Romney’s Victory Website: And The Ugly Truth About Politics

It appears that Mitt Romney and his GOP “posse” had a Vision that the Election was going to yield a landslide victory! Although they could not have been more wrong, their arrogance was palpable. I am sure by now you’ve heard reports about Mitt Romney admitting that he only wrote a Victory speech. That is more than positive thinking, that is sheer arrogance (and not the most attractive trait in a candidate). Fox news, and other conservative media outlets had pre-election panels, and Election-day panel discussions, that harshly laid out reasons why Democrats, and Obama, will be shown the door. During the early afternoon on November 6th, the conservative news anchors and pundits entertained themselves by predicting what the Romney Cabinet would resemble. Who are the likely candidates for the Romney Administration, and who would be passed over for one reason or another. It was not unlike pre-Super Bowl chatter, only this game will impact the entire country, and the world. As the day progressed, the conservative political analysts were confident and excited.

There seem to be such utter certainty, that I was startled by it. It was like being in an alternate world, chiefly because I couldn't see how one-plus-one could equal four. It appeared that Fox News, and conservative Talk Radio, converted simple math (adding likely Romney votes) into an algebraic equation....and it all made sense to THEM. Looking at the issues influencing voters, which bore out to be true, I took note of the following issues:

 Women in America want the right to choose what goes on with their bodies, and don’t appreciate being referred to as “Binders of women”
 Latinos are concerned about immigration laws that impact their children and families.
 FEMA should be left alone; States and local governments, and citizens need financial help after Natural Disasters .
 A sizable portion of the “47%”, Romney wrote off, were retired, or veterans who have paid a lifetime of taxes, or risks their lives fighting for this Country. They’ve earned the right to Social Security, and other government programs
 Auto Makers, their 181,000 auto workers and their families were happy that Obama didn’t take Romney’s advice to “let them go bankrupt”
 Gays are passionate about having heir marriage legally recognized, giving them the same rights as heterosexual married couples.
 Youth votes are more likely to vote for Democrat, given the “Occupy Wall Street” movement, which blames the wealthiest 1 %, and the Bush Administration for the economic and fiscal crisis

The above political and social issues can be translated to a simple addition problem. Accordingly, the 7 bullet points could be treated as an aggregate of votes away from the republican candidate, Mitt Romney. Although the slow economy and high unemployment were working against Obama, as long as the turnout were as strong, or better than 2008, he had a good chance of winning re-election.

So why then, were the Republicans and Carl Rove so vehemently certain that Romney would be elected the 45th President of the United States? To the extent that he had his Victory Website rolled out early Thursday morning?

Perhaps this tidbit of information will provide a clue: Shortly after Obama’s stunning victory, I read a disturbing article that attempted to explain a complicated web of investment companies and venture capital that involved Mitt Romney’s son, Tagg Romney. In a nutshell, Tagg Romney owns the company that invested in the company that bought a controlling interest in a Voting Machine Vendor. What? I was so shocked, that it took the wind out of me. What this amounts to is so incredibly unethical, I can’t help but to think of Watergate. So, that explains the why the Romney camp felt so sure they would be moving into the White House. This is unfathomable and beyond a mere “conflict of interest” issue. This also explains why several concerned voters released video tapes the rigged voting machines they encountered, and posted it on YouTube. One male Caucasian Voter illustrated that when he chose Obama for President, a check would appear next to Mitt Romney’s name. He tried it multiple times, and eventually left that booth. He did not indicate who he ultimately voted for, but stated that he just wanted to report a “strange” occurrence.

Provided below is just one of the "Rigged Voting Booth" videos.

The combination of the Tagg Romney’s secret ownership of a voting machine company, and the YouTube videos of rigged voting machines is too much of a coincidence. I also believe that if this Article was misstating the facts, there would have been a lot of noise and defamation claims coming from the GOP or the Romney camp. Instead there is silence - as if the planned strategy was not to respond, so that the issue would quickly go away. I am almost certain that the Obama Administration is too busy to pursue the matter, especially since the stolen votes did not help them achieve their goal. The outcome of the this election, begs the questions: If Nixon hadn't won the election, would the Watergate break-in become the scandal that rocked Capital Hill - to destroy Nixon's political career? Given the lack of attention drawn to the Rigged Voting Machines connected to Tagg's Venure Capital Company, I can't help but wonder if Watergate would have become one of the biggest scandals in America's political history, if Nixon did not get Elected? Whatever the case, politics is left with a black eye, as democracy stumles on.

