Governmental regulation, much of it coming from the horrendous Dodd-Frank bill, is an unwelcome participant in the marketplace, making it much harder for investors and traders to make money.
Forecast are increasingly difficult, as random governmental interaction and artificial interference curtails investment opportunities. Risk is central to an efficient market, and regulations to eliminate risk cause inefficiencies and reduce potential profits for those who can accurately measure risk.
Doug Dachille, CEO of First Principles Capital Management, was the guest host on Squawk Box last week and explains the difficulty traders are facing:
Showing posts with label Credit Analysis. Show all posts
Showing posts with label Credit Analysis. Show all posts
Thursday, January 19, 2012
Thursday, September 15, 2011
Regulations Eroding Economic Lifeline: Credit
While many of our citizens remain unaware, a slow creep of regulatory instruments are eroding the lifeline of our economy; credit. If you are working hard to make ends meet and catch bits and pieces of newscasts from national and local news outlets in the mainstream media, you likely have no knowledge of how serious this issue is.
Rahm Emanuel, former Chief of Staff of President Obama said the administration should never let a crisis go to waste. They took advantage of the fear in the aftermath of the banking crisis to power grab much of your liberty when it comes to your finances, likely without your understanding of the "small print."
It has been three years since Lehman Brothers collapsed, and although many of the experts say Uncle Sams balance sheet is improved and the worst is behind us, I don't buy it. Neither does Home Depot founder Bernie Marcus, who joins Mary Thompson, David Faber and Joe Kernen for a frank discussion on CNBC's Sqauwk Box this morning. Take a listen:
The experts are almost always wrong. Discredited economist Paul Krugman and social economic pontificator Jared Bernstein coupled with comments such as "The housing crisis is contained" and "Pass the stimulus and unemployment will not exceed 8%" come to mind.
Bernie Marcus is not wrong, and listening to him will get you more saving, more doing.
With a new wave of foreclosures coming, property owners will be seeking opportunities for refinancing among banks, but the big banks are not able to extend the necessary credit due to strict regulations. These banks can borrow from the FED at zero and lend to the public at 5%, and a banker can have a fine career in banking doing that. But this lending is not taking place, and the alternative option of small banks is being crushed by Dodd-Frank, which quite simply is killing small banks. Regulations have wrecked the residential appraisal industry, spearheaded by The Architect of Ruin, Andrew Cuomo. These regualtions allow the government to pick winners and losers as well, which raises costs and handicaps the entrepreneur.
The big banks continue to get bailed out while the small banks are being killed off by excessive regulation, crippling the credit line for consumers, who are on life support. Collusion between the administration and the FED is extremely alarming, contributing to the unnecessary extension of the economic crisis we are in.
Rahm Emanuel, former Chief of Staff of President Obama said the administration should never let a crisis go to waste. They took advantage of the fear in the aftermath of the banking crisis to power grab much of your liberty when it comes to your finances, likely without your understanding of the "small print."
It has been three years since Lehman Brothers collapsed, and although many of the experts say Uncle Sams balance sheet is improved and the worst is behind us, I don't buy it. Neither does Home Depot founder Bernie Marcus, who joins Mary Thompson, David Faber and Joe Kernen for a frank discussion on CNBC's Sqauwk Box this morning. Take a listen:
The experts are almost always wrong. Discredited economist Paul Krugman and social economic pontificator Jared Bernstein coupled with comments such as "The housing crisis is contained" and "Pass the stimulus and unemployment will not exceed 8%" come to mind.
Bernie Marcus is not wrong, and listening to him will get you more saving, more doing.
With a new wave of foreclosures coming, property owners will be seeking opportunities for refinancing among banks, but the big banks are not able to extend the necessary credit due to strict regulations. These banks can borrow from the FED at zero and lend to the public at 5%, and a banker can have a fine career in banking doing that. But this lending is not taking place, and the alternative option of small banks is being crushed by Dodd-Frank, which quite simply is killing small banks. Regulations have wrecked the residential appraisal industry, spearheaded by The Architect of Ruin, Andrew Cuomo. These regualtions allow the government to pick winners and losers as well, which raises costs and handicaps the entrepreneur.
