Archive for 2009

Blame it on the Gipper?

Was Reagan’s free-market zealotry an early cause of the current financial crisis?

Blame it on the Gipper?

Courtesy of Leo Kolivakis at Pension Pulse

 

Before getting into this weekend’s food for thought topic, I think you should all watch Secretary of the Treasury Tim Geithner’s interview on ABC’s This Week and the roundtable discussion where Paul Krugman expressed his concerns with the plan.

Interestingly, Krugman thinks the U.S. government is not doing enough to combat the crisis and that the plan will lead to another Japanese-style lost decade. I agree and I also agree that deficits do not matter in times of crisis because if you don’t get the economy working again, the deficits will only get worse in the future.

But I want to take a step back this weekend and look at the historical events that laid the foundation to this global crisis. On Friday morning, I listened to an excellent interview on CBC Radio’s The Current with Bill Kleinknecht, author of the new book, The Man Who Sold The World: Ronald Reagan and the Betrayal of Main Street America.

Ever since the global economic crisis took hold, people have been looking for a place to park the blame for it. Over-extended homeowners. Greedy bankers. Lackluster regulators. Inept elected officials.

Mr. Kleinknecht has another idea. He says the roots of this crisis go all the way back to the early 1980s and land at the feet of U.S. President Ronald Reagan. Click here to listen to the interview (scroll down to part 3).

Here is a review from Joe Conason published in BuzzFlash Reviews:

From the Nation:

The myth of Ronald Reagan’s greatness has reached epic proportions. The public rates him as one of the most popular presidents, and Republicans everywhere seek to cast themselves in his image. But award-winning journalist William Kleinknecht shows in this penetrating analysis of his presidency that the Reagan legacy has been devastating for the country—especially for the ordinary Americans he claimed to represent.

So much that has gone wrong in America—including the subprime mortgage crisis and the meltdown of the financial sector—can be traced directly to Reagan’s policies. The financial deregulation launched in the 1980s freed banks and securities firms to


continue reading





Madoff’s World

Here’s a captivating behind-the-scenes look at Bernie Madoff’s life of betrayal and deceit.  With friends like that, who needs enemies? - Ilene The lit-up duplex penthouse apartment of Bernie and Ruth Madoff, on East 64th Street, foreground, where he is under house arrest. Photograph by Stephen Wilkes, Vanity Fair

Madoff’s World

By Mark Seal in Vanity Fair

Among Bernard Madoff’s many dupes were his closest friends, including two tycoons he loved as surrogate fathers: the late Norman F. Levy—whose girlfriend, supermodel Carmen Dell’Orefice, would lose her life savings—and the prominent philanthropist Carl J. Shapiro. Amid the sobs, screams, and curses in Aspen, Palm Beach, and New York, with victims sharing their stories, the author gets behind Madoff’s affable façade, to reveal his most intimate betrayals.

Over dinner in New York one night in January, I was airing my frustration concerning Bernard Madoff. Everybody had read about the losses he had inflicted on foundations associated with Steven Spielberg, Elie Wiesel, and Mort Zuckerman, I told my dinner companions, but after having interviewed nearly 40 of his other financial victims, I still couldn’t get a picture of what the man was like. “If you want to know about Bernie Madoff,” said Mary T. Browne, the renowned psychic and author, who counsels many heavy hitters on Wall Street, “you need to talk to my friend Carmen Dell’Orefice.” She was referring to one of the original supermodels, the platinum-blonde beauty who had posed for Richard Avedon, Irving Penn, Francesco Scavullo, and Norman Parkinson, and who had been a muse to Salvador Dalí. She had first appeared on the cover of Vogue in 1946, when she was 15. “Nobody can give you better insights into the Madoffs than Carmen,” Browne told me. “I’ll see if she’ll talk to you.”

Read on ->

 





GM CEO Wagoner, a Visionless Dinosaur, Forced Out

 End of the line for GM’s CEO Rick Wagoner…

GM CEO Wagoner, a Visionless Dinosaur, Forced Out

Courtesy of Mish

Far too late to matter for GM’s viability, CEO Rick Wagoner Said to Step Down.

General Motors Corp. Chief Executive Officer Rick Wagoner will step down after more than eight years running the largest U.S. automaker, people familiar with the situation said.

