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Swass

Swass
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  • The SEC soon will unveil a plan to stabilize money market funds, WSJ reports, requiring fund firms to set aside capital in reserve and placing restrictions on investors who wish to withdraw all their money at one time. Fund industry execs say the new rules could hurt returns and limit their ability to lend to corporations. FII -5.8%, SCHW -3.4%, LM -2.2%.  [View news story]
    Restrictions on withdrawing money? It's our money!
    Feb 7, 2012. 10:18 AM | 3 Likes Like |Link to Comment
  • The Fed's ZIRP is and will continue hurting the economy, argues Charles Schwab, forcing savers out of safer assets into stocks or into long-term bonds that will "backfire on them if inflation returns." Schwab (SCHW) itself is getting slammed, seeing profits cut by nearly 50% in a recent report as it waved fees so money market clients didn't see a negative return.  [View news story]
    Tack: Another thing in addition. The Fed is trying to 'reflate' the bubble. That much I think we can all agree. If what you said were correct, then all they would have to do is raise rates and all the sudden everyone would want to borrow. Raising rates in a time when there is little interest in borrowing will do essentially nothing. Perhaps it would even decrease demand for loans even more, resulting in increased downward pressure on prices and outright deflation. That is exactly the opposite of what the Fed wants, even though they'll never be able to get what they want.
    Feb 6, 2012. 04:46 PM | 1 Like Like |Link to Comment
  • The Fed's ZIRP is and will continue hurting the economy, argues Charles Schwab, forcing savers out of safer assets into stocks or into long-term bonds that will "backfire on them if inflation returns." Schwab (SCHW) itself is getting slammed, seeing profits cut by nearly 50% in a recent report as it waved fees so money market clients didn't see a negative return.  [View news story]
    Usually, but again I'm just suggesting you're putting the cart before the horse. In this case, I contend that rising rates are the result of increased interest in borrowing. In order to understand my point of view, you have to think about the relationship to outstanding credit (money) to prices on goods and services. The more money chasing any one good or service, the higher the price goes. When people actually begin to borrow money, they begin pushing prices higher by using the money expansion capability of credit, which results then in higher interest rates. Higher interest rates come about due to the increased demand for yield when faced with rising inflation due to increased demand for credit.
    Feb 6, 2012. 04:15 PM | 1 Like Like |Link to Comment
  • The Fed's ZIRP is and will continue hurting the economy, argues Charles Schwab, forcing savers out of safer assets into stocks or into long-term bonds that will "backfire on them if inflation returns." Schwab (SCHW) itself is getting slammed, seeing profits cut by nearly 50% in a recent report as it waved fees so money market clients didn't see a negative return.  [View news story]
    1) Depends on the bonds.
    2) That's unlikely, IMHO. BBRO's correct in that there is not a large demand for loans right now, even though interest rates are low. This is not because of ZIRP itself, rather ZIRP is the result of no demand in loans. People don't want a loan to expand or improve their business, or personal loans to buy lots of new stuff they don't need, if they feel the economy is in the tank and they might not be able to afford it. Years ago (for example), with housing going up and up and up, the average home owner saw the trend of increasing home values, and thought it would continue forever. So there was no reason not to lever up. Now, that is not the case. They see decreasing asset values, and believe the risk is too great to take a loan.
    Feb 6, 2012. 01:49 PM | Likes Like |Link to Comment
  • "(Today) is going to be the top day," writes Tom McClellan, saying his sentiment indicators are flashing big warnings about excessive bullishness. He thinks the risk of missing out on further upside is "pretty low."  [View news story]
    Right on. McClellan has the bear's backs.
    Feb 6, 2012. 10:09 AM | Likes Like |Link to Comment
  • Berkshire Hathaway's (BRK.A +1.1%) Burlington Northern railroad plans to increase capital spending to $3.9B this year in order to boost capacity for coal shipments as demand increases with oil pipelines maxing out. The proposal includes $2.1B for the core network and another $1.1M on locomotive, freight car and equipment acquisitions. [View news story]
    I wouldn't be surprised if Obama and Buffett had an agreement that he would help the President with PR to raise taxes and such in return for killing the pipeline. His railroad will become far more valuable and profitable if energy cannot be cheaply sent by pipeline. It also encourages alternative energies such as coal, which obviously needs to be shipped by train.
    Feb 1, 2012. 02:43 PM | Likes Like |Link to Comment
  • With his eyes on a second term, President Obama is due to give his State of the Union address tonight, when he will reportedly push for tax breaks for insourcing manufacturing, help for the troubled mortgage market, and incentives for alternative-energy development. He is also likely to again call for tax hikes for the rich.  [View news story]
    That is a very comprehensive list of phrases. Is a 2-litre bottle of Vodka sufficient to celebrate?
    Jan 24, 2012. 12:40 PM | 1 Like Like |Link to Comment
  • With his eyes on a second term, President Obama is due to give his State of the Union address tonight, when he will reportedly push for tax breaks for insourcing manufacturing, help for the troubled mortgage market, and incentives for alternative-energy development. He is also likely to again call for tax hikes for the rich.  [View news story]
    I think the president is quite clueless with regard to economics. The article on his meeting with Steve Jobs (and other CEOs) in California showed he had really no idea how to bring manufacturing back to the United States. Politicians think creating temporary tax incentives, or bullying companies, will bring those jobs home. They are gone, and they will stay gone until government is forced to abandon it's efforts for a planned economy.

