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Archive for November, 2009

A Real Reality Show That Matters: Politicians Who Walk The Talk

November 27th, 2009 at 08:37 am

Japanese flock to first-ever open budget debate


"In a major break with the past, new Prime Minister Yukio Hatoyama has introduced a public review of the budget. His party, which ousted the long-ruling conservatives in August, has promised to cut wasteful spending and make policymaking more transparent.

The review has gotten plenty of air time on television and seems to be reviving public interest in politics, which many Japanese have come to see as largely irrelevant to their lives.

'This kind of thing is fundamental to democracy. Before, things were too secretive,' said Yoshitomo Yokoyama, a 77-year-old retiree who came to watch. 'This is definitely a positive change.'

A survey conducted Nov. 21-22 by the Mainichi newspaper showed more than 70 percent of respondents supported the budget review.

Taxi driver Koji Iwano said the public review will bring some fiscal discipline to Japan.

'It's clear that the spending until now was irresponsible,' said Iwano, a 43-year-old from Saitama, north of Tokyo. 'If Japan were as careful as many mothers are about watching their family's budgets, we'd be better off.'"

http://news.yahoo.com/s/ap/20091127/ap_on_bi_ge/as_japan_bud...

Dealing with Reality

November 25th, 2009 at 12:17 pm

The Fed stated in documents released from it closed-door meeting held earlier this month that in its efforts to fuel the recovery it is holding to its bank lending rate at basically zero. It acknowledged that there is the possibility, although "relatively low" in their estimation, that it "could lead to excessive risk-taking in financial markets" causing another speculative bubble.

The Fed anticipates that it could be five or six years before employment levels and the economy return to consistent health.

The Fed also announced that it has tightened its regulations regarding conflict of interest rules governing the boards of directors of its 12 regional banks.

Unlike pre-crisis days, I take it as a positive sign that there is some movement from public officials towards a more realistic and forthcoming attitude about dealing with our current state of affairs.

http://finance.yahoo.com/news/Fed-superlow-rates-could-fuel-...

http://finance.yahoo.com/news/Fed-tightens-conflict-of-apf-3...

Dr. James Galbraith's Rx for Wall Street Reform

November 20th, 2009 at 01:46 pm

"The post-op on the great crash of 2008 continued in Washington Thursday as the Joint Economic Committee (JEC) held a hearing on financial reform.

'Unfortunately, the regulatory regime that failed so terribly leading up to the financial crisis is precisely the regulatory regime we have today,' Treasury Secretary Geithner declared. 'We need comprehensive financial reform.'

There is a way to have a financial system with a 'reasonable degree of stability' and 'serves a public purpose,' Galbraith says. 'But it does require having a government which is not run by the financial sector.'

Galbraith didn't use the term 'Government Sachs,' (see link to New York Times article in the attachment) but said 'we're not going to get where we need to get...if you have this revolving door where all the people from Wall Street go down to Washington and offer their services and basically serve their own worldview and the financial interests of their friends.'"

MED Comment: Arsonist or Firefighter? You can't wear opposing uniforms at the same time. Which one is it -- really?

Secretary Geithner served in key economic roles such as an Under Secretary of the Treasury for former Secretaries Robert Rubin and Lawrence Summers (current Director of the White House's National Economic Council for the President), and more recently as President of the Federal Reserve Bank of New York.

Clearly, Secretary Geithner and other members of the major insiders club who exercised powerful influence on the economy while shuttling back and forth between Wall Street and Washington -- in both democratic and republican administrations -- knew all to well the state of the "regulatory regime" during the 20-30 year period of time that our severly under code financial house of cards was being constructed.

Now that the house is on fire, these public displays of concern and outcry are following the standard script.

The media thrives and depends on obsession of all types. It is becoming increasingly more obvious how the tremendous focus given to the democrat vs. republican win-at-all-costs obsession is serving as a convenient sideshow distraction to divert the little guy's attention away from a power clique virus that, with no allegiance other than self-dealing interests, has targeted and infected the heart of our economic system.

It defies common sense to accept the notion that this inbreeding of revolving officials, who wear for show hats from all sides of the political spectrum, will suddenly in earnest stop enabling and start demanding from fellow co-dependent power club members -- with heavy interests in the status quo -- the kind of across the board transparency critically necessary to restore the health of our economy.

