A late day rally allowed the Dow Jones Industrial Average to close the day and month above the new Mendoza line of 8,000. However, the drop of 775 points, 8.84%, for the month is a bad omen as the January performance of the Dow has accurately predicted what it will do for the year 75% of the time according to Dow Jones. In the last 30 years that percentage is 86% and even though a couple of those anomalies occurred recently, such examples usually involve marginal moves for the month. This year the Dow had it worst January performance in its 113-year history in 2008.

You may want to remember that the next time someone tries to convince you the bottom is in.

A clip from CNN.com on Congress’ outrage at Wall Street bonuses:

Former New York Mayor Rudy Giuliani on Friday defended corporate bonuses, saying that cutting them also means slashing jobs in the Big Apple.

“If you somehow take that bonus out of the economy, it really will create unemployment,” he said on CNN’s “American Morning.” “It means less spending in restaurants, less spending in department stores, so everything has an impact.”

Who knew TARP money was to be put back into the economy through bonuses?

In the immortal words of Will Ferrell-as-ex-President George W. Bush, there’s a new “strategery” to promote literacy among financial institutions. Today Congresswoman Eddie Bernice Johnson (D-TX) introduced the National Financial Literacy Act of 2009, which gives incentives to financial institutions, small businesses and corporations to provide financial education to their customers and employees.

Um, isn’t it more than a little late for this? As they take in unprecedented amounts of government bailout money, most financial institution honchos these days aren’t concerned with educating their customers or employees on the markets. Nope, they’re more concerned with cashing those obscene bonus checks, firing up their private jets, or maybe doing a little interior decorating on the company’s dollar.

Good luck and godspeed, Congresswoman Johnson.

Continue reading ‘Hey, teacher, leave the kids alone’ »

One of the most infuriating things about our current economic crisis, and frankly our recent political and corporate culture is the complete lack of accountability and lack of memory by both political officials and the media that cover them.

One may have thought it could not get any worse, then we hear how John Thain, well into the current financial collapse, worked to pass out bonuses to Merrill executives before it got swallowed up by Bank of America and spent a cool million redecorating his office.

Now we hear this idea of creating a “bad bank” to place all of the toxic instruments held by former investment banks to loosen up credit markets. This was the purpose of the TARP! This is what the emergency $700 billion appropriated by Congress was for. Remember.

Continue reading ‘That bad new bank smell’ »

“I have no confidence that they intend or desire to change,” [Carl] Levin told me. “These bankers got away with murder, and it’s obscene that close to nothing is being asked of financial institutions. I get incensed at the thought that a bank that’s getting billions of dollars in taxpayer money is out there buying fancy new airplanes.”

                                      New York Times, Jan. 28, 2009, Column by Maureen Dowd, Wall Street’s Socialist Jet-Setters

A couple months ago I wrote a Futures editorial that got a big response, largely because it took on the arrogance of companies and their corporate jets. At the time I was chiding the car makers, but apparently executive self entitlement has spiraled to the point that even when a company is taking public money, it’s willing to buy a corporate jet for $50 million and be shocked when the government, which loaned the company money, steps in and says no.

In Citigroup’s defense I know this thought process isn’t rampant in its rank and file. One of its executives told me once that while traveling with their children, he and his wife had to stay at a lesser star hotel because their hotel of choice was overbooked. His children were angry, and he and his wife were so appalled by their reaction, that for years afterward when they traveled they stayed at Motel 6’s until the kids quit complaining.

That’s what the government has to do with these Wall Street elite. Continue reading ‘Flying in face of arrogance’ »

Investment analysts like to retell the old saw that when you start to get investment tips from your barber, cabdriver (fill in the blank) it is time to sell. But who knew that is how high finance worked. It seems that a tip from a golf partner or an overheard conversation in the lounge of a swanky Palm Beach country club is all it took for some investors—even institutional investors—to plunk down a considerable chunk of money with Bernard Madoff.

Now the Alliance for Investor Education (AIE) puts out a news release titled: AVOIDING MADOFF-STYLE PONZI SCHEMES: 12 OF THE BEST RESOURCES FOR INVESTORS

Rarely does an e-mail come across my desk that causes me to laugh out loud but this one did. Who did they cite as their expert sources to accomplish this? Why the very folks who dropped the ball for better than a decade regarding Madoff. A “19-Member Alliance Including SEC, FINRA, SIPC, and State Securities Administrators Highlights Top Tips for Investors.”

Continue reading ‘Be your own resource’ »

One thing you can say about the financial crisis is that, despite the trillions of dollars of wealth destroyed, there has been no shortage of laughs and absurd moments. Take this one for instance.

An alliance of 19 regulators, which includes the SEC, FINRA, SIPC, and State Securities administrators, has created a list of educational resources for investors toprotect themselves from Ponzi schemes and other types of fraud.

Better late than never I suppose, but given SEC Chairman Chris Cox’s mea culpa, I can only hope that in addition to disseminating this information, that the regulators themselves actually read it.

Anyway, check below for the release….

Continue reading ‘… But better never late’ »

CNBC reported that big spender, wannabe interior designer and former CEO of Merrill Lynch John Thain will reimburse Bank of America for his $1.2 million office renovation, paid for with company money. In a memo to Merrill employees, Thain also defended reports of accelerated bonus payments before the closing of Merrill’s sale to Bank of America.

“Our 2008 discretionary bonus pool was 41% lower than 2007. The size of the pool, its composition and the timing of the payments for both the cash and stock were all determined together with Bank of America and approved by our Management Development and Compensation Committee and our Board,” he said.

It wasn’t a good year for Freddie Mac and one could rightfully challenge its accounting methods based on the problems it has encountered in the last year but the Office of the Chief Economist at Freddie Mac released its 2009 Economic and Housing Market Outlook recently and their forecasts deserve a look.

While the outlook calls for the U.S. to officially pull out of the recession in the third quarter of 2009, it also predicts unemployment to continue to rise peaking at 8.7% in the fourth quarter and remaining above current levels through 2010.

Continue reading ‘No jobs recovery in sight’ »

Want more proof of some Wall Street titans’ greed and lack of responsibility during the financial meltdown? Check out this story detailing the decorating habits of former Merrill Lynch CEO John Thain, who resigned from Bank of America today.  Merrill Lynch agreed to be sold to Bank of America at the end of last year in the wake of the financial sector crisis.

The Daily Beast reported that Thain spent a total of $1.22 million in company money to trick out his office with, among other things, an $87,000 area rug and a $35,000 “commode on legs.”  Continue reading ‘John Thain’s magic carpet ride’ »