Queercents

And there on the TV is the umpteenth financial ‘talking head’ stating the grim obvious, such as “we are going to be well into next year” before the housing market settles down, and banks re-start to lend. This is the financial economic guru from one of the biggest investment banks in the world. He’s just another face on the same breed of cat - the very same know it alls MBA’s and Ivy League graduates / mathematical geniuses, who with sophisticated computer models and algorithms, attempt to set up a portfolio that doesn’t lose money, but in a whisper - takes some risk. Go figure… The very premise behind risk is that you very well might lose money. That’s why commercial banks don’t belong in the securities industry in the first place.

I would ask our esteemed members of Congress and the regulatory authorities to consider putting Glass Steagall (or some evolved form of it), back in force. Glass Steagall was a law enacted in 1933 that did not permit commercial banks from being involved in investment banking pr brokerage operations. This would have meant that a bank like Citibank and Citibank Securities would have to be two separate and distinct companies with separate balance sheets and types of risk exposure.

If Glass Steagall were in place during this sub prime lending mess, big banks would have been prohibited from overly investing in the sub prime securities – or any part of an investment bank (aka brokerage firm) that was cooking these things up, in the first place. Read the rest of this entry »

Ever since last summers meltdown of the Quants and Hedge Funds, Ben Bernanke has failed to see the signs of structural weakness in the financial system, and to take the appropriate -pre-emptive (not reactive) action. Beyond this, he has failed to project credible leadership when making statements such as the one earlier this year, where he emphatically said the FED would be aggressive in its actions to stem a U.S. recession.

The markets today are reacting as much to the gloomy prospects of a deep U.S. Recession and Disinflation - [Disinflation = the opposite of inflation - commodity prices going lower], as they are about the perceived weakness in leadership and credibility in the U.S. Federal Reserve to keep to its stated word.

Many years ago, I learned that markets are driven by ‘perception’ more so than reality. “In sex, drugs and rock n roll, perception is 9/10ths of reality,” said one high school child of the 60’s market participant. Today the markets are being driven by several perceptions, but in my humble opinion, mainly - and more and more each day - by that of leadership paralysis at the FED. Read the rest of this entry »

When I was on the trading floor of the NYSE as an active broker, we had a saying about when to buy and sell a stock. “Don’t fight the tape”. The “tape” is the ticker tape, a device to display stock prices and quotes that came into being in 1867, invented by Edward A. Callahan of the American Telegraph Company.

When I started on the trading floor, there were no computers yet. (Yup, I’ve been around that long). Anyway… the only way one could tell what the market was doing was to read the ticker tape. Today I doubt there are many current traders on the desks of the major brokerage houses who would know how to ‘read, much less fight’ the tape.

So what does it mean to not fight the tape? Simply stated it means that if the prices are falling, don’t go against the trend. Which brings up another old saying from the pros on the trading floor which says: “The Trend Is Your Friend”. This saying affirms the earlier one in that one should go with the flow, and not try to go against it. Read the rest of this entry »

With the worlds population at 6.6 billion people, and the U.S. at 302 million (that’s 4.5% of the worlds population), and with the United States consumers guzzling roughly 14% (13 million barrels a day) of the worlds energy resources, is it any wonder that the U.S. must learn to conserve energy?

The daily supply produced is approx 85 millioin barrels per day (Source: Energy Information Administration of the U.S. Dept of Energy), and demand is at 87 million barrels per day. The laws of basic economics says that the prices MUST go higher.

Even if the U.S. economy experiences a slow down, it is unlikely that the economies of China and India are going to slow to the point where demand will be exceeded by the supply anytime soon. Read the rest of this entry »

The recent collapse of Bear Stearns, and all of the pain and anguish that has accompanied it, mainly by the employees and retirees should heighten the call for a review of the line between greed and good business practices…and ‘ethical’ behavior. The shareholders took this one on the chin both the institutional, and the widow Masterson. I feel terrible for this poor woman who was living off of the dividends, and am just a little more than a tad angry at the institutional investor.

Between the board of directors, and the institutional investors, there is one word which explains this whole debacle perfectly - “greed”.

Financial Services and Wall Street can be a wonderful place to work; to earn a respectable living, even by most standards, an incredible living. But like speed - “greed” kills too. Read the rest of this entry »