Continue reading Bush's 'Revenge' -- Leaving a Really Big Mess, Economically and Otherwise

Bush's 'Revenge' -- Leaving a Really Big Mess, Economically and Otherwise originally appeared on BloggingStocks on Fri, 22 Jan 2010 13:30:00 EST. Please see our terms for use of feeds.

Continue reading Economic firestorm: Which costs more, stealing or stupidity?

Economic firestorm: Which costs more, stealing or stupidity? originally appeared on BloggingStocks on Mon, 09 Mar 2009 15:40:00 EST. Please see our terms for use of feeds.

Last Friday, the big economic news was the shocking loss of 533,000 jobs which spurred President Bush to accept this weekend a bailout plan for the automobile industry likely to be announced in the week ahead. So did stocks crash on Friday as a result of the bad jobs news? No -- the Dow rose 259 points. And despite the daily failure of the stock market to fit the simple storyline that stocks go down with bad news and up with good, this media mental model persists.

In the week ahead, there is likely to be more bad news. Here are three such items:

• Spiking unemployment filings. On Thursday, first time unemployment filings are likely to top 500,000 for the fourth straight week.
• Slumping retail sales. On Friday, retail sales are likely to decline for the fifth month in a row -- the longest such streak since the numbers were first collected.
• Non-forecasting companies. A few companies are expected to report their results and claim that they lack visibility -- code for the future looks dark and they don't want to speculate publicly about just how dark.

So what will the market do this week? I have absolutely no idea. But it would not surprise me if it rose and fell wildly for no apparent reason.

Continue reading Week ahead to feature grim stats: Will stocks rise?

Week ahead to feature grim stats: Will stocks rise? originally appeared on BloggingStocks on Sun, 07 Dec 2008 10:56:00 EST. Please see our terms for use of feeds.

Nero was a Roman emperor who was rumored to have played a lyre in his palace in July 64 while Rome burned for six days. And to paraphrase Mark Twain, history may not be repeating itself now; but it sure is rhyming. The 30 developed economies are receding -- expected to shrink 0.3% in 2009. Meanwhile, in the U.S., foreclosures are up 25% since last year and Wal-Mart Stores, Inc. (NYSE: WMT), which was thought to be the place everyone would shop in a recession, now forecasts fourth quarter earnings per share to be as much as 7% lower than analysts expected. And the S&P 500 has lost 41.4% of its value in the last year.

So why does this feel like Nero's Rome? Two things: Hank Paulson -- who has consistently made confident predictions that later proved to be wrong -- has done so again. And, Washington, which was required by the terms of the $810 billion rescue plan to report on its progress after 30 days, has missed its deadline. As I posted yesterday, Paulson admitted that his plan to save the world by using reverse auctions to buy toxic waste was DOA. But the subtext of speech was that he does not have a clue about what to do -- and he has his eye on the exit door.

Meanwhile, a special inspector -- to be appointed by Bush -- and a Congressional Oversight Panel, which was supposed to check the dictatorial powers that Paulson originally asked for, has no staff members. This means that the taxpayers do not know exactly where the $290 billion that Treasury has committed so far has been spent. Simply put, the economy is getting worse, the program to restore it is rudderless, there is no public information on how the money has been spent, and nobody is in a position to provide that information.

It's not exactly a repeat of ancient Rome. While I doubt anyone in the White House knows how to play the lyre, the global economy is going up in flames.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book, You Can't Order Change: Lessons From Jim McNerney's Turnaround at Boeing, will be published by Portfolio on December 26, 2008. He has no financial interest in the securities mentioned.

Nero in charge as global economy burns originally appeared on BloggingStocks on Thu, 13 Nov 2008 08:45:00 EST. Please see our terms for use of feeds.

Today, the President-elect is meeting at the White House with the current President. No President in U.S. history has left his successor with two long wars with no end and an economic depression. That is until the current one. But George W. Bush has more trouble in store for his successor. And he's piling on the problems in his usual secretive manner -- hoping nobody will notice.

How so? First, the Treasury Department this morning announced that it would increase the size of the bailout of American International Group (NYSE: AIG) from $143.7 billion to $150 billion and it would do so from funds in the $810 billion bank bailout bill. Second, he snuck a $140 billion bank tax break into that same bailout bill that would encourage bank mergers by allowing profitable banks to pay less tax by using the losses from unprofitable ones they buy to offset their taxable income.

Each of these moves is complex but the bottom line is that more of your money is going to bail out the mistakes of a handful of executives without any input from taxpayer representatives. The new AIG bailout swaps a program that gave it $143.7 billion of taxpayer money -- the original $85 billion loan for warrants to buy 79.9% stake; plus $37.8 billion more to cover losses from AIG's money-losing securities lending unit; plus another $20.9 billion worth of Commercial Paper -- for a new deal.

