Category Archives: Wall Street

We Just Don’t Understand

…how great the divide really is between the “Haves” and the “Have Nots”. Let’s not even look at the top few percent. Let’s look at someone we all know, teachers.

I saw these figures a while ago, intended to post. Life overtook writing and now Paul Krugman has done it for me….and better.

It’s all very well to talk vaguely about the dignity of work; but the idea that all workers can regard themselves as equal in dignity despite huge disparities in income is just foolish. When you’re in a world where 40 money managers make as much as 300,000 high school teachers, it’s just silly to imagine that there will be any sense, on either side, of equal dignity in work.”

Quite the perspective, good to keep in mind while we listen to the talk leading up to the 2014 elections. Maybe we can sort out who’s for adding to the burden of the poor, yet maintaining capital gains at 15%, subsidies to fossil fuel giants, and tax loopholes large enough to drive whole corporations through.

 

 

 

It is Not Heartwarming

To realize the U.S Government post 911 bestowed  private domestic policing powers on the 12 Federal Reserve Banks, including the New York Fed. You have to read about it here, just thinking about it makes me sweat. Remember the Fed is not really Federal…it is private. In essence we have the guys who seek market intelligence and make buku dollars every day off market intelligence, security trades, and equity markets policing themselves. Then the high ranking fed boys and girls move off to make the REALLY big bucks with the wall street firms. Suppose there is any insider information going back and forth there?  Anyone else perceive a major conflict of interest?

Wall Street is Broken

New piece out today about Elizabeth Warren citing a speech she made yesterday. Everyone should be paying attention. She is one of the few in DC who is both willing and able to take these guys on head-to-head. Short excerpt here but a worthy read.

U.S. Senator Elizabeth Warren delivered a speech warning her Congressional colleagues in strident tones that Wall Street is now more dangerous than it was five years ago when it crashed. Warren, again, called for the restoration of the Glass-Steagall Act to prevent another financial calamity.

Gallup released a poll showing the approval rating of Congress had fallen to nine percent, the lowest reading in the 39 years the firm has been asking the question.

A Quinnipiac University poll reported President Obama’s popularity has fallen to the lowest point of his presidency, with a majority of Americans, 54 percent, now disapproving of his performance.

And, finally, Americans for Financial Reform together with the Roosevelt Institute issued a 126-page report in conjunction with the speech by Senator Warren, outlining their own dire predictions for financial stability under the current Wall Street structure. Eleven separate scholars contributed to the study, including Jennifer S. Taub, an Associate Professor at Vermont Law School. One might anticipate what Taub had to say from the title of her upcoming book, Other People’s Houses: How Decades of Bailouts, Captive Regulators, and Toxic Bankers Made Home Mortgages a Thrilling Business – available from Yale Press in 2014.

Inflation? Mirhaydari Missing the Mark-Again (and again, and….)

Yesterday’s MSN Money headliner, Anthony Mirhaydari, still claiming inflation is just around the corner. Guess if you hold that view for long enough–now over 4 years–it’ll get right sooner or later. Fortunately it’ll be later, and if  Bernanke stays in the seat or as I hope is replaced by Yellen, we won’t see it as a problem at all. My concern right now is deflation, but that for another day.

This week even Kiplinger’s Personal Finance talked about the lack of inflation in spite of the pundits yelling about QE being sure to cause not just inflation but “hyper”-inflation.  This inflation scare has been ongoing since QE began in November of 2008 and we have yet to see inflation. So why don’t guys like Mirhaydari get it? Are they leaning so far in one political direction they won’t or can’t learn. Or maybe never got beyond Econ 101 where we all learn the absolute basics like “increasing the money supply will cause inflation”.

If any of us choses to write about and attempt to influence economic thought, surely they would have gone on to 201, 301 where all the exception come to play such as Keynes regarding liquidity traps–where adding money to the mix will not impact inflation until nearly all excess production capacity is used up.  And adding money is really the ONLY way to fix a liquidity trap without causing a full scale depression. The number of folks still yelling inflation are dwindling rapidly as the years have proven them wrong. Theseall  few diehards are perhaps too stubborn to learn or maybe have a financial or political stake. Unfortunate when logic, education, and the lessons of history become clouded by politics.

Meanwhile a lot of investment capital went onto inflation offsets in 2008 and has remained there. Those investors continue to lose equity. All the while we have stated the obvious, no inflation yet. With the right folks on the job at the Fed we have a long way to go before we see real inflation cutting into our equity, and I’ll be watching. Frankly I won’t be concerned at all until unemployment–including shadow unemployment–nears 5%. If you read back I’ve already been watching, writing, and so far being on the money.

“Fed News Sends DOW into a Dive”

Between the article itself and the MSN headline they’re trying to make news when there is none. You professionals should be able to do better than that. If you’re going to write about the market give me the facts. Knock off doing what all the computer algorithms are already trying to do i.e. create your own trading outcome.

Here’s the fact: the market went down today a total of 108.13 points Woo hoo, that is a whopping seven point seven tenths of just one percent.  Not even a single whole percent, certainly not news unless you’re in the business of trying to create some where there isn’t by using words like “concern”, “volatile”, and “slide”.  Hello, did anyone think QE would last forever? Nope, and neither did the market. Well except it seems MSN Money editors.

Financial Transactions Tax

Greg North has a great one here in his discussion of Why the U.S. Could Use a Financial Transaction Tax.  For years I have been frustrated with the sheer volume of computer driven, speculative and high frequency trading in the market today. I and others, believe it causes havoc within the “free” market where in so many ways it creates it’s own successes and failures. All we have to do is take a look at the average time a stock is held by investors (roughly just 22 seconds) to see trading today is far from what the market was created to accomplish; allow average people to make capital investments in business.

 

“In January, 11 European countries implemented a Financial Transaction Tax (FTT), which places a small tax on stocks, bonds, and other products traded in financial markets. They expect to raise billions of dollars in revenue, and there are signs the idea for a similar tax may be gaining traction in the United States. Senator Tom Harkin and Rep. Peter DeFazio are reviving their Wall Street Trading and Speculators Tax Act, which includes an FTT but died in committee in 2011.”

 

Read the post. I see this as a great way to reduce the impacts of speculative trade and achieve more stability in the market. Kind of what the Long Term Capital Gains Rates were conceived to do before being watered down. Fantastic idea.