The markets have been up this week, and given all the horrendous economic news this week, such as an unexpected rise in jobless claims, inflation and sobering news on poverty, you may wonder why. Euro Tarp! You got it, the FED is essentially bailing out Europe, which can be equated to QE3, a new installment of quantitative easing on a global scale. A socialist European dream! Of Course, I am quite sure this will fix the problem with the PIGS? Well, it won't work!
The economy is in crisis, and we are far from out of the woods. Uncle Sam is a major event way from taking a substantial leg down, and the FED is short on tools to fight the problem due the poor crony capitalism decisions made under Obama and Bernanke. Could the crisis in Europe be such an event? If so, will global governance, all for our benefit no doubt, claim more of our liberty in creating a global banking system, which could lead to a dollar collapse?
The economy is in crisis, and we are far from out of the woods. Uncle Sam is a major event way from taking a substantial leg down, and the FED is short on tools to fight the problem due the poor crony capitalism decisions made under Obama and Bernanke. Could the crisis in Europe be such an event? If so, will global governance, all for our benefit no doubt, claim more of our liberty in creating a global banking system, which could lead to a dollar collapse?
The big banks continue to get bailed out while the small banks are being killed off by excessive regulation, crippling the credit line for consumers, who are on life support. Collusion between the administration and the FED is extremely alarming, contributing to the unnecessary extension of the economic crisis we are in.
All these goings on are the antithesis of what should be taking place, and strongly appear to be orchestrated. These are critically troubling times, and our country as we know it could hang in the balance. As I pray we make it to November 2012, we must hold our freedoms dear, protect our sovereignty and remember that free market capitalism is indeed the best path to prosperity.
Wednesday, July 21, 2010
Lessons Not Learned
Unfortunately, the financial bill (FINREG) has passed. Crafted by two of the top members of the architectural team of the housing crisis, Rep. Barney Frank (D;MA) and Sen. Chris Dodd (D:CT), this bill be deal a serious blow to the consumer. In addition, it will add further negative pressure on the housing market long term.
FOX Business takes up the potential effects in the following interview:
The new bill, over 2000 pages with many of the particulars of the legislation yet to be firmed up, will simply be devastating to small business and consumers. Governmental regulation increases costs which limit the choices of the consumer.
The banks will not be free to lend as they see fit, in their own communities taking into account current local market conditions, but will be governed under the new regulatory framework of this bill. It certainly will make effort to secure credit by the consumer more costly and much more difficult to obtain.
While we had to pass it find out what in it, there have been some real distressing items uncovered, from regulations on insurance to affirmative action hiring quotas for Wall Street.
Among the more puzzling items, the bill does absolutely nothing to rein in Fannie Mae and Freddie Mac, the government sponsored entities which contributed greatly to the housing crisis. Imagine that! CNBC has more:
The bill, signed in a ceremony at the Ronald Reagan Building, is insulting as it is in direct opposition to the principles and economic beliefs Reagan championed.
It would be great for Americans to let the following sink in: Free Market Capitalism is the best path to prosperity!
FOX Business takes up the potential effects in the following interview:
The new bill, over 2000 pages with many of the particulars of the legislation yet to be firmed up, will simply be devastating to small business and consumers. Governmental regulation increases costs which limit the choices of the consumer.
The banks will not be free to lend as they see fit, in their own communities taking into account current local market conditions, but will be governed under the new regulatory framework of this bill. It certainly will make effort to secure credit by the consumer more costly and much more difficult to obtain.
While we had to pass it find out what in it, there have been some real distressing items uncovered, from regulations on insurance to affirmative action hiring quotas for Wall Street.