Continue reading Bush sneaks $146.3 billion in bank tax breaks and new AIG cash onto Obama's plate

Bush sneaks $146.3 billion in bank tax breaks and new AIG cash onto Obama's plate originally appeared on BloggingStocks on Mon, 10 Nov 2008 09:09:00 EST. Please see our terms for use of feeds.

I realize that it's not a reason to pick a president, but if you care about your stock portfolio, you'd be better off with a Democratic president. How so? Peter Siris of Guerrilla Capital has run some numbers -- comparing an investment of $10,000 in the S&P 500 under Republican administrations to the same investment under Democratic ones. He permitted me to preview these numbers which will run in his New York Post column on November 3rd.

Since 1929 both parties have controlled the White House for 40 years and Siris estimates that the $10,000 would be worth $11,733 under Republican administrations and $300,671 under Democratic ones. According to Siris, "for whatever reason, Republicans have been in office during the three worst stock market declines: The Great Depression, the early to mid-1970s, and the current market."

That may sound interesting but what about recent presidents? Under the Clinton administration, the S&P 500 rose the most in the last 60 years -- up an average of 17.4% per year. The only president who posted a negative performance is a familiar name -- George W. Bush -- under his administration, the S&P 500 has fallen 27% from 1,342 to 979. It's an exceptional record and one that I hope will never recur.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Democrats beat Republicans 25:1 in stock market returns originally appeared on BloggingStocks on Fri, 31 Oct 2008 16:19:00 EST. Please see our terms for use of feeds.

Continue reading Is a second stimulus check up ahead?

Is a second stimulus check up ahead? originally appeared on BloggingStocks on Wed, 15 Oct 2008 15:00:00 EST. Please see our terms for use of feeds.

Continue reading Fog clearing - maybe. Clear skies - no! GE, JNJ, MRK, PG, RTN, WFC

Fog clearing - maybe. Clear skies - no! GE, JNJ, MRK, PG, RTN, WFC originally appeared on BloggingStocks on Mon, 13 Oct 2008 13:42:00 EST. Please see our terms for use of feeds.

Readers of this space know that economist David H. Wang, a colleague and friend of yours truly, approaches the economic scene from a unique perspective.

Wang was born and raised in Communist China for 22 years, before moving permanently to the United States in 1989 for graduate school, completing his Ph.D. in economics in 1995.

Of course Wang still talks with family and friends in China, and right now there's this joke making the rounds in the great centers in Beijing and Shanghai.

Question: What's the difference between U.S. President George W. Bush and Chairman Mao?

Answer: Chairman Mao actually put some bankers in jail.

**

As officials and citizens in China, India, Russia, Brazil, and many other developing nations look on, the United States is attempting to end a financial crisis that threatens to severely damage economies worldwide.

In the process, Wang and other economists agree, a number of myths and misnomers -- some promoted by the current U.S. administration, are being dispelled, and we'll review each in the months ahead.

Continue reading Is the market always right?

Is the market always right? originally appeared on BloggingStocks on Sat, 11 Oct 2008 18:10:00 EST. Please see our terms for use of feeds.

Congress is screwing up -- think backstop not bailout! originally appeared on BloggingStocks on Mon, 29 Sep 2008 15:35:00 EST. Please see our terms for use of feeds.

President Bush predicts bailout will pass -- but when? originally appeared on BloggingStocks on Fri, 26 Sep 2008 12:05:00 EST. Please see our terms for use of feeds.

• Top 5 Contributors, 2003-2008: Citigroup Inc. $310,294, SAC Capital Partners $282,000, United Technologies $263,400, American International Group 224,678, Bear Stearns $205,600.
• Top 5 Industries, 2003-2008: Securities & Investment $,245,796; Lawyer/Law Firms 1,976, 063; Insurance $1,416,972; Real Estate $1,262,791; Commercial Banks $850, 544.

Continue reading $700 billion reprise: Conservative bankers? Surely you jest!

$700 billion reprise: Conservative bankers? Surely you jest! originally appeared on BloggingStocks on Mon, 22 Sep 2008 11:00:00 EST. Please see our terms for use of feeds.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. DISCLOSURE: I owned BSC and now own shares in its acquirer JPM.

SEC opens the gates and the world drowns originally appeared on BloggingStocks on Thu, 18 Sep 2008 13:51:00 EST. Please see our terms for use of feeds.

Continue reading The Bush Administration's tax cut didn't increase investment and savings

The Bush Administration's tax cut didn't increase investment and savings originally appeared on BloggingStocks on Mon, 08 Sep 2008 11:40:00 EST. Please see our terms for use of feeds.

In November, Barack Obama will be elected president. People are fed up with George Bush and the Republican candidate wants to continue his policies -- tax cuts for the rich (even though he opposed them before), 100-year war in Iraq, etc. Americans know we can't afford a third Bush term.

