Two days ago I raised the question of whether US Secretary Paulson and the Treasury would be able to stop Wall Streets run on the Moral Hazard Insurance Company – that is as Paul Krugman of the New York Time’s calls it: “[Federal] officials are worried that their rescue efforts will encourage even more risky […]
The Moral Hazard Denoument Read More »
There have been some interesting business news items recently. In the Thursday, August 14th Financial Post, there is a story by Barbra Shecter on the state of securities disclosure by Canadian businesses. Even in the polite etiquette and language of regulation, the Canadian Securities Administration declared that “significant deficiencies were found in the disclosures made
The Problem with Business Ethics Shortfalls Read More »
I have promised to feature some venture capitalists who are taking real risks and creating new jobs and businesses. This is in stark contrast to private equity and hedge funders who are playing Ponzi games or, given cheap capital, making sure thing leveraged buyouts of marginal beneficial impact to the economy. My first choice is
Venture Capitalist: Vinod Khosla Read More »
It bears repeating that American capitalism is at a crossroads. There is a coterie of financier and investors primarily of the private equity and hedge fund kind that are taking advantage of historically low interest rates and banks willingness to allow for and finance hugely leveraged (the private equity stake is typically less than 15%
Venture Capital vs Financial Private Equity Investments Read More »
As an alternative RPEM-Rigged Perpetual Earnings Machinations being foisted on North American financial markets by Hedge Funders and Private Equity firms, I am going to highlight some real venture capitalists. These are financiers that are NOT doing the latest financial no risk sure thing to existing large corporates that have fallen into stock market disfavour
Venture Capitalists Read More »
This is the Cover story at Business Week this July end – one year after Bear Sterns shot itself and the US Economy in the foot, being the first of many Hedge Funds and Investment banks, to gag on its own Derivative Mortgage Greed. Now I don’t want to say that I told you so
How Wall Street Ate the Economy Read More »
This article in the NYTimes shows that Greed is still running rampant on Wall Street and the Financial markets: “Since the almost overnight collapse of Bear Stearns earlier this year, top-level Wall Street executives have been pleading with regulators to investigate what they see as efforts by short sellers to plant false information and profit
Greedy Continues to Gut US Read More »
There are some rather heated arguments by Economists about the desirability of monopolies – and even more so on how quickly economic systems adjust to either defeat or mitigate the deletorious effects of monopolies. I would argue that monoplies are a)rarely good especially over long periods of time and b)the pace of globalization and change
Why Monopolies and Near Monopolies Are Bad News Read More »
In a June 18th 2008 story, Heather Scoffield of the Toronto Globe and Mail is leading the charge on getting things wrong on the Canadian economy. And she is using supporters like Dale Orr at Global Insights, Patricia Croft at Phillips Hager North, and Derek Holt at Scotia Capital who is of the opinion that
After Carney’s Curveball Read More »
The Canadian Supreme Court ruled against Bell Canada Enterprise-BCE bondholders last Friday. It was greeted in the Business Press as a case that would make “capital market rules clear for all stakeholders”. And the vote was not close, 9-0. So bondholders were told in no uncertain terms, if you have not provided in the bonds
The Catholic Church has published a list of 7 new mortal sins – Now I don’t disagree with the moral tone of the Church – for example, I still regard The Catechism of the Catholic Church which states that €œimmediately after death the souls of those who die in a state of mortal sin descend
The New Mortal Sins Read More »
Medicine is under siege in the US. 1)Over 40 million Americans do not have Health Insurance. 2)The number of uninsured is growing. 3)The costs of health care are increasing at 6.7% faster than rate of inflation. 4)Healthcare costs are 15% of GDP in 2007 and are expected to be almost 20% by 2017. 5)There is
More Than Medicine Under Siege Read More »
I was just investigating the Ontario governments decision to go Nuclear to the tune of $26B over 6 years starting construction in 2012 and start-up set for 2018. So I immediately considered looking at the Energy Probe position, since they had advised in the 1980’s against nuclear expansion and had proved providential – a $4B
Energy Probe Ontario Read More »
I have nothing against the rich that a cool swig of a fifth couldn’t deal effectively with; but still let me list 5 ways to Heaven that I resemble their impudence: 1)The Super rich, the top 6% of income earners, rake in over 30% of all US Income in 2005. But I reserve my scorn
Tax Dodgers Tagged Read More »
Lately in America, Success has been breeding Failure. CEO’s have been hyper-compensated including risk-less golden parachutes and boards that reward them with upticks in total compensation even when their performance lags their competitors and/or the broader markets. Investment Banking Malfeasance Likewise Investment Banking, Hedge Funds, and Private Equity Firms have setup a similar riskless M+A
Success Breeds Failure Read More »
Success Breeds Failure is the title of Paul Krugman column in the NYTimes. It is chillingly accurate. Forces are marshalling against any Wall Street Reform after the mortgage and investment banking crisis of this past year which a)had the Fed rescuing again investment bankers, hedge funders and private equity firms who say to the companies