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Industry Outlook: Technology Driven Jobs Growth

The Department of Labor names the Service Sector as one of the top five industries that will drive the economy over the next 6 years, out pacing all other industries According to a recent Bureau of Statistics Report, the service sector employs approximately 112.8 million people. Given the continuous advancements of technology, technology related occupations are expected to grow 25.9%, while the service sector (including project management and consulting) will be the driving force in the economic growth through 2018. It is no surprise that the demand for IT consulting and system upgrades will foster increased business, driven solely by the face-paced changes in technology.

This is really good news for a wide range of career paths particularly; project managers, IT consultants, and risk analysts, network security specialists, developers, corporate trainers and recruiters. The Industry Outlook page indicates the Department of Labor anticipates 18 percent growth in the IT management and consulting services through 2020, out pacing all other occupations by 4 percent.

The Department of Labor Industry Outlook page indicates that the service sector will be accountable for employing as many as 131 million people between now and 2018. In their Industry Outlook Report issued the second quarter of this year, the Department of Labor points out that technological consulting services will be among the fastest growing sectors for professional and technical workers. To further support the positive outlook for IT and related Management and Service sectors, a Plunkett Research Report issued earlier this year, reiterated the projected 18 percent growth for the aforementioned industries. Like a super heroe, Technology will impact the overall business community as it continues to drive change, demand and thus economic recovery.

Small and mid-size organizations struggle to keep up with advancements that influence their ability to remain competitive as the market place transforms. For this reason globalization and express technology advancements foster new opportunities for IT consultant firms (Deloitte, 2012). Industry and Occupational Outlook data can be found at US Department of Labor website

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Silver Lining for Seniors:Outpacing National Unemployment

Great news for seniors comes as the economy crawls to recovery. At the depths of the recession unemployment was as high as 10%. By the 3rd quarter of this 2012, the national unemployment rate dipped below 8%, to settle at 7.9.
Although, this is a welcome turn of events, there are still millions of people unemployed or under employed. Nevertheless, it’s a positive indication that the long awaited recovery process is at work. Fortunately, seniors are the age group benefiting the most from the jobs surge. A Daily News article by Elizabeth Lazarowitz reported that 70% of the jobs filled since 2010, were fill by candidates over 50. In the past two years nearly 3 million jobs were filled by seniors, which has driven the national unemployment rate for down to 6.7% for people over 50.

We’ve always heard that employers have little use for their senior employees, and instead chase them out for younger, “cheaper” talent. Well…finally, the tables have turned. It took a while, but it appears that wisdom, experience and stability has become much more attractive to companies for the obvious reasons. In the aforementioned Daily News article, Kate Wendleton, president of Five O’Clock Club is quoted as saying “When employers have a choice, they say, ‘I need someone who’s seasoned and who will be up and running” What seemed to be common sense, took decades for HR executives to ascertain: Training, learning curves, and mistakes are eminently more expensive than the higher salaries required for, shall we say, "seasoned " professionals. This is exhilarating news for anyone over 50 seeking to find a job, change jobs or careers. My only question is; Why has it taken so long for companies to appreciate the immense value an experienced, older employee brings to the table?

In these difficult times, companies are forced to go into stealth mode to sustain their profit margins and growth objectives. That entails staff trimming, budget cutting, and closely analyzing the performance data for a more vivid perspective on their bottom line. What do you think that ultimately revealed? New recruits - fresh out of college, usurp far more costs and waste than the tried-and-true “senior” employees. That said, those candidates over fifty, or pushing sixty should carry their experience and grey hairs with pride and confidence – as the short-sighted HR executives have finally seen the light.

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Doin' the Twist: The Federal Reserve Steps in to Spur the Economy

In the beginning of the year, the Federal Reserve indicated their plan was to let the economy stand on its own. By the end of last month, however, the Feds broke down and reduced long-term interest rates in a program they refer to as Operation Twist. In this program, the Feds would drive down interest rates to encourage business activities, such as borrowing and hiring. According to a Wall Street Journal article by Peterson and Hilsenrath, the Federal Reserve officials announced that Operation Twist will be extended through the end of the year, but they’re “poised to do more”.