It's out there, but we need more of that real type of independent stand-up leadership that when the heat is on will not shy away from flipping on the lights to dissolve these veils that cover the hidden agendas of those -- on all sides -- whose priority is not finding real solutions to society's real problems beyond their own tight circles of self-serving interests.

Real change for the greater good sounds and feels warm and fuzzy, but it's just another empty slogan until you back it up.


http://finance.yahoo.com/tech-ticker/article/375918/%22A-Gov...

The New York Times - Banks Bundled Bad Debt, Bet Against It and Won

http://finance.yahoo.com/banking-budgeting/article/108476/ba...

The Dilemma: Bull or Bear?

November 13th, 2009 at 08:23 am

Bull

Liz Ann Sonders, chief market strategist at Charles Schwab, represents the more bullish point of view saying, "It's very clear we're in the midst of a V-shaped recovery." Tech Ticker credits Ms. Sonders with keeping its viewers ahead of the curve. It goes on to say, "In October 2008 she said the recession was upon us and would be deep. Remember, this was months before the NBER's official declaration and at a time when most economists were debating whether or not a recession was in the offing. In June 2009 she said the recession was ending, if not already over, a highly controversial statement at the time."

Ms. Sonders says, "I'm on the more optimistic end of the spectrum," she says. "I'm not expecting the kind of pop in growth you'd normally see after such a big compression, but probably [growth] still above what is a very low level of expectations."

http://finance.yahoo.com/tech-ticker/article/369869/On-the-M...

Bear

Robert Prechter, founder of Elliott Wave International and author of Conquer the Crash, is on the other end of the spectrum cautioning retail investors to "stay away... for now." He was bullish near the lows in March, but now says the stock market "is in a topping area." Mr. Prechter compares the current market to those of 1966-74 or 1929-32, where massive bear rallies gave way to another "big leg down", i.e., a W-shaped recovery.

Mr. Prechter is predicting another crash in 2010 that will bring stocks below this year's lows. His word to the wise, "be patient, don't rush it" keep your money in cash and cash equivalents for now and wait out this bear market. His analysis further indicates 5 or more years before we turn the corner into real bull territory and "it'll be the buying opportunity of a lifetime."

http://finance.yahoo.com/tech-ticker/article/367008/Bob-Prec...

Ms. Sonders and Mr. Prechter are professionals who have both made, through extensive research and study of the same market history, reasonable sounding arguments for their diametrically opposing views. They represent armies of experts on both sides of the ongoing bull vs. bear debate. Whether the market as a reflection of the underlying economy will experience a W, V, U, "Square Root" or whatever shape of recovery, remains to be seen.

As emphasized in my previous posts, my personal view is that we will be stuck in a volatile environment until we have seriously tackled the underlying structural rigging problems of our economy that were decades in the making.

However, I am optimistic that, unlike before, these problems are being dragged kicking and screaming out of the shadows and into the public eye where with full recognition -- over time -- they will be resolved.

How to Solve the Dilemma: Core Asset Conservation

First, let's stop buying into this Wall Steet notion that we have to "climb the wall of worry" for the rest of our lives. There are alternatives.

As a financial planner, I specialize in the management and preservation of what are defined as Living and Legacy Core Assets. For my clients, the bull vs. bear dilemma is solved by placing these core assets in a step structure that provides, safety of principal, locked-in gains as credited and liquidity. By utilizing the indexing method, clients are able to share in the upsides of the market, but have an automatic defense system in place that eliminates the possibility of losing principal or credited gains whenever the market wave patterns turn negative.

When you know that your Living and Legacy Core Assets are safe, with non-core assets that have direct exposure to the markets, you are in a far stronger position -- financially and psychologically -- to either try and time the upswings and downswings, or just ride out any of the more severe downturns which may occur and not be forced to sell at the wrong time.

From the standpoint of timing, milestones in life -- college tuition, an untimely death, guaranteed retirement income, etc. -- are totally indifferent to whatever state the economy or the markets may be in at the time they arrive.

In today's world, true asset allocation is adding the guarantees of the step structure as a permanent feature to the mix of diversifying risks among the wave patterns of various assets classes in order to provide the stability you can rely on to support life's milestones for yourself and those who depend on you.

For more information on Core Asset Conservation, please visit my website.

Privatizing Gains and Socializing Losses

November 11th, 2009 at 03:41 am

"Repealing Glass-Steagall was 'obnoxious' and a bipartisan 'absurdity'...