Among the more puzzling items, the bill does absolutely nothing to rein in Fannie Mae and Freddie Mac, the government sponsored entities which contributed greatly to the housing crisis. Imagine that! CNBC has more:
The bill, signed in a ceremony at the Ronald Reagan Building, is insulting as it is in direct opposition to the principles and economic beliefs Reagan championed.
It would be great for Americans to let the following sink in: Free Market Capitalism is the best path to prosperity!
Tuesday, December 8, 2009
Consumer Under Attack
Meredith Whitney, CEO of the Meredith Whitney Advisory Group, joined CNBC's Joe Kernen and the gang of Squawk Box for a frank discussion on the plight of the consumer. Listening to Obama, you may think things are getting better. Whitney, who accurately predicted the collapse, informs you otherwise, and why. Take a listen:
The current administration is doing everything wrong, most notably attacking small business and the attempted implementation of historically huge entitlement programs, and if the electorate does not stand up strong almost immediately, then in about 9 months it will be too late.
I quite agree with Whitney and am anticipating a high level of pressure on the S&P shortly after the new year. For evidence, review the action in the financials, and remember, as Whitney pointed out, banks can borrow at almost 0% and lend at approximately 5%, but are not lending. Do they know something you don't? Not anymore.
The current administration is doing everything wrong, most notably attacking small business and the attempted implementation of historically huge entitlement programs, and if the electorate does not stand up strong almost immediately, then in about 9 months it will be too late.
I quite agree with Whitney and am anticipating a high level of pressure on the S&P shortly after the new year. For evidence, review the action in the financials, and remember, as Whitney pointed out, banks can borrow at almost 0% and lend at approximately 5%, but are not lending. Do they know something you don't? Not anymore.
Monday, August 17, 2009
It's Happening Now
For homeowners, credit is still marginally difficult to secure even as most banks have received federal assistance to resume fair and prudent lending practices. But, while even the most intellectually challenged banker can make money borrowing short at next to free and lending long at around 5%, few banks are doing so. Why? Do they know something we don't? Is there another shoe to drop?
FOX Business Neil Cavuto uncovers it is happening as we speak.
Unfortunately, the economic policies of the current administration, which can be summed up as an assault on small business, is prohibiting the marketplace from resuming economic growth. Yes, a jobless recovery.
If these proposed actions, from excessive new regulation, increased taxation, "skyrocketing" energy costs under cap & trade to the insane prospect of government run health care, the prognosis for real recovery is bleak.
The commercial real estate sector cannot bounce back without small business expansion, which is fueled by entrepreneurs who start and expand small businesses, and thus occupy office and retail space. The current environment is not supportive to small business. A sad situation indeed.
FOX Business Neil Cavuto uncovers it is happening as we speak.
Unfortunately, the economic policies of the current administration, which can be summed up as an assault on small business, is prohibiting the marketplace from resuming economic growth. Yes, a jobless recovery.
If these proposed actions, from excessive new regulation, increased taxation, "skyrocketing" energy costs under cap & trade to the insane prospect of government run health care, the prognosis for real recovery is bleak.
The commercial real estate sector cannot bounce back without small business expansion, which is fueled by entrepreneurs who start and expand small businesses, and thus occupy office and retail space. The current environment is not supportive to small business. A sad situation indeed.
Wednesday, July 8, 2009
A Jumbo Headache
The ratings agencies, who had absolutely no clue with regard to the mortgage backed securities which have played a major role in this housing crisis, today lowered the ratings on jumbo loans from a period before the mortgage fire really began burning.
Please take a listen as David Faber of CNBC explains:
As Faber indicates, this goes straight to the level of unemployment, which is much worse than the numbers indicate.
If you think in terms of a roller coaster, the sub-prime borrowers have already been to the top and have now emerged on the other side of the valley. Mid range borrowers are in the valley and the high end borrowers, saddled with job losses and coupled with a severe contraction of credit options and a reduction in revenues and profits associated with their employer, are bolting into the valley.