At the end of the 1st Quarter, the Feds indicated that there was no need for their help. The economic picture appeared brighter following a strong 4^th Quarter, and encouraging jobs report.

By the time the we turned the corner into the 2^nd Quarter, the economic storyline began to change amid heightened pressures from overseas. The market, which had anticipated S&P downgrades for Spain and France, could no longer withstand the push-back stemming from the European Union’s fiscal and political upheaval. Globalization has its rewards, but this isn’t one of them. When the EU sneezes, we are going to get the sniffles, as if the distance were non-existent.

As the Euro fiscal storm brewed, the dismal jobs report and Facebook IPO did its part to shrivel up any confidence Investors might have had left. The market uncertainty lingers, regardless of good economic news. This  depicts the profile of weary investors - possibly suffering from Post-Traumatic Stress Disorder.  Being the eternal optimist, I’m hoping Operation Twist will have us all dancing in the isles by the end of the year.

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Financial Fraud Strikes Again

Haven't we had enough of financial scandals? Of course not, here we go again. This time it is with a boutique futures trading broker - Peregrine Financial Group, also known as P.F.G.. On July 9, 2012, the National Futures Association (NFA) - the industry wide, self-regulatory organization for the U.S. futures industry, made an inquiry with U.S. Bank and learned that out of the $225 million in customer segregated funds that P.F.G. had reported to the NFA as being on deposit at the Bank just days earlier, only approximately $5 million was actually on deposit. The NFA also learned that, although P.F.G. submitted confirmations that U.S. Bank account balances as of February 2010 and March 2011, were reported to be approximately $207 million and $218 million, respectively, P.F.G.'s actual balances were less than $10 million for each one of these months.

On top of the reported financial fraud, a day earlier, the chairman and chief executive, Russell Wasendorf Sr., tried to commit suicide outside of the firm’s offices in Cedar Falls, Iowa .The Federal Bureau of Investigation is investigating the matter, according to a spokeswoman for the Omaha office, Sandy Breault. Ms. Breault indicated that the Chicago office of the agency might also get involved.

The Commodity Futures Trading Commission (C.F.T.C.) is seeking a restraining order against P.F.G., to prevent the destruction of any information that may be needed in the course of the investigation. The C.F.T.C. is also asking a federal court to appoint a receiver for the firm and freeze its assets.

This feels a lot like a curtain call for MF Global, where $1.6 Billion is still missing. (refer to a prior article in this blog for more information about MF Global). Similarly in this case, as the complaint states: “P.F.G. and Wasendorf have used customer funds for purposes other than those intended by its customers, and consequently, have misappropriated these funds”. “The whereabouts of the funds is currently unknown".

Needless to say, the operations of the firm have been halted. Unfotunately, I am one the many victims. For two years, I was an active futures trader with the company which offered  proprietary trading platforms to small retail customers like myself with unique and robust features that were not available from other brokerage houses. Although it has been several years since I day traded, due to time constraints, I still kept a funded account with P.F.G.. I contacted the NFA today and registered my name as an account holder. I urge all others affected to do the same. It may not amount to much but at least it is better to take some kind of action and to make your voice heard.

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To Be or Not To Be: EU Shows signs of cracking

Twenty years ago, when the idea was circulating about a unified currency in Europe, it seemed like such a brilliant concept, based upon sound economic and political arguments. Today, it almost seems like an impossible dream. Landon Thomas of the New York Times asks in his article "Can they muster the will and resources to keep the euro zone from breaking apart?

As the world looks on, and markets take defensive positions, the Euro crisis unfolds like the climax of a mystery novel. Greece's dramatic elections - where the people ousted Sarkozy, opting for an unlikely candidate, François Holland. The outcome of the election was a clear sign that the people were not ready for the strict austerity measures needed to turn their economy around. Bailout alone was not going to save Greece, it was only expected to buy them time to pull their policies, and fiscal plan together. The political and civil unrest in Greece, gave little hope for a turnaround. Instead the notion of Greece leaving the European Union resurfaced with somber overtones of reality.

