Archive - Blog entry

This is a good start...

As pension plans face mounting financial strains, they will be scrutinizing every relationship, including the ones with their big custodial banks. If there is any truth to these allegations, State Street will see many of their pension clients switching to another custodial bank.

If you moved music stands at Carnegie Hall for a living, you might think you were lucky to get the job. You get to work with the some of the greatest musical talents of our time. And, the work isn't that hard. Maybe even fun to be around all that genius. But what if you made $530,000 a year doing it. Now, THAT would be fun. Maybe board president Sandy Weill doesn't think that's so much. After all, it is the Big Apple.

What do you think?

Track the career of the man who in 1999 testified to Congress against derivatives regulation on behalf of the Fed and PPT, only to recant in 2008, then become Fed's Director of Banking Supervision.

The government rescued bondholders so they wouldn't have to take a haircut.

Everyday Americans? We've been scalped ...

Nassim Taleb, author of The Black Swan and Fooled By Randomness, writes brilliantly on investment risk, but his proposed solution to the economic crisis, converting defaulting mortgages to equity by banks, will result in America catching the Japanese Disease. We can't keep debt lingering on the books of banks like they did in Japan. And you can't magically turn stone into bread. Read this and tell me what you think. Perhaps he is creating another black swan.

Are Fannie and Freddie dead or are they not? That is the question. Keefe, Bruyette & Woods says the stock is toast. As of today the Administration is putting them to work for a few more years. Is the outcome the same but the timing different? What is the "Trickle Up" theory? Will it work?

I believe monetary authorities are desperately trying to reflate the real economy by flooding the financial system with a tsunami of liquidity. Asset bubbles are being formed as we speak. Equity and commodity prices will head much higher but it remains to be seen whether higher asset prices will translate into higher real prices. Stay tuned, but in the meantime you might want to curb your enthusiasm and remain very alert as asset prices disconnect from fundamentals.

Janet Tavakol says:

"During World War II, we imposed an excess profits tax. We should impose a 95% excess profits tax—or windfall profits tax—on certain financial institutions (including Goldman Sachs) enriching themselves with ongoing low-cost Fed funding and debt guarantees."

What do you think?

Russia shot itself in a foot last year when in dispute with Ukraine, it shut off natural gas supplies to Europe. That experienced was very unpleasant for Europe and underlined its dependence on a single nation.

House Financial Services Committee DOESN'T wimp out!

In reviewing the last couple of quarter's results of Goldman Sachs operating results, I have come to the conclusion that Goldman is a Federally insured, publicly traded hedge fund!

Pass this on to people who get their news from the talking heads on tv . . .