The financial markets, to borrow a term from Fed Chairman Bernanke about the economy, are “unusually uncertain.” Yet on balance the greater volatility is not a category 5 event to worry about. That’s because global regulators are at the helm. They have too much invested in bailouts to let things go to hell now. As we have said the markets are in “safe mode.”
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July 28, 2010 - Markets - 0 Comments
The House and Senate versions of the financial reform legislation is in the reconciliation process to merge the two bills into one. The Fed and their lobbyists have already won no matter what the final version becomes. The single onerous provision remaining is for the GAO to audit the Fed’s monetary policy decisions, but since the Senate version limits that to a one-time event to look at policy during 2008-2009, you can bet that this minor interferance will be the end result in the final legislation.
(Continued…)
June 11, 2010 - Economy, Politics - 0 Comments
The US economy is not on the precipice as pundits would have you believe by listening to their prognostications and comparisons of the Greece and the EU to the US. Yes there are similarities in government spending gone wild but the US has a dynamic economy unlike Greece and is taking pro-active action unlike the EU. In fact even while the bandwagon of commentary of hype and mania is spewed, the US is posting stronger consumer and manufacturing economic data and companies are beginning to hire. One only needs to take a road trip or do a channel-check to verify that goods are rolling down the road–and its not just inventory replacements either. The prescription is sound. Stabilize the credit markets, restore confidence, reform abuses, control spending, and raise taxes. Not a popular quest, but a necessary one and its working.
The US posted strong GDP the first quarter 2010 and will do so again in the next several quarters. The decline in stocks is a gift. Don’t listen to the doomsayers that compare this recent rout with 2008 and 9, this one is Wall Street initiated to enhance trading profits and shake up the politicians pushing reforms. This is obvious if you look into any strong company’s stock price movement or even leveraged bull ETFs. The institutional traders don’t want anybody buying at the lows they won’t hold em there but only momentarily. As example is suggest you look at BGU or SOXL. The later, 3x Bull Semi-conductor ETF has closed off it low every day and has gyrated upward off its low consistently. That’s because with the plethora of new smart phones and tablet pcs coming, chip orders are robust. This sector is cheap and will return big profits for those willing to do their own thinking. The message is get long from here this is bargain time.
May 26, 2010 - Markets - 0 Comments
It is well known that Congress is paid by lobbyist to change bills proposed that have adverse consequences to business. Both Senator Christopher Dodd, Chairman of the Senate Banking Committee his counterpart Barney Frank in the House have adamantly claimed that these contributions never change their votes. SB has previously opined on the truthfulness of these statements however disingenuous they are. The fact of the matter is that the payments provide access to change what they don’t like. No vote ever comes up before the bought and paid for Congressman adopt bills to their liking building loop holes around the most onerous provisions or eliminating them altogehter.
The financial reform legislation to be the legacy work of Dodd before he retires on a fat pension with healthcare benefits, is just one more example. Yet now we have direct proof these Congressmen deliberately do less than would be necessary or expected to protect the public. Barney Frank is quoted by Bloomberg News stating: “There were votes I lost on the floor of the House that we would have won if we had been doing them now because of the public attention,” Frank said in a May 13 interview. In other words his bill had loop holes that are getting closed now that he public advocacy groups are involved. The Bloomberg article by Phil Mattingly states: “Frank, a Massachusetts Democrat, said some parts of the Senate legislation go beyond his bill. The House section on the regulation of derivatives, for example, was criticized by consumer advocates, including Washington-based Americans for Financial Reform, and Commodity Futures Trading Commission Chairman Gary Gensler for creating loopholes for financial firms to receive exemptions from much of the new regulations.” In the same article Robert Litan of the Kauffman Foundation says: “Things have changed since the House voted. The public has gotten a lot angrier and the game has changed due to a rise in the anti-bank fever.” Lobbyist aren’t easily defeated though and though the House could just pass the tougher Senate bill the money pouring in is likely to stop that. Frank has hinted that he will not do that but instead open the bill up to compromise in an open forum. A conference committee meeting to align the two bills gives Lobbyist extra time to see their money work. Already the public has lost its push to have the Fed regularly audited and the Fed will become the super-regulator having both the purse and the responsibility for oversight with the mandate to “insure the stability of banks and the financial system.” Congress sees no conflict of interest there, only preservation of the status quo and money, money.
So now there’s proof from the horses mouth that your Congress is not working for you–as if you needed it. We need term limits and legislators that act as fiduciaries. They have to vote on limiting there own terms so that isn’t going to happen. Voters must enforce change by eliminating all incumbents. Doing so will yield the extra benefit of cutting the deficit and their pension benefits as well. November is the next opportunity. Don’t miss it.
May 17, 2010 - Politics - 0 Comments
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