StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between

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  • The Ownership Society, International Edition   8 years 13 weeks ago

    Looks like we'll get a temporary ban on shorting, similar to what UK did today.

    The seem to be considering an RTC type entity to take on the bad debt . . . announcement from Pelosi, Bernanke, Paulson tonight.

    Finally some movement and announcement from trusted sources (Pelosi, Bernanke, Paulson) . . . good start!

    Injecting liquidity is the right thing to do . . . the best way to prevent Depression 2.0.

  • McCain or Obama, who has the better economic policy?   8 years 13 weeks ago

    As an objectivist, capitalist, low-income, highschool drop-out, who does not consider herself an ignorant citizen nor a burden on society, I think you may be as biased as those who live off the system. I have seen both sides of this coin and the answers are not as simple as either "more government hand outs" or "better tax cuts for free trade." Tax collection and distribution have a lot to do with econonmic policy, there is a balance that somehow must be maintained, and it is very difficult to decide who is best suited for this task. Whoever wins this election, I do not envy him.

  • The Ownership Society, International Edition   8 years 13 weeks ago

    Allowing the big five investment banks to leverage 40:1 was a big mistake (2004 SEC rule change)

  • The Ownership Society, International Edition   8 years 13 weeks ago

    McCain is actually saying this . . . where was he when his friggin' Republican friend Cox repealed the rule a year ago??

    What a piece of work. He must be reading my posts on this board ;-)

  • The Ownership Society, International Edition   8 years 13 weeks ago

    He can't distance himself from the sitting administration fast enough. This is rather amusing.

  • The Ownership Society, International Edition   8 years 13 weeks ago

    Jim Glass,

    Was your title some sort of pun?

    (sorry, couldn't resist)

  • The Ownership Society, International Edition   8 years 13 weeks ago

    I think McCulley does a good job of putting into laywoman's terms ;-) why we have to do these bailouts. Massive deleveraging (what the banks are doing right now) leading to asset deflation is a negative feedback loop . . . which of course means it leads to more severe asset deflation if it isn't addressed by someone countering with leveraging (the government in this case) . . . so the bailouts are necessary right now.

    Read the whole thing.

  • The Ownership Society, International Edition   8 years 13 weeks ago

    See site below - we get labor market data tomorrow, and other action on Friday. We are about to see if "much worse" comes to fruition.

    Edward E. Leamer

    NBER Working Paper No. 14221
    Issued in August 2008
    NBER Program(s): EFG

    ---- Abstract -----

    Monthly US data on payroll employment, civilian employment, industrial production and the unemployment rate are used to define a recession-dating algorithm that nearly perfectly reproduces the NBER official peak and trough dates. The only substantial point of disagreement is with respect to the NBER November 1973 peak. The algorithm prefers September 1974. In addition, this algorithm indicates that the data through June 2008 do not yet exceed the recession threshold, and will do so only if things get much worse.

  • The Ownership Society, International Edition   8 years 13 weeks ago

    I am tired of reading that the Federal Reserve Bank had to bail-out or rescue some failing financial institution because otherwise our whole system will collapse. What utter bullcrap. We have a time-tested process for handling a failing business: bankruptcy court. If the failing institution has huge near-term debts, then the Federal Reserve Bank could guarantee those near-term payments (and get the money back after the bankruptcy process has progressed).

    With the above system, the financial sector 'domino effect' is avoided, the failed institutions go into bankruptcy whereby smarter (or luckier) institutions can buy the assets, loans, and investments. The taxpayers don't get soaked, and the executives and the stockholders at the failed institutions don't get rewarded for bad decision-making.

  • The Ownership Society, International Edition   8 years 13 weeks ago

    I'm not a big fan of Cramer (his stock picks are worthless), but he's had it right on the macro level for a long time

  • The Ownership Society, International Edition   8 years 13 weeks ago
  • The Ownership Society, International Edition   8 years 13 weeks ago

    Michael Lewis (of Liar's Poker fame) names Cox as his #1 (identifiable) culprit in all this -- for harassing the short sellers who were trying to get the truth out about the likes of Lehman Bros. Thus keeping the market from recognizing their real situation until it was too late.

    Blame? Start Here
    1. Christopher Cox.

    ... He went as far out of his way as he could to enable the brokerage firms by harassing the small group of informed financial people who have been trying to tell the truth to the markets: the short sellers.

