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Follow up on regulators
Hello again, In yesterday’s post, “a proposal for change, part II,” I said of the leaders and ideas of regulators needing to change: “Regulatory agencies also need to change. Their primary sin in both the dot.com era, and the mortgage bubble era, was that they lacked the spine to reign in drunken frat-boy behavior. This is largely a leadership issue. Unfortunately, the leadership of these institutions is appointed by Congress and without support from the Legislature, regulatory heads usually blink when confronted by...
read moreIBM making a bid for Sun Microsystems
Hello all, A very brief posting this morning. IBM is bidding to buy Sun Microsystems. As I said in a blog posting earlier this month, businesses are starting to behave to the financial market conditions in a rational manner. They are deploying their cash and cash equivalents to buy rival companies whose shares of stock are on sale due to the collapse of the stock markets. Think about what it takes in order to spend billions of dollars in the midst of economic conditions that are poor and where the environment is described by many as...
read moreA proposal for change, part II
A week ago I published the first part of, what I called, “a proposal for change, part I.” Here is part II of that missive. Recall that in the first part of this post I addressed the Institutions that needed changing if the economy was to regain a firm footing and start to recover. Today’s post deals with the final two elements of the economy that need to change. Namely, the leaders of institutions and the ideas of the leadership. Because of the close overlap with leadership, the ideas portion will be included, too. 2 &...
read moreStaggered board terms
Huh? What are “staggered board terms?” They are a little understood evil that has strongly contributed to the financial crisis and resulting recession. Let me explain. Was the financial crisis caused by poor financial institutions management decisions? Yes. Then fire the idiots! Unfortunately, that is harder than it sounds. Who has the authority to fire a poor-performing executive? The board of directors is the only entity with that power. So why don’t boards fire poor performing executives, after all, it’s their job...
read moreOverview of the proposed regulatory changes
I feel as if the talk of regulatory change is one of the most important national discussions taking place right now. Count on continued updates here on ze blog outlining the proposed steps. The rumbling in the District of Columbia is as follows: giving the Federal Reserve new powers, including… – the ability to monitor broad risks that could potentially affect the economy – the ability to take mitigating actions against identified risks Commentary: As you know, I have been saying for months that it was important that a...
read moreA wee bit of progress
The major stock indices have rallied, with the whole thing starting off last Tuesday. Encouragingly, there has been good news circulating to accompany the rally. For example, AIG has disclosed where it spent its bailout monies. While distressing to some, transparency helps to reestablish trust, even if your particular take on the AIG fund distribution is negative. Additionally, we are getting greater national discussion of financial industry regulatory change. This is the sort of news that should lead to a partial restoration of investor and...
read moreIndex fund volatility
A relatively quick missive… There have been several academic studies that have tried to track the effect of index funds on the upward momentum of the stock market. In case you didn’t know, an index fund is a mutual fund designed so that its performance very closely matches that of a financial market index. The most popular of these sorts of funds track the performance of the S&P 500. The problem with the funds is that as new monies are invested in them they trigger a commensurate amount of purchases into the various individual...
read moreBottomed out?
Happy Friday everyone, As I am sure you all know, the financial markets have rallied over the previous three trading sessions. The initial spark was Citigroup having released the news that their results for the first two months of the year were better than expected and that they were actually profitable. This is a good sign for the economy. Fear about the health of banks is what has been the predominant driving force behind the stock market tripping and falling down. So does this rally indicate that we have reached a bottom? [By the way, even...
read moreSpeak of the devil, so to speak
So just after my comment earlier today that regulators need to begin talking about new regulations to better shepherd the financial markets, Ben Bernanke, Chairman of the Federal Reserve, said, “…the time for such a longer-term discussion has come…”. Shazam! What exactly did Bernanke propose? Well the details are a little thin at this point, but here is what has been stated: He focused on four things: systemically important and interconnected firms; financial infrastructure; regulation; and addressing systemic risks...
read moreA proposal for change, part I
With this post I am going to take a chance and try and make some suggestions as to what needs to change in our economy in order for it to survive its current credit-crunch spawned problems, permanently change, and thrive into the far future. Whew! Here goes… I have been saying for many months now that three things need to change before the economy stabilizes and recovers from its problems. Those three things are: the Institutions that got us into this mess need to change the Leaders that headed those institutions need to change the...
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