No Little People?

By | 2014-09-09T10:59:55+00:00 November 29th, 2012|Global Market Update|

Where have all the small IPOs gone? One of the unfortunate side-effects of the financial crisis has been the consolidation of the financial sector, especially brokerage firms. When Merrill Lynch, Bear Stearns, or National City got in trouble, they were merged into Bank of America, JP Morgan, and PNC. Other firms, like Lehman Brothers, just went away. The too-big-to-fail banks became even bigger. This has had an impact on the initial public offering (IPO) market. Everyone loves to discuss mega-IPOs like Facebook, which raised [...]

New Kid on the Block

By | 2014-09-09T10:58:40+00:00 November 28th, 2012|Global Market Update|

The British Prime Minister just selected the head of Canada’s central bank to run the 314 year-old Bank of England. What does it mean? Mark Carney is a 47 year-old Harvard undergrad, Oxford Ph.D. (in Economics) who spent 13 years managing sovereign credit risk for Goldman Sachs before serving as a Deputy Governor, and later Governor, of the Bank of Canada, beginning in 2003. He served the Bank of Canada well, lowering rates in March of 2008—rightly judging that the leveraged sub-prime loan crisis [...]

Short-Term Memories

By | 2014-09-09T10:56:52+00:00 November 27th, 2012|Global Market Update|

Remember Auction Rate Preferred notes? These investments seemed to offer something for nothing. Their interest rate would float at a spread above LIBOR and be reset weekly. If investors wanted their money back, there were supposedly a host of other investors ready to purchase the securities at their next auction. But it didn’t work out that way. When the financial crisis hit, a lot of the auctions failed. Short-term notes became long-term loans. Bonds that were as good as cash suddenly traded at a [...]

Another Black Swan?

By | 2012-11-26T09:59:48+00:00 November 26th, 2012|Economics, Global Market Update|

Another Black Swan? – Is the world a fragile place?That’s what Nassim Taleb thinks. The former best-selling author and hedge fund manager has written a book in which he divides the world’s structures into three categories—the fragile, the robust, and the anti-fragile. Fragile items are those that are getting along, but break down in times of stress. Robust items can stand up to shocks and stresses without changing. Anti-fragile systems get stronger and more creative when they face new challenges. […]

Giving Thanks

By | 2014-09-09T10:55:54+00:00 November 21st, 2012|Global Market Update|

So what do you have to be thankful for? I thought about this question and a lot of things stand out: First, I’m thankful that the election is over. As a proud resident of a “battleground” state, my land-line phone rang nonstop during this election season. I’m thankful that our family can eat a meal in peace. I’m thankful that New Hampshire has no major-league sports teams: so we don’t have team-owners threatening to move their franchise if we don’t build them a new [...]

Down the Drain?

By | 2014-09-09T10:55:03+00:00 November 20th, 2012|Global Market Update|

Sometimes the end isn’t the end. With potential buyers lining up, Bankruptcy Judge Robert Drain sent the baker’s union and management back to the negotiating table. The union thought that management’s threat to go to liquidation was a bluff, that there were would be a white knight behind them to rescue the company if they just held out long enough. But when they began to make liquidation plans in earnest, the union may have had second thoughts. So the Judge is giving them one [...]

Twinkie-Town

By | 2014-09-09T10:53:48+00:00 November 19th, 2012|Global Market Update|

Should you stock up on Ding-dongs? On Friday Hostess Brands’ baker’s union rejected a proposed set of wage and pension cuts, forcing management to move from a Chapter 11 bankruptcy reorganization to a Chapter 7 liquidation. Consumers went out and immediately stocked up on the four major food groups: fruit pies, Twinkies, Ho-hos, and Wonder Bread. But they needn’t worry: the iconic brands will be purchased by someone, and will be produced somewhere. But it’s unlikely that the new owners will hire the same [...]

Syrian Rebels

By | 2014-09-09T10:51:53+00:00 November 16th, 2012|Global Market Update|

Arabs, and Persians, and Turks. That’s the key to understanding what’s going on in Syria. The country has 22 million residents has been ruled by the Assad family for over 40 years. From the rise of Islam in the 7th century until the World War 1, the country has been ruled by the Arab, Persian, and Turkish empires, successively, with brief periods under Crusaders and Mongols. But now these powers are vying for control of Syria again. The Arabs of Saudi Arabia, the Persians [...]

Debt and Taxes

By | 2014-09-09T10:50:25+00:00 November 15th, 2012|Global Market Update|

Can we forgive our way back to prosperity? Imagine this: you’re underwater on your mortgage and out of a job. You’ve been struggling to make payments on your home, but you’re not sure you can make it. You’re considering a short-sale and other options. Then you get a notice from a group called “Rolling Jubilee” that they have purchased your mortgage and forgiven it. You’d be delirious, right? Well, maybe. Because that lovely act—debt forgiveness—is a taxable event. That is, forgiving a $200 thousand [...]

Un-Lockeing the Morality of Markets

By | 2012-11-14T09:52:51+00:00 November 14th, 2012|Global Market Update, Regulation|

Un-Lockeing the Morality of MarketsJohn Locke is usually remembered as a source for the Declaration of Independence. But in a small pamphlet written in 1660 he also displays a keen sense of economic justice.In 17th-century Europe the price of wheat would vary by town. What was available in one city might be scarce in another. Locke noted two towns—one where the price was five shillings a bushel, and another where the price was 20 shillings, where there practically a famine. If it costs me the [...]