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Sunday November 8, 2009

DrStockPick.com Article!

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Let’s call it what it is; It’s Reagan’s Fault!

The government, both state and federal, is on a feeding frenzy to save the banks, the real reason is that the banks are the feeding ground for our politicians, in fact any office seeker is beholden to the banks for their financial support. As such there will never be any meaningful control over these institutions.

There are now 140 fewer banks then there was last year, and the too big to fail have gotten even larger, and now

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In the midst of the 1990s bull market, one lone regulator warned about derivatives’ dangers - and overnight became the enemy of some of the most powerful people in Washington …

In The Warning, veteran Frontline producer Michael Kirk unearths the hidden history of the nation’s worst financial crisis since the Great Depression. At the center of it all he finds Brooksley Born, who speaks for the first time on television about her failed campaign to regulate the secretive, multitrillion-dollar derivatives market whose crash helped trigger the financial collapse in the fall of 2008.

“I didn’t know Brooksley Born,” says former SEC Chairman Arthur Levitt, a member of President Clinton’s powerful Working Group on Financial Markets. “I was told that she was irascible, difficult, stubborn, unreasonable.” Levitt explains how the other principals of the Working Group - former Fed Chairman Alan Greenspan and former Treasury Secretary Robert Rubin -

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Here's an entertaining scene from Secretary of State Hillary Clinton's visit to Russia from Tom Lasseter of McClatchey.  I suppose having planted questions like the Putin telethon is a step up from the Obama visit, which was banned from most television. 

Freshman Pavel Yankovsky was among the first to take the microphone: Nervously, he inquired about the financial crisis and why it started in the U.S. Like all the students who spoke, his English was good and his question seemed well rehearsed.

Clinton walked the audience through an abbreviated history of bad mortgages, derivatives and the false notion that free markets are infallible.

"It all seemed like a great idea at the time," she said, launching into an explanation of how the need for more checks and balances in the economy reminds one of the balance of power in the American government.

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Fred Hiatt of the Washington Post has a new column which digs up a number of quotes from American officials over the years which illustrate how often they have been willing to assume a certain level of rational thinking going on inside the Kremlin with regard to Iran.  Just because it is technically in Russia's interests to not have Iran possessing nuclear weapons, doesn't mean that they will act on those interests.

It might be, for example, that Russia understands the value of keeping Iran nuclear-free, but values even more the fruits of its commercial and military trade with Iran.

It might be that Russia believes that the stalemate status quo is pretty close to ideal. Iran can be delayed in its progress toward nuclear status but also prevented from normalizing relations with the United States and the West. And as long as those relations are

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So how should we look at today’s jobs report -- as good news since the number of jobs we are losing is slowing significantly, or as bad news since the unemployment rate is jumping? Personally I think that the number of jobs is the more significant of the two, since the data is more reliable and because it is the number of jobs that actually drives the economy. The unemployment rate is a lagging indicator of the economy while the number of jobs lost or created is closer to being a coincident indicator. The graph below shows both the unemployment rate as well as the year-over-year percentage change in employment. Based on the unemployment rate, things were actually worse in the 1982 recession, but in terms of employment growth, this downturn has been far worse than anything seen in the lifetimes of anyone but the most senior of ...

Initial claims for unemployment insurance rose by 4,000 this week to 558,000. The four week average rose by 8,500 to 565,000. As the graph below shows (from http://www.calculatedriskblog.com/), we are well past the peak, in both time and level. The peak of the four-week average was 18 weeks ago and 93,750 higher than we are today. Historically, claims have peaked right near the end of a recession. Unless the NBER surprises us when they get around to dating the end of this recession, that does not appear to be the case this time. The rise in the four-week average could be the start of a pattern like we saw in the last two downturns, where initial claims started coming down sharply but then plateaued and remained elevated for an extended period of time. The current levels are still consistent with the economy losing jobs. We will need to see the number ...

Archer Daniels Midland Company’s (ADM) fourth quarter 2009 EPS tumbled due to a rise in the cost of corn, a fall in average selling prices and weaker demand for agricultural commodities amid the global economic recession. EPS came in at 10 cents, below the Zacks Consensus Estimate of 42 cents, and was down 83% year over year compared to 58 cents reported in the prior-year quarter. The agricultural industry has been reeling under the fall in commodity prices. Moreover, ethanol-related businesses have been grappling with a slump in demand for corn-based fuel, a gasoline substitute. With oil prices hovering around $70, the production of ethanol is losing its attractiveness. Total revenue fell 24% to $16,532 million due to the decline in average selling prices, partly offset by an increase in sales volumes. Total segment operating profit plunged 73% to $208 million. Lower average selling prices resulted ...

Or you could take heed of Bill Clinton’s former labor secretary Robert Reich. He reckons we’re not in for a “U” or a “V” or an “L” shaped recovery but an “X”. This from underground investor Jon Herring, writing for Investor’s Daily Edge:

We don’t usually care much for the Marxist musings of Clinton’s Lilliputian former labor secretary, Robert Reich. But he got it right when he recently commented on how the recovery from this recession will look.

It will not be a V-shaped recovery, nor a U. But an X.

“This economy can’t get back on track, because the track we were on for years […] simply cannot be sustained. The X marks a brand new track – a new economy. What will it look like? Nobody knows. All we know is the current economy can’t ‘recover’ because it can’t go back to where it was before the

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Back in the Bush II heydays, I always thought of Russia's Ambassador to NATO, Dmitry Rogozin, as a tongue-in-cheek answer to the appointment of John Bolton to the United Nations (minus, of course, the overt racism of the former).  Among others, Paul Goble recently told me in an interview that more attention should be paid to the choices the Kremlin makes in its key diplomatic appointments - and that Rogozin is far from a constructive presence.  Russia's NATO ambassador has certainly won the longevity contest compared to Bolton (though this is due to, ya know, America's habit of democratic transfers of power), and currently spends his days giving interviews about Georgia and spearheading the disaggregation strategy of Europe - even proposing that NATO itself is plotting against the reset diplomacy of the Obama Administration.  Removed from officialdom, Bolton spends more ...

Back in the Bush II heydays, I always thought of Russia's Ambassador to NATO, Dmitry Rogozin, as a tongue-in-cheek answer to the appointment of John Bolton to the United Nations (minus, of course, the overt racism of the former).  Among others, Paul Goble recently told me in an interview that more attention should be paid to the choices the Kremlin makes in its key diplomatic appointments - and that Rogozin is far from a constructive presence.  Russia's NATO ambassador has certainly won the longevity contest compared to Bolton (though this is due to, ya know, America's habit of democratic transfers of power), and currently spends his days giving interviews about Georgia and spearheading the disaggregation strategy of Europe - even proposing that NATO itself is plotting against the reset diplomacy of the Obama Administration.  Removed from officialdom, Bolton spends more ...