    Factors including minimum wage laws, environmental regulations, burdensome financial regulations, tax policy, healthcare policy, employment law, organized labor unions, wasteful higher-education, etc, must all be considered. Some should be scaled back and others eliminated. Failure to do that will ensure that our children have a very dim future ahead of them.

    The majority of all jobs out there are in the service sector. Providing services to each other produces nothing. Kids worry more about their tweets and who they friended than learning about engineering. Government can't make them care. They don't care because of government. They've been made to believe, because of big brother, that they are owed a bright future and job.

    Republicans would be well to learn this, too.
    Jan 24, 2012. 11:54 AM | 1 Like Like |Link to Comment
  • Oil prices will rise to $146/barrel by 2035 as China, India and the Middle East consume more energy, the U.S. EIA predicts. The agency also forecasts that U.S. production will increase 22% from 2010-2020 to 6.7M bpd, allowing the country to rely less on imports, and that it will become a net exporter of natural gas by 2021.  [View news story]
    ... so you're saying we've got some time. lol
    Jan 23, 2012. 01:12 PM | Likes Like |Link to Comment
  • "Get a grip ... trade in the now," says Jeff Macke, offering advice for those fretting about missing the recent powerful rally. After a 12% move in a month, don't try to play catch-up - instead, "get long at a measured pace" by using your cash to buy what are certain to be coming dips.  [View news story]
    Please do go long so I have shares to sell short.
    Jan 19, 2012. 01:50 PM | Likes Like |Link to Comment
  • Angry Birds creator Rovio won't list in 2012 but still eventually wants to carry out an offering. "This year is way too early for an IPO...and we are in a very early stage of the Angry Birds lifecycle," the company says. Rovio hasn't yet decided where to list, with New York and Hong Kong among the favored options.  [View news story]
    I think they need to come up with something more to offer, otherwise they may become the tech equivalent to the musical one-hit-wonder.
    Jan 19, 2012. 12:00 PM | Likes Like |Link to Comment
  • In "a largely symbolic vote aimed at staking out election-year positions on government spending," the House rejects 239-176 - not enough to avoid Pres. Obama's veto - the $1.3T increase in the federal debt limit. Ron Paul, as always, votes against the debt hike but calls the vote a “farce” because lawmakers already gave Obama the power to lift the cap.  [View news story]
    Ron Paul calls it.
    Jan 18, 2012. 08:14 PM | 3 Likes Like |Link to Comment
  • The President's statement denying the application for the building of TransCanada's (TRP) Keystone XL Pipeline: The rejection is "not a judgement on the merits of the pipeline, but the arbitrary nature of (the Congressional) deadline." (earlier)  [View news story]
    Curious statement. That would suggest he should have rejected all of the bailouts due to the arbitrary nature of the deadlines associated with them. "If we don't pass this right now (without reading it), _________"
    Jan 18, 2012. 04:04 PM | 6 Likes Like |Link to Comment
  • Is Europe About To Unravel? [View article]
    In a manner of speaking, I was alluding to a similar point in my comment above.

    Everyone is trying to focus on, "How do we prevent an economic collapse/correction from occurring?"

    The simple fact is, you can't. You can either make the problem worse by trying to manipulate, which will result in a much larger correction occurring down the road, or allow the market to correct itself. They are trying to manipulate, which ensures the maximum amount of pain and duration.

    There is no way out of this that doesn't involve pain. The question is, how bad do you want it to be and how long do you want this to go on? The sooner the market is allowed to correct, the sooner growth will occur.
    Jan 18, 2012. 11:50 AM | Likes Like |Link to Comment
  • Is Europe About To Unravel? [View article]
    "Lacking currency devaluation as a tool to resolve imbalances, European policymakers turned to fiscal austerity."

    This statement suggests the author believes QE resolves 'imbalances.' This is naive at best. Only the market itself can correct or resolve imbalances. Attempting to devalue currency rewards government for it's excessive spending, hurts savings and productivity, while pushing lucky capital into unproductive assets like gold or silver as a means of saving wealth. It also encourages massive speculation.

    Fiscal austerity isn't the solution itself -- it's part of how free market forces naturally correct imbalances and punish those that deserve to be punished. QE punishes those people who did everything right, rewards those that did everything wrong (especially government), and destroys real wealth.
    Jan 17, 2012. 12:55 PM | 5 Likes Like |Link to Comment
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419 Comments
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