on Cents!!

Why am I so enthused about the potential for this site? I could write at length in answering that question, but in short I firmly believe the “product” delivered here is in very strong demand and very short supply. Collectively as we navigate the economic landscape we will learn, share, and become more comfortable with the economy, the markets, and global finance. While the economy dominates our news currently, where can one go to make sense of it? Welcome to Sense on Cents!

Sense on Cents is truly a reflection of my professional instincts and personal interests.  I sincerely believe this site can elevate the level of financial literacy, economic knowledge, and market insights for those who come here. Additionally, I am pleased to provide a wealth of information on career planning, global perspectives, financial primers, and meaningful literature. The sharing of opinions and active dialogue are strongly encouraged. I hope you feel comfortable coming here, find it to be of great value, will offer your perspectives, and will spread the word! While making “sense on cents,” I feel strongly we will find the relationships and returns to be very rewarding, especially relative to the risks!

I thank Larry Johnson for his tremendous support from my very first day at No Quarter and look forward to a continuing, close working relationship with him, Susan, and all involved at NQ. I sincerely hope and believe our efforts can and will promote our mutual interests.

Ceteris Paribus

Posted by Larry Doyle on February 26th, 2009 2:01 PM |

Economic and budgetary analysis by their very nature often employ a “ceteris paribus” approach or similarly base line assumptions. Ceteris paribus, translated as “all other things being equal,” or base line assumptions are necessary given the fact that economic analysis has so many variables. Well, let me share with you that ceteris are NEVER paribus and base line assumptions are almost always skewed to bias the results in a desired direction.

***UPDATE: I was not aware at the time of my writing but it is reported that the Obama administration is projecting  the economy will grow at a 3.2% GDP in 2010. That assumption is wildly optimistic. No respected economist would project that figure. Consensus has it in the 1.5-2% range. What does this mean? Well, lower growth means lower revenues, means higher deficits, means greater funding needs, means more borrowing, means higher government interest rates, means more “crowding out”, means slower growth for the economy going forward!!  

There was little doubt about President Obama’s social agenda and economic platform during his campaign. While markets will somewhat discount campaign rhetoric, they do not discount economic reality. The markets are sending a strong signal that Obama’s economic proposals and proposed budget are anything but pro-growth.  Obama Delivers $3.6 Trillion Budget Blueprint runs the risk of raising taxes at a time of economic distress. Raising taxes was a prime factor that increased the economic malaise in the 1930s. Obama is willing to take that risk as he sticks to his campaign plan and is pressured by the liberal wing of the Democratic Party. (more…)

Leading Wall Street Analyst Speaks

Posted by Larry Doyle on February 22nd, 2009 4:29 PM |

I worked in the mortgage business on Wall Street for 23 years. During that time period I had the good fortune of  developing relationships with some of the finest minds in this sector. While I do not know Laurie Goodman personally, I can tell you that there is no one individual in the market today whom investors follow more closely when it comes to developments in this space. While Ms. Goodman does work in a business that is actively engaged with investors, I have always appreciated her perspectives as being untainted by bias and merely reflecting an extremely professional and honest outlook.

What does Ms. Goodman think about President Obama’s plans for housing? It would appear that there may be all sorts of unintended consequences and misaligned incentives in this proposal. Regrettably plans  that are well intended often do not necessarily achieve their desired results. I strongly recommend you read Mortgage Plan Aids Liars About Income to gain a fuller appreciation of this proposal.


Let’s Get a First Down

Posted by Larry Doyle on February 21st, 2009 9:10 AM |

throwing-a-hail-mary1Football fans know that ball control and time management are two very critical factors in determining outcome. While a coach may at times “go deep” in order to catch the opponent off guard, victory is determined by the hard work in the trenches and grinding out first downs. I know of no team that has ever established a winning discipline by “throwing Hail Mary’s.” The same can be said of investing. In the midst of these challenging markets, do not lose sight of your long range goals and the disciplines necessary to achieve them. Leave the “Hail Mary’s” for the gridiron entertainment.

The Wall Street Journal provides us with an excellent piece on this topic:

Desperate investors do desperate things.

A few months ago, most people were too terrified to do much more than wring their hands while sitting on them. But now, as the stock market takes another bullet every day and the yields on cash dwindle away, some investors seem to be flinging caution to the winds.

You can read the rest of the article at your leisure. Enjoy your weekend.   – LD –

As Stock Losses Loom, Don’t Throw a ‘Hail Mary’
by Jason Zweig
illustration by Heath Hinegardner
The Wall Street Journal; February 20, 2009

Cheaters Never Win

Posted by Larry Doyle on February 12th, 2009 7:34 PM |

While our country has had high profile cheats such as Bernie Madoff, Barry Bonds, and the crowd from Enron amongst MANY others, we have other cheats permeating our lives every day. Tim Geithner offered that “he screwed up” on his taxes and Alex Rodriguez claimed that he was young and naive from 2001-2003 when he took steroids. In my opinion, I believe both of these individuals are representative of a society that has become far too lax in tolerating a lack of decency and integrity. This is not good business!!

In the midst of the current economic turmoil, we all want to look for individuals, groups, parties, and/or industries that are culpable and direct our indignation towards them. While we may gain some sort of short term gratification, are we changing the nature of the dialogue and in turn the course of our country? I think not.

The opportunity for the “silent majority” within the American public to voice their opinion, promote real core values of decency and accountability, and “lead” our country has never been greater. (more…)

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