James H. Wang

Fake Sirius News Report Outrages Investors

The only question of course is that if it is possible for them to do this with Sirius (which in most respects you can say is pretty well followed), what can you say about other stocks, especially more thinly traded/researched ones?

Perhaps it's the last death throes of a withering industry... but given how blatant this one was, I doubt it.

Looks like big media still has one viable revenue model.

General Electric's Strange Days

GE Capital. That's the thing though—we don't know enough about their balance sheet and considering the other financial institutions, it can easily be a black hole even if everything else is profitable.

Besides what, don't forget that GE's phenomenal "beat analyst expectations by a penny" has been driven largely by GE Capital. Slowly, it ballooned to a huge proportion of GE's total revenue.

With the engine of GE Capital no longer functioning (and blowing up), would we really say that GE has lost enough of its value? GE began to rely too much on financial services and side businesses that are not its core strength. I think we'll start to see the consequences of this act for years down the line, even after recovery.

Freddie Mac Is Back for More of Your Grandkids' Money

And great-grandkids' money, with the way things are going with Freddie Mac, Fannie Mae, AIG, and all of the other "not nationalized" institutions.

You might be right, but we don't need conspiracy theories for our politicians to do stupid things and throw our money at financial institutions with lots of lobbyists.

They've done these sorts of things on their own prerogative plenty of times.

Barron's Calls a Bottom

They might not be wrong, but they'd probably be more credible if they (along with the other analysts) haven't called it quite a few times already.

2009 Depression Will Be Nothing Like 1929

I've heard your reasoning from a multitude of macroeconomics professors and researchers. Each time, they give a prognosis of "this is why this is the bottom"—without fail, they continue to revise downward.

Of course, it's easy for them to do this. They have tenure.

The fact of the matter is, we THOUGHT we had a handle on why the Great Depression occurred. Your reasoning is not uncommon in why it could never happen again, both before this happened, and after.

Ever thought that perhaps, we were wrong? We never did get a chance to test our theories on what exactly would have halted and turned around our economy. We take what natural experiment there was, in terms of the less-than-amazingly-ef... New Deal, and the massive stimulus of WWII, and determine that's what did it.

Overall, if we were right, the stimulus should be doing more than it actually is at the moment. Although it hasn't had time to "trickle" through the economy, there should be some sign in the markets, which are forward looking. Even if you dismiss the markets as irrationally panicking, we should have signs in real indices (Purchasing, Baltic Dry, etc.).

We aren't seeing it.
You're right that we have these things. It seems you've merely neglected to realize that perhaps our assumptions about how these general, real (not financial, meaning not 2001 and not 1983) downturns function were simply wrong.

We've finally gotten a chance to test our theories about them. It's turning out rather poorly.

As Unemployment Grows, Tech Jobs Hang On

Tech was already hit pretty hard in the last recession, and wasn't as overvalued as most other sectors. Even though it is a growth sector, many "value plays" were even more highly valued in PE ratios and outperformed it.

That's the main reason why it isn't cutting quite as much of the rest of the economy. It was already somewhat low in terms of valuations.

However, this situation will only hold for so long if the economy continues to get worse. Thinking that tech will forever be insulated from the worst of the recessions for some reason would simply be wishful thinking.

EU Comes Up Wanting Regarding Eastern Europe

It's the wrong tone more because Germany is being somewhat of a hypocrite. What about THEIR bank rescue fund? Or what about these bailout of the auto makers? It's pretty much always been this way though.

There's strict "fiscal responsibility" balances and measures, but France and Germany have always been for the most part exempt from follow them.

I agree with your article in any case. The EU is still far more partisan than most observers have been willing to admit for quite some time now.

Obviously, when times are good, everyone celebrates together. It's times like these that show us the priorities of the countries. The biggest, Western European countries dominate the Union and will continue to do so.

I wouldn't be surprised if, even after things become sunny again, the peripheral countries will be more hesitant to throw their lot in with the EU.

The AIG Scandal

The crime is that as an insurance specialist AIG didn't predict it.

That's ultimately the sad part of this entire sordid affair. AIG actually THOUGHT it could weather whatever came.

Obviously, if you constantly predict sunny weather, why even own an umbrella?

