Economy Is Tanking; Why Are Markets Up?

Markets Up Mitt Romney Responsible by Chris Banescu –
The latest economic data released Thursday confirms what all Americans, especially business owners, already knew.  Economic growth has slowed down to a measly 1.5% (from 2% the previous quarter), job growth continues to languish with nationwide unemployment at a dismal 8.2%, consumer confidence has fallen to its lowest level this year, and consumer spending is also tanking.  Household purchases, which represent approximately 70% of GDP, grew at the slowest pace in a year.  Recent surveys show that Americans have lost approximately 40% of their net worth in the last few years, and poverty rates are reaching levels not seen in this country since the 1960s.

So, why are the markets up?  [Read more…]

Dwolla – New Payment System Sidesteps Credit Cards

Dwolla - New Payment Systemby Alyson Shontell –
There’s a tiny 12-person startup churning out of Des Moines, Iowa.

Dwolla was founded by 28-year-old Ben Milne; it’s an innovative online payment system that sidesteps credit cards completely.

Milne has no finance background yet his little operation is moving between $30 and $50 million per month; it’s on track to move more than $350 million in the next year.

Unlike PayPal, Dwolla doesn’t take a percentage of the transaction. It only asks for $0.25 whether it’s moving $1 or $1,000. [Read more…]

How To Make Companies Think Long-Term

Harvard Business Review logo by Roger Martin –

In my latest book, Fixing the Game: Bubbles, Crashes, and What Capitalism Can Learn from the NFL, I wrote about the negative impact of executive stock-based compensation on corporate short-termism. Eliminating stock-based compensation would help reduce the incentive for executive leadership to focus on the short term. But there is a residual problem which has long frustrated me. The answer finally popped into my brain (funny how that works). As usual, the solution won’t be easy to pull off (but that has never stopped me).

The residual problem I’m talking about is corporate short-termism. Many companies face quarterly or even more immediate pressure from their shareholders (increasingly made up of hedge funds, program traders, and day traders) to deliver short-term performance. Worried that short-term-oriented arbitrageurs will put their company in play and short-term-oriented shareholders will gain majority or effective control of the company, ending their ability to steer the long-term trajectory of the company, they focus on making short-term decisions to protect their positions. The paradoxical result is that they never get around to taking those long-term-oriented decisions. [Read more…]

Why Most Market Forecasters Get it Wrong

Market Riders Investment Advice by Mitch Tuchman –
Be it a football game, the weather, an election, or the future of Middle East uprisings, people want to know what will happen before it does. We want to know the future, and we actively seek out experts who can predict it. But facts show that in most pursuits where dynamic and multiple variables determine what will happen, experts are not good at predicting the future. And to make matters worse, those who predict are rarely held accountable for their prognostications.

Take politics, for example. Philip Tetlock, a psychology professor at the University of Pennsylvania, conducted a study that became a book called Expert Political Judgement. He tracked about 80,000 forecasts from nearly 300 political experts over 20 years regarding political events in many countries. He tracked the outcomes of their forecasts against a group of college undergraduates making subjective predictions and a group who just made random guesses. The experts did slightly better, but not much. Nevertheless, they got on TV frequently and built their names and reputations. [Read more…]

The Death of the Dollar

Death of the Dollar8/6/2010 – Vasko Kohlmayer –

Nothing can save our financial system in the long run. It is doomed to collapse. This is inevitable, because our government controls and manages its very foundation — the dollar.

The federal government began its takeover of the dollar in 1913 when it established the Federal Reserve Banking System. Prior to that, the dollar was a real store of value. In the period from 1783 to 1913, there was a long period of currency stability with virtually no inflation. If you saved one dollar in 1800, your great-grandchild could buy roughly the same amount of goods with the same dollar one century later. [Read more…]

Ten Stock-Market Myths That Just Won’t Die

7/26/2010 – Brett Arends –

The Dow plummeted nearly 800 points a few weeks ago — and then just as dramatically rocketed back up again. The widely watched market indicator is down 7% from where it stood in April and up 59% from where it was at its 2009 nadir.

These kinds of stomach-churning swings are testing investors’ nerves once again. You may already feel shattered from the events of 2008-2009. Since the Greek debt crisis in the spring, turmoil has been back in the markets.

At times like this, your broker or financial adviser may offer words of wisdom or advice. There are standard calming phrases you will hear over and over again. But how true are they? Here are 10 that need extra scrutiny. [Read more…]

Congress Refuses to Outlaw Insider Trading For Lawmakers

by Peter Gorenstein –
Even a cynic can find Washington’s hypocrisy shocking at times. The Wall Street Journal reports today a House bill that would force lawmakers to make greater disclosures on financial transactions and disallow them from trading on nonpublic information is going nowhere fast.

That’s right. Members of Congress are currently allowed to profit on insider trading! [Read more…]

Across America 15 Million People Still Unemployed

US Unemployment Situation Grim
US Unemployment Situation is Grim

Across America 15 million Americans are still out of work and unable to find jobs. The latest numbers from the Labor Department indicate that only 41,000 private sector jobs were created last month. Of the 431,000 new jobs added in May, 411,000 were temporary census workers hired by the government. Despite Obama’s assertion, made just days ago, that “the economy is improving and that the economic stimulus legislation passed a year ago was having a positive effect” there is little to cheer about. The president’s unrealistic predictions that “the economy is poised to start adding the jobs people need” were clearly misguided and off the mark.

These are predictable results given how aggressive this administration and the Democrat controlled Congress have been in promoting socialist policies that stifle economic activity and unreasonably punish responsible corporations and businesses. [Read more…]

Here’s What’s Happening to the Economy

American Thinker | by Randall Hoven | Mar. 12, 2009

I think I have it figured out, roughly. And I’m ready to assign blame. If my narrative is not exactly true, it is a hypothesis that appears to fit the facts. This particular hypothesis is conspiracy-free, although I still think something is really fishy about the timing of the financial crisis, peaking as it did just when McCain started leading in the polls. But until we see some smoking guns, no conspiracy theory from me. [Read more…]

A Primer on Capitalism

Capitalism Freedom Private PropertyIn today’s turbulent financial times and difficult economic conditions, a lot of unjustified criticism and unwarranted accusations have been laid at the doorstep of capitalism. Many in the mainstream press and academia, a majority of politicians, and a large number of Americans have jumped on the bandwagon and unfairly blame capitalistic principles for the huge mess that we are in. Such widespread confusion evidences a misunderstanding by many Americans of how value is actually created in society and what capitalism really represents.

All societies, in order to prosper, grow, and take care of its citizens must create new value to sustain its economy and support an expanding population. Common sense and experience dictate that there are only three (3) possible ways for anyone in life to have, create, or obtain value (monetary or economic) or acquire any assets (property) to be able to live or sustain oneself or one’s family: [Read more…]

Buy American. I Am.

The New York Times | by Warren E. Buffet | Oct. 17, 2008

The financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So … I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities. [Read more…]

Ethical Solution to Mortgage Crisis: De-Bundle Loans and Identify Known Risks

I have just sent this appeal to my representatives in Washington. Feel free to copy and paste and send to your representatives.

Dear Representative,

Please do NOT support the $700 Billion Bailout Plan until the Banks and the Lending institutions identify the Toxic Loans and DE-BUNDLE them.

It would take very little effort on their part to identify each loan based on a computer search of their existing loans:
1. Full Default = no payments in 3+ months (Toxic)
2. Partial Default = no payments in 1-3 months (Potential Toxic)
3. Good Standing = on-time payments

[Read more…]