Acquitted!

By | 2014-09-05T13:51:00+00:00 November 10th, 2009|Global Market Update|

Jurors found two ex-Bear Stearns managers not guilty on all counts related to their failed hedge funds. Paradoxically, investors should be encouraged. In April of 2007 Ralph Cioffi and Matt Tannin exchanged some frank emails regarding the sub-prime mortgage market. Later on, when the market blew up, it took their fund down with it. 300 investors lost $1.6 billion. Prosecutors said that the two hid warning signs that their hedge fund was headed over a cliff. This was the only major criminal prosecution stemming [...]

The Private Option

By | 2014-09-05T13:49:07+00:00 November 9th, 2009|Global Market Update|

Many are discussing the public option in health care as a way to keep the private insurance companies honest. But in education it’s the for-profit private colleges that are serving to keep the nonprofit institutions efficient and affordable. College tuition is expensive. Many private undergraduate schools can cost about $200 thousand for a four-year degree. State Universities are cheaper, but even at half the price, that’s a lot of cash. Which is why online schools like the University of Phoenix are so attractive. At [...]

Bank Failure Friday

By | 2014-09-05T13:48:28+00:00 November 8th, 2009|Global Market Update|

These days, you can check your calendar by the FDIC. If it’s Friday, there must be bank failures. Last week was no exception. This time the closed banks were in the Midwest, Georgia, and California. The biggest fish was United Commercial Bank of San Francisco. That $11 billion bank had over $7 billion in deposits. Its failure will cost the FDIC almost $1.5 billion. But United Commercial is a special case. In addition to receiving $300 million in TARP money a year ago, it’s [...]

Straight and Narrow

By | 2017-07-17T12:35:21+00:00 November 5th, 2009|Global Market Update|

Is everyone out there crooked? That’s what I wondered when I read the recent news about Galleon Group and the analysts, traders, consultants, managers, and lawyers that have been accused of insider trading. I’m stunned at the extent of this conspiracy. To recap: numerous insiders at firms like Intel, Google, and Hilton would tell friends what was happening before it was public, in terms of earnings, mergers, or other material information. Their friends would trade on that information and tell a few others, like [...]

Shhhh!

By | 2017-07-17T12:35:21+00:00 November 4th, 2009|Global Market Update|

Are investors too arrogant? In ancient times, it was thought that any successful mortal who bragged about it made the gods angry. So they would destroy that person for his hubris, or arrogance. If you were lucky, or rich, or beautiful, it was best to be quiet about it. Good investment ideas can also seem to incite the gods’ wrath. Take the efficient market hypothesis: it started out as the simple notion that it is really hard to beat the market when you consider [...]

Cash for …

By | 2014-09-05T13:42:03+00:00 November 3rd, 2009|Global Market Update|

Was “Cash for Clunkers” a clunker? A couple months ago I took some heat when I suggested that the cash-for-clunkers program might not be borrowing sales from the future, but might actually encourage consumers to make up for their abysmal sales of the past. Naw, people commented. Most of those sales were taken away from the rest of the year. Once the government program is over, sales will go right back into the cellar. In fact, many thought, they’d probably be a lot lower [...]

Inflating Away?

By | 2014-09-05T13:40:18+00:00 November 2nd, 2009|Global Market Update|

Is runaway inflation in our future? Or is it deflation? Some people point to the growth of money over the past year and say that accelerating inflation is inevitable. Others point to rising unemployment and economic slack and say that deflation is the problem. Who’s right? Certainly, if money were the only issue, prices would be rising. The money supply has been growing about 6% per year for a while, in spite of the economy’s contracting. If inflation is really caused by too many [...]

Déjà vu All Over Again

By | 2017-07-17T12:35:21+00:00 November 1st, 2009|Global Market Update|

Is Yogi Berra working in finance? As the Yankees battle for their 27th potential World Series title, it seems like we’re seeing a replay of last year’s financial mess. CIT Group filed for bankruptcy yesterday. As the former Yankee player would say, it’s like déjà vu all over again. We’ve seen this movie before: CIT needs cash but can’t raise it. Carl Icahn is willing to loan them fresh operating capital, but only if he can jump the line and get in front of [...]