    They bet against the stock price of a company and so have always had a bad reputation with the public. But in this case, they are the closest thing we have to heroes.

    A man named David Einhorn is a case study. He runs a hedge fund called Greenlight Capital, which sells short some stocks and buys others. That is, he doesn't just bet against companies, but for them, too.

    Still, for some time now, he's been standing up in front of large audiences, announcing that he was shorting Lehman Brothers stock, and then explaining in great detail its dubious accounting practices.

    The SEC responded by demanding to see his firm's e-mail, hinting darkly that he was part of some conspiracy to drive Lehman Brothers out of business, and generally making him feel that he'd pay a price for telling the truth.

    Christopher Cox is probably a nice man who has no real idea what just happened. But for the way he treated people with the nerve to speak the truth to power, you should feel free to blame him anyway....
    [NY Post].


  • The Ownership Society, International Edition   8 years 13 weeks ago

    Macke, CEO of Morgan, called for action from Cox. Also CEO of Goldman Sachs . . .says naked shorting is hurting their stock and has called on Cox to do something. Ironically the CEOs of these firms are now calling for the same reforms that investors (including me) have been screaming about for over a year.

    Cox is incompetent.

    Apparently there is an emergency meeting of SEC going on right now. Washington Mutual now up for auction.

    Anyway, we were warned about Cox back in 2005.

    Prescient Article from 2005:

    Cox's SEC: Investors Beware

    The new Securities & Exchange Commission chairman seems likely to undo his predecessor's legacy of toughness

    It has been less than three years since the enactment of the Sarbanes-Oxley Act and the appointment of William H. Donaldson as Securities & Exchange Commission chairman combined to help restore investor confidence in U.S. financial markets. That's why President George W. Bush's choice of Representative Christopher Cox (R-Calif.) to replace Donaldson is such a shocker. A conservative critic of aggressive market regulation, Cox seems likely to undo Donaldson's reforms even as still-fragile financial markets struggle with the debt overhang, rising interest rates, a possible housing bubble, and the growing U.S. dependence on foreign capital. The gutting of the SEC certainly would make Wall Street insiders happy, but how can the White House be so reckless about something so critical?

  • The Ownership Society, International Edition   8 years 13 weeks ago

    "losing face internationally is just a whole lot worse than losing it within your own borders"

    Not just in the US.

    With all of the action on our financial markets, nobody here's noticing what's happening in Russia -- still a fairly significant place, with those 15,000 nuclear weapons -- where they have no subprime loan or CDOs at all!.

    Say "oil bubble bursts". And also, international investors apparently didn't like the Georgia adventure.

    Their financial markets have been closed for two days now, their banks are going bust, the gov't is pouring money into the big ones that haven't gone bust yet.

    The ruble-denominated Micex Stock Exchange suspended trading indefinitely at 12:10 p.m. after its index plunged as much as 10 percent within an hour. The benchmark fell 17 percent yesterday...

    Chris Weafer, chief strategist at Uralsib investment bank: "We’re in completely uncharted territory where the prevailing emotion is of fear and numbness. No one knows where this could stop"....

    The Finance Ministry said it was increasing liquidity for the country's three largest banks, raising lending to 1.12 trillion rubles ($44.9 billion). The country's top banks — Sberbank, VTB, and Gazprombank — will be loaned federal funds for a minimum of three months, the ministry said.

    Considering the size of the governments, that's a lot more money to them than it is to us.

    foreign investors have pulled at least $35 billion from the nation's stocks and bonds since the five-day war in Georgia last month ... Production of crude oil, the government's chief source of revenue, has started to decline even as the price of oil has fallen by a third ... the inflation rate advanced more than expected in August to 15 percent... [combined soruces]

    Interesting times all around.

  • The Ownership Society, International Edition   8 years 13 weeks ago

    Some bailout has to happen or we'd be in deep doo-doo ala Great Depression with horrible unemployment. Injecting liquidity is the right thing to do . . . Bernanke knows it and has said as much many times in the past.

    The problem is balance . . . how much and who and working the deals to make the banks cooperate (not freeze up lending). Right now everything is in knee-jerk reaction mode. If trading in financials were halted for, say a week, the majors could get together and work this out (and this includes bankers from Europe and Asia).

