It was one year ago that Lehman Bros. went to the great investment bank in the sky. But it was also when the feds arranged the shotgun marriage of a failing Merrill Lynch to a moribund Bank of America (NYSE:BAC). And AIG’s collapse into federal hands was taking shape, if not yet a done deal.

Years of debt and securitization finally caught up to the FIRE (finance-insurance-real estate) sector of the economy. The titans of finance refused to come clean about the real value of the ‘assets’ they sat on…and finally it came time to pay the piper.

Dan Amoss, whose recommendation of Lehman put options generated 462% gains earlier that summer, wrote in this space a year ago, “Think about how much better off Lehman Brothers would be if its management hadn’t put off the process of reporting losses, dumping impaired assets and raising new capital. Would its stock

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 Goldman Sachs Would Have Collapsed If Not For Henry Paulson.

The Dow slipped a bit yesterday – only 39 points. Everyone is watching. They want to see how far this rally carries on. Many think it is more than a bear market bounce; they think it is for real.

The prevailing opinion is that quick action by the feds avoided a more serious meltdown. Ben Bernanke says he was working to prevent a “second great depression.”

And now that the crisis is past, the economy is slowly climbing out of its hole. The second quarter showed GDP falling at 1% per year in the US… rather than the 6.4% rate recorded earlier in the year. Housing sales have perked up. Oil is trading above $71 – a sign of renewed economic activity. And gold seems to be getting ready for another assault on the $1,000 mark – a sign of growing inflation pressures.

At

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Woohoo!…U.S. stocks racked up their biggest quarterly advance since 1998! The Standard & Poor’s 500 Index soared more than 15% between March 31 and June 30 - lifting its year-to-date performance marginally into the black, and breaking a streak of six consecutive quarterly declines for the S&P 500, the longest since 1970.

This champagne-cork-popping performance obscures a few trends that should be worrisome to the celebrants. First, the S&P 500 has gained no ground whatsoever since May 8, the first trading day after the Federal Reserve triumphantly announced the results of its banking sector “stress tests.” Second, the BKX Index of financial stocks has DROPPED more than 16% since May 8. (As we have noted in prior editions of the Rude Awakening, the finance sector has been leading the overall stock market - both to the upside and downside - for the better part of four years.

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In today's NYT, Casey Mulligan presents an interesting picture of GDP during the "1980-82 recession" -- the conjoining of the two NBER defined recessions in 1980 and 1981-82. Based on the comparison with the current recession, he concludes:

While the job losses, foreclosures, stock declines and other casualties of the current recession have been very painful, substantially more bad economic news is needed to make this recession worse than the downturns of 1980-'82, at least in G.D.P. terms.

Here is Professor Mulligan's graph.

Figure from C. Mulligan, "Worse than 1982?" Economix (June 3, 2009).

Here, without comment, are three graphs of employment and industrial production, but normalizing the start date instead of the end date. Why one would want to normalize on the trough especially when the trough date is unknown, I'm not certain, but there's nothing to stop one from doing so. But, as I say, I'll

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“We do not want a disclosable event.” Thus spoke former Treasury Secretary Hank Paulson to Bank of America CEO, Ken Lewis, last December.

Paulson’s remark came in response to Lewis’ request for a letter from Fed Chairman Ben Bernanke, acknowledging the government’s insistence that Bank of America acquire Merrill Lynch, despite the brokerage firm’s mounting mega-billion-dollar losses.

This one little phrase probably tells you everything you need to know about Henry Paulson, the man who put the “secret” in Secretary. And this one little phrase certainly tells you everything you need to know about the structure and actual objectives of the bailout campaigns Paulson orchestrated.

Specifically, the Paulson bailouts sought to divert hundreds of billions of taxpayer dollars toward Wall Street finance companies, and to do so as secretly as possible. In the name of “systemic risk,” the former Treasury Secretary dispensed hundreds of billions of dollars to

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div align=”left”emOligarchy: A form of government in which all power is vested in a small but dominant class or clique distinguished by financial and/or political power./em/divdiv align=”left”em/em/divdiv align=”left”US observers often comment disparagingly on the nature of the incestuous relationships between political power and the most powerful businessmen in Russia, known collectively as the Oligarchs. Most owe their wealth to their manipulation and indeed corruption of the bureaucracy and political class, which has allowed them to capture and shift tens of billions in resource revenues offshore. Ironically, the relationship between the State and the Oligarchs has moved decisively in favour of the Russian government in the current crisis, which is now seeking growing strategic control over key assets lost in the Yeltsin years, while in the US the financial elite remain unbowed. In fact, this capture of central government by a private sector elite in common in developing nations across Asia …

The winds of feigned outrage promise to blow hard from Washington, D.C. today.  The new president will announce limits on executive pay for companies slopping at the TARP trough.  And at the other end of Pennsylvania Avenue, Congresscritters will hold hearings on Bernie Madoff’s Ponzi scheme.

Thus it’s pretty clear the power elite has settled on a dual-distraction strategy.  Madoff and executive pay will serve as convenient whipping boys for public consumption, lest the booboisie actually wake up to how the culture of bailout and endemic legalized corruption is robbing them blind.

Madoff is especially convenient in this regard.  It’s so easy to take the case of a guy who committed obvious crimes that anyone with room-temperature IQ can understand, and make him the poster child for everything that’s gone wrong in the finance sector and even the wider economy the last several months.  Sure beats having to slog through things

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Stocks featured in this article are: McDonalds Corp. (MCD), Republic Services, Inc. (RSG), Raytheon (RTN), Sunoco, Inc. (SUN), and Waste Management Inc. (WMI).

< ?DART(15);?> There has been a lot of talk about dividends lately.

Unfortunately, much of the talk is about who's going to cut theirs.

We've all read or heard about mainstream companies suddenly deciding to slash dividends or cut them altogether.

Pfizer is one example, although they were apparently trying to finance their purchase of Wyeth. But regardless of the reason, the investor who was told his dividend would be slashed by 50% was likely none too happy.

Most of the bad news however has come from the financial sector, where companies have been forced to stop their payouts.

But there's no reason to quit looking for good stocks with good dividends.

Smaller growth companies will typically not pay a dividend

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T. Boone Pickens thought oil was going to hit $150 last year and go up from there. I don’t mean to pick on him. He’s worth about $3 billion. He’s earned his stripes. I have nothing but respect for the man.

Pickens wasn’t the only person who got 2008 wrong. There were plenty of others.

When it comes down to it, anybody can make predictions. It’s not very hard. But it is hard to make ones that do what they purport to do: predict.

My advice is to take them with a grain of salt. If predicting the markets were so easy to do, most of Wall Street’s brightest fund managers wouldn’t have lost 40 percent or more last year.

I’ve made my share of predictions in the last couple of issues, “A Preview of 2009?” and “Six Predictions for 2009″.  So I decided to go back a

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Today’s financial melt-down continues to find investors running for the sidelines. Some, however, say that the time may be near to start thinking about getting back into the finance sector. As with any downturn, quality does exist if a closer look is taken. Larger institutions, that were the darlings of the mortgage banking system in the past, may not be the right play at the moment, but smaller banks with the tried and true main street “neighborhood banker” tag may be. Prudence and solid financial values define this type of bank.

Allegiance Bank of North America., a full service commercial bank based in Bala Cynwyd Pennsylvania, offers a full range of personal and commercial banking services. Chartered in 1998, the bank has five branches and a non-active subsidiary taking the form of Paramount Mortgage & Capital LLC.

From a general point of view, the company is weathering the banking crisis in

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