It's always easier to understand things in hindsight, but even putting aside valuations of these assets, they should have been able to see that their correlations were all going to end up being 1 (everything would go to hell at the same time) from the historical example of LTCM.

It's not like that affair wasn't well-publicized and studied. AIG had many of the SAME types of hedges, swaps, and insurance agreements that they had. It's not an "unprecedented" crisis. The particulars may be different, but what destroyed them were many of the EXACT SAME ASSETS. Given that they're paid for this, they should have at least realized the problems with THESE.

It's not a problem of inadequate capital or any deliberate attempt. It's more unforgivable shortsightedness.

Wall Street Breakfast: Must-Know News

End cycle of capitalism, bobbobwhite?

This is a system that has helped pull the entire world into a new age, bringing millions out of poverty and in absolute terms, prosperity.

Even now, though we can't splurge, I'd say we're far better off than living on the edge of subsistence.

Capitalism does not always mean corruption. The pursuit of opportunities, if you define that as "corruption," we might as well have never left our caves.

The system, just like any tool, just is. In the end, it's what people do with it that bring morality into—or drive it out of—society.


On Feb 27 10:35 AM bobbobwhite wrote:

> We now may be seeing what happens at the end cycle of capitalism.
> It may be that capitalism eventually corrupts each person in it so
> totally that at the end, it becomes unworkable and collapses as a
> system due primarily to the dishonor, lies, deceit and criminality
> resulting from the incremental growth of runaway selfish greed over
> the years that served to place the good of the individual above the
> good of society as a whole.

The New Unwind

I do agree very much that this is necessary though.

One way or another, we couldn't keep running an economy on fumes alone.
As others are saying, this doesn't necessarily mean anything long-term in a change to our habits, but for that front, we'll all just have to wait and see.

Goldman: Stimulus Plan Can Work

If you offered to pay a man a whole bunch of money and then asked him what he thought of the plan, I'm sure that he would say it's a great plan too.

There's a great deal of benefit that Goldman Sachs and the others will be deriving from this plan, even if money is not infused in them directly. Their counterparties, clients, and whatnot would all benefit from this which would help the remaining investment banks/universal banks.

They might be right. But I wouldn't be taking it purely on their word.

Privatize the Banks, Already

There's one big difference between defacto nationalization, and actual nationalization.

In actual nationalization, the shareholders who should get wiped out get wiped out. There's very little reason NOT to do a calculated, planned, and rationalized nationalization and quick reprivitization with the broken up pieces (not talking about a Lehman Brothers type situation, with billions of fund assets frozen in bankruptcy proceedings and whatnot).

Even Lehman, which was an unholy mess, got most of its North American operations integrated with Barclays Capital relatively quickly. It isn't a matter of this solution not being feasible.

No, it seems the obstacle remains political, and not economic. The only question is how long this state of affairs will remain before it becomes untenable.

Are U.S. Banks Really Worthless?

The problem isn't whether or not the banks "could eventually be profitable again."

This is why we have the policies we do on bank bankruptcies. Unlike other industries that run out of money and can do longer continue operations, banks can just dither.

It is NOT healthy for banks to be zombies in the economy, continuing to take money when they're underwater.

What seems to be not kept in mind for this article is that what you want is comparative advantage.

A "great" 5% ROE opportunity is not so great when everyone else is making 10%. Likewise, dead banks might still be able to perform some essential functions, but they sure as hell are not better than healthy ones.

7 Signs of an Economic Bottom

Although you might be right about a bottom, that doesn't necessarily mean we're out of the woods. If consumer and investor confidence is not restored, the economy will simply stay "bottomed." For an example, witness Japan's lost decade.

They bottomed too. They just stayed there.

This particular lack of confidence is our main problem, with the fall being simply a natural consequence of it. We need to take measures that help make institutions and consumers feel safe to spend again.

We'll see soon enough, I suppose, whether or not this stimulus and these "stress tests" of the banks will do it. I'm somewhat doubtful, but here's for hoping we'll be pleasantly surprised.

A Few Things to Consider Before We Re-Regulate

Agreed, but shouldn't we always do this?

You're right, and you're right that this sort of process usually doesn't happen—but honestly, it shouldn't be done just for securities regulation and should apply to everything Congress legislates.

"Think before you legislate."

If only we could actually believe politicians will take to doing that for anything.