The Obama administration asked Wagoner, 56, to leave the company and he agreed, an administration official said. Wagoner said March 19 that he didn’t plan to resign. The likely replacement, unless the government hires from outside the company, would be Chief Operating Officer Fritz Henderson, said John Casesa, managing partner at New York-based consulting firm Casesa Shapiro Group.

“If they go to someone inside, Fritz is the obvious choice,” Casesa said. “He’s run every region, he’s been number two and he knows where all the bodies are buried.”

The departure of Wagoner comes as President Barack Obama prepares an address tomorrow morning on his plans for the future of the U.S. auto industry. GM is surviving on $13.4 billion in U.S. loans and is asking for as much as $16.6 billion in additional aid to survive. Wagoner was asked to step down as part of the company’s restructuring, the official said.

“It’s very hard for the government to write a big check without giving some evidence of change,” Casesa said. “This will also give the government moral authority with the other stakeholders to make them sacrifice.”

Wagoner has repeatedly argued he knows the company better than most who could take his job. He joined GM in 1977, as U.S. automakers were fending off Japanese competitors who recognized the need a decade earlier to build fuel-efficient vehicles.

As CEO, the former Duke University freshman basketball player and Harvard University MBA early on bet against gasoline-electric hybrid vehicles, focusing research on hydrogen technology. GM offered its first full-scale hybrids in 2007, a decade after Toyota introduced the Prius.

Wagoner kept GM focused on trucks and sport-utility vehicles, only to press for development of the Volt plug-in electric car when gasoline prices soared.

Wagoner a Visionless Dinosaur

Wagoner is an aging dinosaur with no vision. He made bad bets on the wrong technology. He bet on Hummer,


continue reading





Dave’s Daily

MARKET COMMENT

Dave Fry at ETF Digest, March 29, 2009

Dave and Greg Newton discuss last week’s market activity and various controversial hedge fund issues.

 





G20 Summit Our Last Chance, says Soros

George Soros sees the upcoming G20 summit as a "make-or-break occasion."

G20 Summit Our Last Chance, says Soros

Courtesy of StockJockey at 1440 Wall Street

George Soros is famous for lower back pain…and while his son like to tease him about it, his back seem to be a better trading tool than anything developed by rocket scientists on Wall Street. And he is finally explaining why his back tends to ache at inflection points in the market:

…he has psycho-somatic illnesses – backaches and pains – that tip him off to changes in the market. “It’s as if you’re a jungle animal, and you see another animal facing you. You have to make a decision: fight or flight? Your hair stands up and you growl and you decide, ‘Am I going to attack because I’m stronger or am I going to run away because otherwise he’s going to eat me?’ You are very tense. And that’s the tension that gives you the backache.” Times Online

George thinks next week’s G20 summit in London is the last chance for policy makers to pull a rabbit our of their hat and pull us out of this spiral…but he is not holding his breath:

“The odds would favour that it fails because there are such differences of opinion. It’s difficult enough to get it right in your own country let alone with 20 governments coming together, but if it’s a failure I think then the global financial and trading system falls apart.”

If the G20 is nothing but a talking shop then he thinks we are heading for meltdown. “That could push the world into depression. It’s really a make-or-break occasion. That’s why it’s so important.” The chances of a depression are, he says, “quite high” – even if that is averted, the recession will last a long time. “Look, we are not going back to where we came from. In that sense it’s going to last for ever.”

Food for thought for those you you who have been chasing stocks – a big crowd, given that we just posted a two week stretch that was the fiercest rally in 78 years, at least in the U.S.

George Soros, the man who broke the Bank, sees a global meltdown
TimeOnline

Read more:  George Soros, the man who broke the Bank, sees a global meltdown

 





Vast Computer Spy System Tracked Back to China

Big Brother sent from China?spies2.jpg

Vast Computer Spy System Tracked Back to China

Courtesy of Dan Colarusso at ClusterStock

Researchers are the University of Toronto have tracked back to China a computer spying operation that’s infiltrated machines in more than 100 countries, according to The New York Times.

The investigation, which doesn’t point at the Chinese government specifically, said the so-called GhostNet system had stolen documens from almost 1,300 computers, including those in offices of the Dalai Lama. It has also monitored a NATO computer system and the Indian Embassy in Washington, D.C.