    As it is the train wreck continues day after day . . . just not a good way to solve the crisis.

  • The Ownership Society, International Edition   8 years 13 weeks ago

    You can talk all you want about the Republican Party abandoning it principles, but the Feds did the right thing here (even if it came a little late). The issue is a liquidity trap. If you don't bail this firms out capital will disappear, and you'll have a monetary contraction, unemployment will be way up, interest rates will go way up, and you'll get a replay of the Great Depression. The way to get out of this is more inflation to stop a liquidity squeeze. I'm a bit surprised more people aren't criticizing Bernanke for not cutting rates yessterday particularly after consumer inflation has declined.

  • The Ownership Society, International Edition   8 years 13 weeks ago

    What a bunch of idiots. Oh my God, they'll ruin all of us.

    Landslide for Obama.

  • The Ownership Society, International Edition   8 years 13 weeks ago

    Goldmann Sachs taking a huge hit right now.

    SEC needs to halt trading and give these companies time to reorganize, find international funds, whatever. These guys have to scramble to meet on weekends to hammer out deals that would normally take months. They can't even react.

  • The Ownership Society, International Edition   8 years 13 weeks ago

    Morgan Stanley now under attack.

    SEC finally put some naked shorting rules in today. Maybe too late.
    Hanging is too good for Cox.

  • The Ownership Society, International Edition   8 years 13 weeks ago

    Bakho, it's more interesting to me why so many people who believe in your list of formerly Republican values don't recognize that their party has left them behind. I can't prove it, but it seems consistent with our culture's general aversion to evidence. When I present "right wing" voters with a simple, clear fact (for example, the president and republicans had control of the government for 6 years, and we went from a big surplus to a big deficit) the responses I get are often pathetic non-sequitors ("Nancy Pelosi has a pro-gay agenda!" "IRAQ/IRAN/9-11/SAFTEY/TERRORISM all liberals are traitors!"). I see the same behavior in the other direction, of course, it's a general pattern.

    It's really important for the grown-ups to take back the debate, and to consistently call out rhetorical sins. We must recapture the notion that wise and smart people (not elites, normal people with common sense) change their conclusions when presented with new facts. The examples they see (TV pundits) are paid to maintain their farcical positions no matter what. They are not role models, they're a clown show...and we should no more emulate them in a political debate than we should put on a red nose and squirt our friends with water at a cook-out.

  • The Ownership Society, International Edition   8 years 13 weeks ago

    When push comes to shove Republican administrations don't believe in the Laissez Fairy.

    Nationalization of private business
    Fiscal responsibility
    Cut spending
    Balance budgets
    Free market
    Free trade (no steel tariffs)

    They act the opposite of everything they claim to favor. What new wonders could John (don't know much about the economy) McCain and Phil (Enron) Gramm bring to our government? "Drill, drill, drill" reminds me that President McCain might feel like 4 years in the Dentist's office.

  • McCain or Obama, who has the better economic policy?   8 years 14 weeks ago

    Since 2001, Congress supported by President Bush has passed a major tax bill almost every year. Most have reduced taxes significantly and, since they were not accompanied by spending cuts, the resulting deficits have increased the national debt. The largest revenue loss was $1.35 trillion over ten years—came from the Economic Growth and Tax Relief Reconciliation Act of 2001. The Jobs and Growth Tax Relief Reconciliation Act of 2003 reduced revenues by another $350 billion (again over the subsequent decade). Subsequent legislation cut taxes further: $146 billion in 2004, $142 billion in 2006, $51 billion in 2007, and $125 billion in 2008. The tax cuts total almost $2.2 trillion over ten years, and that total may be vastly understated if some or all of the cuts are extended beyond their scheduled expiration date of 2010.

    Today, we have a national public debt in excess of $9.5 Trillion dollars. This week congress passed a bill that will increase the debt limit to nearly $10.5 Trillion. President Bush will certainly sign it into law. This debt is a burden of epic proportions, if it is not taken care of, it will bring this nation to its knees, especially as China, Russia, Brazil, among other begin to take hold of our once economic dominance. Our children and our children's children will have to endure our recklessness. That debt is costing us $500 Billion a year in interest. After defense, Health and Human Services, it is the third largest expenditure.