Greedy Guts US – More Fallout Read More »
The title of this post is also the title of a column by Tom Friedman in the NYTimes today. But it easily could also be the title of a column by Bob Herbert in the paper as well. Both columns chastise not just the media and politicians but the electorate for falling for yet another
“Dumb as We Wanna Be” Read More »
The depth of the injury that Wall Street Greed has done to the US Economy is stunning. But now it is being made worse by the major financial institutions working for their own ends primarily at the risk of the whole economy. Yet the cost to taxpayers through their Moral Hazard Insurance Agents(think US Treasury
As proof that the notions that Private Equity, Hedge Funds and the Investment Banks are out of fiduciary trust limits and without control I will offer various articles by respected journals. Here are some sources: Business Week – huge debt levels smack against the Wall of Debt calls Barrons – December 24, 2007 Cover Story
Greedy Guts US: Readings Read More »
I recently had an experience with Fedex Ground service that emphasizes the still large opportunities available in the Business of Delivery. I had been waiting for a package for four months along with my ever patient editor. It finally shipped – and the notice of its attempted delivery was delivered to my offices (I could
Delivery of Opportunity Read More »
On the March 30th ABC Sunday news program This Week with George Stephanopoulos I saw a coming together of political minds that was quite unexpected, almost stupify. Here were Newsweek’s George Will, NTime’s Paul Krugman and economic author Robert Reich all agreeing on George Will’s Law. A little background. The show was doings it usual,
All through the debacle on Wall Street, the issue of Moral Hazard has been lingering. Moral Hazard says that people with insurance may take greater risks than those without such insurance. In the current stock market, hedge fund and other investment bankers have been dealing with very high risk transactions and extremely high leverage –
Greedy Guts Us : Moral Hazard Read More »
Our continuing series on the credit crunch gripping US financial markets in which key Financial Players in the mortgage and security creation and evaluation businesses (think Moody’s and Standard and Poors in the latter case) did an Eliot Spitzer – failed to deliver on the fiduciary trust and monetary integrity for which they are paid
From the Eliot Spitzer case there are five other major ramifications: 1)The NYTimes certainly cannot be accused of treating Democrats with kid gloves. 2)The vice-presidential choices of the two presidential contenders will be watched with much greater interest. 3)The US is certainly not European in its sexual morality. 4)The news media are certainly moving along
Eliot Spitzer V: Five Ramifications Read More »
The most popular story on the NYTimes email list this weekend is about the topic that has been one of the most controversial on business and IT websites – the exact extent of the disaster that is Windows Vista and what it is doing to the Windows Brand. What makes the NYTimes story more relevant
Windows Brand Under Siege Read More »
It is remarkable that in the Western Developed countries that are looking for innovation to bring economic advantage and prosperity, there is such a recoiling against Science. The US has an evangelical wing attacking many aspects of Science including creationism over Evolution plus stem cell research stymied by draconian restrictions. And George Bush has gutted
Science in Retreat Read More »
Greedy Guts Itself has had widespread consequences – collateral damage that was either not anticipated or, more likely, simply ignored by the round-up of Usual Suspects like an Anthony Mozilo, the Quants and every Big US Bank and its CEO that has foreign Sovereign Funds as new large shareholders. This section will track the spread
Greedy Guts Itself: The Fallout Update Read More »
The Financial Investment community should be reasonably careful about its image of late – after all these gals and primarily guys have been responsible for triggering a recession (and maybe a particularly nasty one) plus incurring large losses in their various investment offerings. So you would think caution no celebration would be the operative style.
In my Greedy Guts Itself series of articles here I have been arguing that today’s quant driven derivative instruments (poorly understood and very hard to measure) plus the automatic computer-driven trading systems are one of the major factors (but not the only ones) driving the current sub-prime fiasco and the general malaise in the financial
Derivative Caution: Greedy Guts Not Alone Read More »
The following is an example of Time Magazine’s Business Competitivenes indicator in an overall new section called Global Business on its website. It seems that Tom Friedman in his book The World is Flat, may have tripped off the publishing of reports comparing the effective business infrastructure and competitiveness of various world countries. Time Magazine
Time’s Competitiveness Indicator Read More »
The New York Times and the Economist rarely agree on economic outlooks but of late they have begun to converge. The graph below shows the problem: The New York Time is calling this 21st century boom -> The Good Times that were Mostly a Mirage. In surprising agreement, the Economist is seeing red signals all
The Fundamental Economic Problem Read More »
The Toronto Star’s Saturday January 26th, 2008 Business section (page B3) has a couple of very interesting stories on litigation ensuing from recent major financial transactions. Both suits will be tests on the extent of legal liabilities in various recent financial “transactions”. The first story is about the exposue of 3 large Canadian banks to
Pension Funds and Bondholders Revolt Read More »