The article says the sytem was the most-ranging one ever discovered and had Big Brother-type capabilities:

"It can, for example, turn on the camera and audio-recording functions of an infected computer, enabling monitors to see and hear what goes on in a room. The investigators say they do not know if this facet has been employed."

Read more->

Source:  Vast Spy System Loots Computers in 103 Countries by John Markoff, NY Times

See also: 

Spy chiefs fear Chinese cyber attack by Michael Smith, Times Online 

INTELLIGENCE chiefs have warned that China may have gained the capability to shut down Britain by crippling its telecoms and utilities.

They have told ministers of their fears that equipment installed by Huawei, the Chinese telecoms giant, in BT’s new communications network could be used to halt critical services such as power, food and water supplies.

The warnings coincide with growing cyberwarfare attacks on Britain by foreign governments, particularly Russia and China.

A confidential document circulating in Whitehall says that while BT has taken steps to reduce the risk of attacks by hackers or organised crime, “we believe that the mitigating measures are not effective against deliberate attack by China”.

Read more here->.

 





Money creation and the Fed

Using a variety of colorful charts, James D. Hamilton examines whether the explosive growth of the monetary base implies uncontrollable inflationary pressures.

Money creation and the Fed

Courtesy of James D. Hamilton at Econbrowser

A lot of people have seen this picture of the recent behavior of the monetary base and wondered what it means.

Figure 1. Adjusted monetary base. Source: FRED.
mon_base_mar_09.jpg


To understand the explosion in the monetary base since September, let’s begin with a little background. The Federal Reserve has the ability to purchase assets or make loans with funds (money) that are created by the Fed itself. To buy a billion dollars worth of assets, the Fed doesn’t show up with new cash in a wheelbarrow. Instead the Fed pays for any assets it purchases or loans it extends by crediting the funds that the recipient bank has in an account with the Fed, known as reserve deposits. A bank can later withdraw those deposits in the form of green currency, if it chooses, and that’s the point at which an armored truck from the Fed would be involved with physical delivery of cash.

The monetary base is essentially the sum of (1) the currency that’s been withdrawn from private banks and is being held by the public, (2) the currency that’s sitting in the vaults of private banks that could potentially be withdrawn by the banks’ customers if they wanted, and (3) banks’ reserve deposits, which you could think of as electronic credits for currency that the banks could ask for from the Fed any time the banks choose. Historically, newly created reserve deposits have usually shown up pretty quickly as currency withdrawn by banks and then by the public. Choosing a pace at which to allow that supply of currency to grow so as to accommodate the increased currency demands from a growing economy without cultivating excessive inflation is one of the main responsibilities of the Fed.

Figure 2 below plots the assorted "factors absorbing reserve funds" from the Fed’s H41 release during the halcyon period from 2003 to the middle of 2007. At that time, currency held by the public was by far the biggest component in the liabilities side


continue reading





What Goes Around, Comes Around

A Lesson in Karma?

What Goes Around, Comes Around

Courtesy of Michael Panzner at When Giants Fall

It’s a source of secret (and not so secret) pleasure and the plotline of many books and movies: seeing the tables turned — and the abuser getting abused.

While Americans might not see it that way, no small number of countries have long resented the haughty and overbearing approach that the U.S. and other instruments of American hegemony, including the International Monetary Fund, have taken when they (and other nations) have gotten into financial difficulties.

Under the circumstances, it’s likely that some of them are looking at how things are unraveling in the United States and muttering to themselves: "What goes around, comes around."

In a Washington Post commentary, "Re-emerging As an Emerging Market," Desmond Lachman, a fellow at the American Enterprise Institute and former deputy director of the International Monetary Fund’s Policy and Review Department, helps put those sentiments into context.

Back in the spring of 1998, when Boris Yeltsin was still at Russia’s helm, I led a group of global investors to Moscow to find out firsthand where the Russian economy was headed. My long career with the International Monetary Fund and on Wall Street had taken me to "emerging markets" throughout Asia, Eastern Europe and Latin America, and I thought I’d seen it all. Yet I still recall the shock I felt at a meeting in Russia’s dingy Ministry of Finance, where I finally realized how a handful of young oligarchs were bringing Russia’s economy to ruin in the pursuit of their own selfish interests, despite the supposed brilliance of Anatoly Chubais, Russia’s economic czar at the time.