    Although, supporters of the tax cuts say that it encourages investment, saving, entrepreneurialism and ultimately increases economic development and growth, the fact of the matter is, it doesn’t. In fact, following each of the tax cuts, including the disastrous AMT, business investment is down, the savings rate is at a post-World War II low and the labor participation rate has declined, just look at the numbers.
    Furthermore, the belief that rich taxpayers would invest their money and invest in the right way – domestically, is a grave mistake. There was no guarantee that investment was aimed for the U.S. Someone who is rich could invest the money in Brazil or India, with little benefit for the United States. Since the dollar is so low, a product of increase national debt, many investors, Berkshire Hathaway, being one of them, is buying foreign currency and investing in assets elsewhere. Even smaller, non-institutional investors are looking elsewhere for investment.
    Now, I will concede that revenue did increase slightly during this time, however, the revenue was not fueled directly by taxpayer dollars, it was fueled by increasing federal debt as spending increased. In essence, Bush’s so called “booming” economy, per the mantra of tax cutting logic, the public debt should be going down. Yet it is still growing, he continues to spend more. Using government projections, US debt will double under at its current pace.
    The two Presidential candidates have offered drastically different economic plans, from funding healthcare to changing the tax structure and both have promised additional fiscal responsibility. Both have proposed tax cuts.

    Under Sen. McCain’s plan, he wants to permanently extend the tax cuts of 2001, 2003, and 2006. Tax cuts would primarily benefit those with very high incomes, raising their after-tax incomes nearly twice the average of all households. Households at the bottom of the income distribution would get tax cuts and those tax cuts would be small portion of their after-tax income.
    In contrast, Sen. Obama’s tax cuts would be much more broad and equitable. It would benefit 95% of Americans, and give larger tax breaks to low- and middle-income taxpayers. The wealthy, over $250,000 would receive marginal tax cuts, and those making $500-1,000,000 would have a greater rate increase.
    The top marginal rate for McCain’s plan would be 35 percent on individual income and 25 percent on corporate income. Obama’s would be more, at 39.6 and 35 percent, respectively. However, Obama encourages corporations that invest in the U.S., in alternative energy, etc. McCain wants to extend cuts to corporations, oil companies, etc. In addition, Obama promised that senior citizens, making under $50,000/year would not pay any taxes. This would help with medical costs among other expenses.
    Although, the two candidates want to decrease taxes, the long-term effects from the McCain plan will continue to stifle the economy, as it continues to go further in further into debt. A fire-sale to China. By giving money to working-class American’s and encouraging regulation, projection, and domestic investment and interests, Obama will be able to decrease spending and balance the budget and fix many of the other problems that continue to weight down on American’s and our true growth.
    Where have all traditionalist republicans, the debt hawks, like myself gone? It seems many others have exchanged their fiscal conservativism for greed and short-term gains. This kind of ideology, and recklessness is what has brought us into the most severe financial crisis since the Great Depression. More regulaion. More U.S.A., that is truly being a Patriot.
    Folks, the bottom line iswe’ve got to start paying our bills. Any savvy business man would not run a business like those in Washington are running government. We would have file for bankruptcy long ago, probably beginning with Reagan.
    Like Clinton, Obama will eventually balance the budget and restore America.
    Truly, take the time to know the Issues. Don’t Vote along party lines. Think for yourself. Don’t be greedy!

  • Anything Going on Today?   8 years 14 weeks ago

    See if you can spot the uptick rule removal on this weekly chart of the S&P500:$SPX&p=W&b=5&g=0&id=p46979860208

    Here is a hint. Look at the weekly moves before and after July 2007.

  • Anything Going on Today?   8 years 14 weeks ago

    bad for the market, and financial sector in particular (see bolded below), and what the SEC is going to do about it.

    "Bank stocks are a uniquely exposed industry to naked shorting," a professor of law at Columbia University, John Coffee, said. "In most other markets, if a company's stock price declines it doesn't have any operational impact. If I am a bank, however, and my stock price declines, the credit ratings agencies put me under review and counterparties who engage in trading with me back away." This leads to a loss of confidence by the markets and a possible liquidity crunch, much like the ones that felled Bear Stearns and Lehman Brothers, and might have toppled Merrill Lynch if not for the deal with Bank of America.

  • Obama Versus O'Reilly on Tax Policy   8 years 14 weeks ago

    Heh, didn't know that. He's right about the lies and assault on reason though.

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