The end result of the repeal was you have 'taxpayers subsidizing risk-taking' on Wall Street...

'It's the most anti-capitalist thing I've ever heard of in my life.'

...Glass-Steagall wasn't regulation, 'it was common sense'..."

http://finance.yahoo.com/tech-ticker/article/369201/Why-Jami...

Elizabeth Warren, chair of the Congressional Oversight Panel for bank bailouts

November 6th, 2009 at 10:51 am

"The numbers are bleak -- unemployment has surpassed 10 percent for the first time since 1983 -- and Warren is not surprised.

'Let's face it,' Warren said, 'This is sort of how we went about the rescue -- we rescued at the top and we left the bottom to kind of fend for itself -- and that's showing up in the unemployment numbers.'

Warren went on to explain that the report is really about the guarantees the Government made to protect banks' assets while leaving the public out to dry.

Morning Joe host Joe Scarborough suggested that it was the old 'socialize the risks, privatize the gains' scenario, but Warren took it one step further.

'The way I think of it is: they say something like 'Give me your money, investors and I'm going to Las Vegas and put it all on red 22. And if red 22 comes in -- woo! we are RICH. If red 22 doesn't come in, don't worry because the tax payers will pay you back the money you invested.'"

See post: The Cheerleaders vs. The Chicken Littles and comments re "A Jobless Recovery" --http://coreassets.savingadvice.com/2009/10/30/the-cheerleade...

http://www.huffingtonpost.com/2009/11/06/elizabeth-warren-we...

http://www.pbs.org/now/shows/546/index.html

Time.com -- Why it's Time to Retire the 401(k)

November 5th, 2009 at 01:11 pm

"...upgrading the 401(k) alone won't save the nation's retirement-savings problem.

Here's why: Remember, the biggest factor in whether the 401(k) works as designed has to do with when you retire. If the market rises that year, you're fine. If you retired last year, you're toast. And the chances of your becoming a victim of this huge flaw in the 401(k) plan are pretty high. The market fell in four of the nine years since the beginning of the decade. That means anyone retiring this decade had a nearly 50% chance of leaving work in a down market. In fact, your chances of retiring into a down market are even greater than that: forced retirements spike in recessions just as the stock market is tanking.

The solution: a new type of insurance. Retirement savings, it turns out, are exactly the type of asset we need insurance for. We need insurance to protect against risks we can't predict (when the market collapses) and can't afford to recover from on our own. "People tend to meld savings and insurance in their mind, but they are not substitutes," says Nancy Altman, a former Harvard professor and the author of The Battle for Social Security. "It's fine to have a savings plan as a supplement but not as the main retirement protection for everyone." She says the best way to guarantee a replacement for people's wages in retirement is by pooling risk, and the way to do that is through insurance."

http://www.time.com/time/business/article/0,8599,1929119-5,0...

Geithner "Burned Billions," Shafted Taxpayers on CIT Loan

November 4th, 2009 at 02:53 am

"William Black, professor at the University of Missouri-Kansas City School of Law is dumbfounded. 'We put ourselves on the hook in a completely inept way where we lose first. We lose entirely as the taxpayers.'

Black, a former top federal banking regulator, blames Treasury Secretary Timothy Geithner for negotiating such a bad deal on behalf of the American public.

His argument goes as follows:

The government was in no way obligated to lend the struggling CIT money and, in fact, initially refused to provide it bailout funds. More importantly, being the lender of last resort, the government should have guaranteed we'd be the first to get paid if CIT eventually filed Chapter 11. By failing to do so, 'it's like he [Geithner] burned billions of dollars again in government money, our money, gratuitously,' says Black."

http://finance.yahoo.com/tech-ticker/article/364593/Geithner...

Focus on MSNBC's Dylan Rattigan

November 2nd, 2009 at 08:22 am

The host of MSNBC's Morning Meeting is one example of an increasing number of people from across the spectrum with high-profile platforms who are stepping out, asking the hard questions and won't quit until we get some straight answers and solutions to the same unresolved systemic problems that brought us to the edge of economic meltdown.

Fortunately, because of these efforts there is a growing level of public awareness and support for getting at the root of these problems -- not just paving them over yet again as occurred with Brooksley Born who was featured in the PBS Frontline documentary, "The Warning" (see post below).

"Captiol Hill, Wall Street at odds over regulation"



"Is Wall Street making a comeback?"