At the time, I could not imagine that anything remotely similar could happen in the United States. Indeed, I shared the American conceit that most emerging-market nations had poorly developed institutions and would do well to emulate Washington and Wall Street. These days, though, I’m hardly so confident. Many economists and analysts are worrying that the United States might go the way of Japan, which suffered a "lost decade" after its own real estate market fell apart in the early 1990s. But I’m more concerned that the United States is coming to resemble Argentina, Russia and other so-called emerging markets, both in


continue reading





Fraud in the desert and the “Disabler”

Note: the wordpress backup site is back, with apologies, so now there are two more Favorites sites. The original one has the blogroll, which can’t be exported/imported.

Below, Tim Iacono reports on the cat and mouse game in the auto sales industry… fraud and arson, meet the "Disabler." – Ilene  

Fraud in the desert and the "Disabler"

Courtesy of Tim Iacono at The Mess That Greenspan Made

Two reports in the Wall Street Journal tell the tale of how automobile ownership is hitting the skids in the U.S. in an eerie parallel to home ownership – people are walking away from what they promised to pay for and lenders are taking steps to assure they are repaid.

In Signs of Stress, Fraud on Roadside, Las Vegans are abandoning their cars in record numbers to get out from under the monthly payment – if you don’t want to take it out to the desert and torch it yourself, the going rate is only $500 for someone else to do it.

Police detective Mark Menzie drove 55 miles into the desert Sunday to inspect the charred remains of a formerly silver Ford Expedition.

Later, he sat in a kitchen on the city’s south side where a 19-year-old man confessed to torching his girlfriend’s Chrysler PT Cruiser.

At noon Monday, Mr. Menzie was picking through the smashed windshield of a 2008 Land Rover in a desert canyon. His police radio crackled as he worked; another car was spotted burning southwest of the city.

Years of no-money-down car loans followed by sinking home values and rising unemployment has made many people desperate over car payments they can no longer afford. For some, the answer is to ditch the car, report it stolen and collect the insurance money to pay it off without hurting their credit.

Well, at least their intentions are good – to preserve their credit in order to borrow another day. The fact that they are committing a crime is apparently less important.

On the bright side, this is one more growth area for our new economy – more jobs in insurance fraud investigation and vehicle storage.

Tow yards in Las Vegas are filled with the blackened hulls of Mercedes sedans and Cadillac Escalades. The wrecks were


continue reading





Weekend Reading

Where do we go from here?

Dylan Ratigan is going somewhere, off CNBC because THEY didn't like the direction he's been taking lately – going after the mechanism of Wall Street that led to this crisis and may well lead to the next one.  Dylan wants to do more investigative reporting and thinks CNBC should take on a watchdog role – as he says in this clip re. Wall Street bonuses "it's not capitalism, it's stealing."   CNBC, on the other hand, wants Dylan to look pretty and lob softball questions at CEOs while parent GE et al feed at the government trough while Dylan wants to tell people "capitalism is broken" and needs to be fixed and regulated.  I don't know where he's going to find a job pushing that agenda but he can certainly find a forum here!

The official G20 kicks off in earnest on Wednesday (the underlings have been going at it for 2 weeks already) and our President is going to make a real World Tour out of it:  Stopping by to see th Queen for tea ahead of the G20, at the meeting all day Thursday, having a Town Hall meeting in Strasboug on Thursday ahead of Friday's Nato Summit.  Saturday it's off to Prague for a speech at the EU-US summit, Sunday he negotiates with Turkey on troops and trade and Monday he'll be in Istanbul before heading home.  So what will you be accomplishing next week?  "President Obama has been talking for many months, if not a year or more, about the need to restore U.S. leadership around the globe," said Reginald Dale, a senior fellow at the Center for Strategic and International Studies' Europe program. "This trip is the first chance, actually, to start doing something about that."