Unfortunately, this housing crisis would be behind us if not for implemented policies by the government which handicap any expansion of the economy. Excessive new regulation and taxes are a major problem, but the uncertainty of potential increases in these areas, read Cap & Trade and Health Care Insurance Reform, virtually prohibit employers from expanding their payroll. In addition, a value added tax is being discussed.
Consumers, who cannot borrow to escape the financial constraints they are mired in and are scared about the potential of their employment being eliminated, have drastically cut back on spending. This is crushing many industries, including retail, where lower level workers are prevalent. And, if you can believe it, the minimum wage is set to be raised, which will further reduce employment in lower income positions.
Virtually every position the Obama administration has taken has been the wrong one, and a second stimulus package that is being discussed, is certain to follow on the heels of the first one, as a colossal failure. The economy is certain to remain shackled with excessive regulation and taxation in place. Until the government gets out of the way of small business, limits regulation and taxation and allows the free market to function properly, GDP, and thus prosperity, will be declining.
Call your Congressman and Senator today!
Please take a listen as David Faber of CNBC explains:
As Faber indicates, this goes straight to the level of unemployment, which is much worse than the numbers indicate.
If you think in terms of a roller coaster, the sub-prime borrowers have already been to the top and have now emerged on the other side of the valley. Mid range borrowers are in the valley and the high end borrowers, saddled with job losses and coupled with a severe contraction of credit options and a reduction in revenues and profits associated with their employer, are bolting into the valley.
Unfortunately, this housing crisis would be behind us if not for implemented policies by the government which handicap any expansion of the economy. Excessive new regulation and taxes are a major problem, but the uncertainty of potential increases in these areas, read Cap & Trade and Health Care Insurance Reform, virtually prohibit employers from expanding their payroll. In addition, a value added tax is being discussed.
Consumers, who cannot borrow to escape the financial constraints they are mired in and are scared about the potential of their employment being eliminated, have drastically cut back on spending. This is crushing many industries, including retail, where lower level workers are prevalent. And, if you can believe it, the minimum wage is set to be raised, which will further reduce employment in lower income positions.
Virtually every position the Obama administration has taken has been the wrong one, and a second stimulus package that is being discussed, is certain to follow on the heels of the first one, as a colossal failure. The economy is certain to remain shackled with excessive regulation and taxation in place. Until the government gets out of the way of small business, limits regulation and taxation and allows the free market to function properly, GDP, and thus prosperity, will be declining.
Call your Congressman and Senator today!
Wednesday, August 20, 2008
Home Equity Squeezed Tight
Alexis Glick (see previous post) of FOX Business interviews a few market players who discuss the issues surrounding the tightened environment of the day.
Banks horribly mismanaged their risks principally through the subprime lending mechanism. Now, while they repair their balance sheets, homeowners with credit previously extended to them are having these loans frozen or called.
In order for the economy to rebound, and don't think for one moment the residential real estate market is not principal in the recovery, the consumer will need bargaining power and lines of credit to work with. With the banks squeezing the consumers by raising credit card rates, freezing credit lines and tightening lending requirements, the consumer appears to be a deer in the headlights.
Banks mismanage risks and then pummel the consumer to help them heal. This extortionist tactic cannot be good news if you looking for a rebound in this consumer driven economy.
Banks horribly mismanaged their risks principally through the subprime lending mechanism. Now, while they repair their balance sheets, homeowners with credit previously extended to them are having these loans frozen or called.
In order for the economy to rebound, and don't think for one moment the residential real estate market is not principal in the recovery, the consumer will need bargaining power and lines of credit to work with. With the banks squeezing the consumers by raising credit card rates, freezing credit lines and tightening lending requirements, the consumer appears to be a deer in the headlights.
Banks mismanage risks and then pummel the consumer to help them heal. This extortionist tactic cannot be good news if you looking for a rebound in this consumer driven economy.
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