President Obama will offer a middle class tax cut and raise the capital gains rate. This change will put more money into the pockets of consumers which account for 70% of GDP growth. And it will help balance the budget -- Bush's tax cuts have helped hit a record $410 billion deficit. Obama will also veto earmarks and implement pay-go rules which require a balanced budget.

These fiscally sound policies will strengthen the dollar which will help drop the price of gasoline and food. Obama will also create incentives to encourage investment in alternative energy. America knows that high oil prices enrich the enemy -- 15 of 19 9/11 hijackers were from Saudi Arabia -- our second biggest oil supplier. The sooner we can free ourselves of that devil's bargain, the safer we'll be.

For the sake of our economy, January 2009 can't arrive soon enough.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Why President Obama will be good for the economy originally appeared on BloggingStocks on Wed, 04 Jun 2008 09:00:00 EST. Please see our terms for use of feeds.

Whatever your political ideology happens to be, I think we can all agree on one thing: Given the complex economic issues currently facing our country -- many of which will continue to be important for the foreseeable future -- our next president must be someone who understand economics.

To that end, the latest issue of Barron's looks at the backgrounds of each candidate (subscription required), showing something troubling: McCain's financial expertise is pretty much limited to having married a rich woman. That's a good strategy to be sure, but not necessarily the best background for someone charged with dealing with the current mess. Advising struggling homeowners to scan the obituaries in search of newly widowed socialites might not go over well.

Then there's Barack Obama whose experience in the market is, according to Barron's, pretty much limited to having once lost $13 thousand on stocks acquired through a blind trust. Barron's writes that "Small wonder he's giddy to raise taxes on interest and dividends. Obama has little skin in the game ... He's as insulated from his own dividend and capital gains proposals as a penguin is from the cold."

Hillary Clinton's net worth is very high, but she owns little stock. Her experience on the board of directors at Wal-Mart (NYSE: WMT) is intriguing but, looking at the available information, one thing is clear: None of these candidates can be considered an economics expert, something that we badly need, although George W. Bush's MBA from Harvard did little to avert the current mess.

Perhaps we'll get our economics expert from the other half of the presidential ticket. Private equity titan Mitt Romney is rumored to be a possible pick for John McCain, and there is some speculation that Barack Obama could pair up with New York Mayor Michael Bloomberg.

Which presidential candidate understands economics best? originally appeared on BloggingStocks on Sun, 30 Mar 2008 14:10:00 EST. Please see our terms for use of feeds.

On Saturday, President Bush warned that the government must guard against going too far in trying to fix the troubled economy. "If we were to pursue some of the sweeping government solutions that we hear about in Washington, we would make a complicated problem even worse -- and end up hurting far more homeowners than we help."

"Democrats know that wait-and-see is not a responsible strategy for an economy that is teetering on the brink of recession," said Senate Majority Leader Harry Reid. "The president continues to convince himself that inaction is the cure-all for the economic problems hurting hardworking Americans." Democrats intend to strengthen the economy with measures dealing with housing, energy efficiency, and renewable energy.

President Bush said the recently passed program of tax rebates should begin to lift the economy in the second quarter of the year and have an even stronger impact in the third quarter. But he urged caution about doing more, particularly about the crisis in the housing market.

Continue reading President warns against "overcorrecting" economy, but further Fed rate cut expected Tuesday

President warns against "overcorrecting" economy, but further Fed rate cut expected Tuesday originally appeared on BloggingStocks on Sat, 15 Mar 2008 18:40:00 EST. Please see our terms for use of feeds.

There has been so much crap thrown around about whether WE ARE in a full blown recession OR NOT that all the talk, is just that -- a lot of talk. Long time investors know well that if there is anybody left that thinks we are not in a recession than we have not reached final capitulation.

If we do not reach this level of pain, then we cannot get better. Admitting the problem is a major path to recovery. That is true for an alcoholic and our ailing economy. As long as the alcoholic keeps saying they can handle the problem, its not going away.

Our economy is drunk and falling over. You can call our current economic crises a "rose" for all I care, and for those that want to wait for the classic two quarters of negative growth to appear you can consider yourself followers not leaders. Leaders take action and try to avoid a crises. Followers, wait until there is a crises... and historians document and report on the difference between the two.

Continue reading Economic TKO: Bush will call recession capitulation

Economic TKO: Bush will call recession capitulation originally appeared on BloggingStocks on Fri, 14 Mar 2008 16:47:00 EST. Please see our terms for use of feeds.

Continue reading As home foreclosures rise, some in Congress eye FHA refinance plan

As home foreclosures rise, some in Congress eye FHA refinance plan originally appeared on BloggingStocks on Wed, 27 Feb 2008 16:40:00 EST. Please see our terms for use of feeds.

Continue reading Does support of our troops affect your perception of a company?

Does support of our troops affect your perception of a company? originally appeared on BloggingStocks on Thu, 14 Feb 2008 20:27:00 EST. Please see our terms for use of feeds.