While Obama's away, the bears may play next week and we have tons of data coming:  Tuesday we have Consumer Confidence, which has been below 30 since the Fall, The Case-Shiller Home Price Index, down about 18% since last year and the Chicago PMI, which should give us a small upside surprise from 36 expected.  Wednesday we have the dreaded ADP report, which showed just under 700,000 Jobs lost in February and better be under 650K for March.  We also have Construction Spending and the ISM and Pending…
continue reading





 
 
 

Phil's Favorites

Overpriced tech IPOs sell grand visions but aren't worth their valuations

 

Overpriced tech IPOs sell grand visions but aren't worth their valuations

rblfmr / Shutterstock.com

Courtesy of John Colley, Warwick Business School, University of Warwick

The year of the tech IPO is 2019. Uber went public on May 10 with a US$82.4 billion valuation. Fellow ride-sharing app Lyft floated in March with a U$24 billion valuation and Pinterest had a US$10 billion IPO in April...



more from Ilene

Zero Hedge

Futures Slides As Trade Tensions Escalate

Courtesy of ZeroHedge. View original post here.

S&P futures were lower on Wednesday as investors sought safety in bonds, the Japanese yen and Swiss franc in muted trade amid renewed worries over the U.S.-China spat after reports Washington is considering cutting off the flow of American technology to as many as five Chinese companies including Hangzhou Hikvision Digital Technology, the world's largest supplier of video surveillance products, expanding the US crackdown on China beyond Huawei to include world leaders in video surveillance. The dollar and 10Y yield were unchanged ahead of today's FOMC Minutes.

...



more from Tyler

Kimble Charting Solutions

Emerging Markets About To Submerge If 3-Year Support Breaks?

Courtesy of Chris Kimble.

Are Emerging Markets about to “Submerge” and head a good deal lower? What they do at (3) will go a long way in answering this question!

Emerging Markets ETF (EEM) has been lagging the broad market for the past 15-months. They hit their 50% retracement level of the last year’s highs and lows and falling resistance at (2) recently. The weakness of last has EEM trading below its 200-MA line.

EEM has spent the majority of the past 3-years inside of rising channel (1), which reflects that this trend remains up. The weakness of late has it testing the bo...



more from Kimble C.S.

Insider Scoop

Amgen To Buy Danish Collaborator Nuevolution For $167M

Courtesy of Benzinga.

Amgen, Inc. (NASDAQ: AMGN) took a logical step forward in buying a preclinical biotech it has been collaborating with since 2016. 

What Happened

Amgen announced Wednesday an agreement to buy Copenhagen-based Nuevolution for $167 million.

Th...



http://www.insidercow.com/ more from Insider

Chart School

Weekly Market Recap May 18, 2019

Courtesy of Blain.

China – U.S. trade talk continued to dominate the week.   A heavy selloff Monday was followed by 3 up days, with Friday moderately down.

On Monday, Chinese officials announced retaliatory tariffs against the U.S., hitting $60 billion in annual exports to China with new or expanded duties that could reach 25%.

Then on Wednesday:

The Trump administration plans to delay a decision on instituting new tariffs on car and auto part imports for up to six months, according to media reports.

...

more from Chart School

Digital Currencies

Cryptocurrencies are finally going mainstream - the battle is on to bring them under global control

 

Cryptocurrencies are finally going mainstream – the battle is on to bring them under global control

The high seas are getting lower. dianemeise

Courtesy of Iwa Salami, University of East London

The 21st-century revolutionaries who have dominated cryptocurrencies are having to move over. Mainstream financial institutions are adopting these assets and the blockchain technology that enables them, in what ...



more from Bitcoin

Biotech

DNA as you've never seen it before, thanks to a new nanotechnology imaging method

Reminder: We are available to chat with Members, comments are found below each post.

 

DNA as you've never seen it before, thanks to a new nanotechnology imaging method

A map of DNA with the double helix colored blue, the landmarks in green, and the start points for copying the molecule in red. David Gilbert/Kyle Klein, CC BY-ND

Courtesy of David M. Gilbert, Florida State University

...



more from Biotech

ValueWalk

More Examples Of "Typical Tesla "wise-guy scamminess"

By Jacob Wolinsky. Originally published at ValueWalk.

Stanphyl Capital’s letter to investors for the month of March 2019.

rawpixel / Pixabay

Friends and Fellow Investors:

For March 2019 the fund was up approximately 5.5% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was down approximately 2.1%. Year-to-date 2019 the fund is up approximately 12.8% while the S&P 500 is up approximately 13.6% and the ...



more from ValueWalk

Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



more from Our Members

Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



more from M.T.M.

OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



more from OpTrader

Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

...

more from Promotions





About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>