By the end of May, Spain had decided to pump 19 billion Euros into its struggling Lender, Bankia, SA, as a strategy to illustrate stability, and quell any notion that the crisis continues for its financial sector, in light of Greece's downward slide. This is a prop-up strategy that is effective in influencing perception, which is crucial in the realm of investors and financial markets. The US equivalent of $24 billion, was a rich injection that is twice the amount Spain spent in the recent past to straighten out the banking sector during US housing market collapse - causing a global rippling affect. Spain is swiftly reacting to mitigate a repeat of the fiscal mayhem stemming from billions of dollars lost in toxic mortgage-backed securities.

Meanwhile, two weeks ago, S&P downgraded Bankia, and several other Spanish Banks, causing worldwide concern. The rating agency made matters worse by painting a gloomy near-term forecast for the region, citing their belief that Spain is heading toward a double dip recession. S&P also noted that there was a reasonable expectation of an increase in troubled assets. On the heels of Frances downgrade, and Spain’s fiscal concerns, the question becomes, was this unified currency such a sound economic and political move in the first place. Friday, the DOW closed 300 points lower, illustrating investor sensitivity to the Euro Crisis - although, it should be noted that market anxiety was further stimulated by the soft jobs report.

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BFF: Ballad of the Facebook Fiasco

Countless individual investors, and some intrigued "average Joes" thought that the Facebook IPO was going to be the atom bomb of Silicon Valley. The Golden Egg of the privately held tech companies, and its fearless leader, Zuckerberg, was sure to deliver. As the highly anticipated IPO jettisoned into history, as being the most anticipated offering of the millennium - I too thought FACEBOOK would be the IPO not to be missed. "get in now", I thought, "or you will regret it". Of course, I truly expected that the offering would be priced in the mid-teens, $13 or $15 per share. At the very least, it would be priced at a level commensurate with the "value", of a company that has no PRODUCT, who depends solely on Advertising. Advertising as a revenue source is not at all bad, but when you take into consideration that revenue growth on an ongoing basis would mean continued popularity, increased memberships and usage. Now, therein lays the rub. Allow me to offer MySpace into evidence, as how quickly a popular "hang out" can just as quickly shift into decline. MySpace, which was somewhat of a pioneer, is now valued at approximately $1 million, and struggling to stay relevant. That said, the pricing geniuses at Morgan Stanley had to be confusing FB stock with a commodity; you know... one of those limited resources that the world could not do without. How else would you explain a $38 opening price.

When a new popular issue is priced in the teens, it has no place to go but up. Sure it would fluctuate during the course of the day, but normally it would wind up quite a bit higher than the initial price. On the other hand, if you come into the market at $38, you are already at a premium, there is no place to go but down. Of course the speculation as to why the issue was priced so high, created underlying tension and uncertainty. By the end of the following day, reports of unethical matters surrounding the handling of the new issue began to surface. What a Fiasco this turned out to be! A sad, and bitter reality hit as news broke of possible insider trading. It is alleged that the lead bankers handling the FACEBOOK account at Morgan Stanley had tipped off their clients with confidential information. This information was in essence a warning not to purchase the stock at the opening price. Was this a setup, designed specifically to make million on the short sale of Facebook shares. An article in Business Insider reported that Morgan Stanley provided a select few classified information about FACEBOOK's weaker than expected forecast. Within 48 hours, news circulated of an SEC and FINRA investigation into what really happened. Whatever the case, Finance Reform obviously didn't go far enough.

Selective dissemination of "material" information concerning a cut in forecast estimates for the company would cause institutions to lose interest, which generated investor uncertainty among the small investors who weren't privy to this insider information. From the savvy individual investors, down to the average Joes jumping in to get a piece of the Facebook pie, this scandal put investors at an unfair disadvantage. The whole matter created a unprecedented IPO fiasco, leading to untold losses, and a decline of market confidence, which we could have done with out.

Adding insult to injury, Nasdaq had a fair share of technical problems which only added to the mayhem. Thousands of trades were stuck in limbo for individual investors. This may actually be a blessing, giving them the opportunity to either pick up shares at a steep discount, or back out completely. Ultimately, FB shares ended up about 30% lower than its initial price, with occasional ticks upward and downward. We're not likely to see stability in this stock price until the dark cloud of confusion is lifted, legally or otherwise.

My plans to purchase a hand full of shares immediately fizzled when I heard the price. A conversation with a few hopelessly optimistic friends convinced me that I should go ahead and pick up a couple shares just to be a part of the historic IPO. I never expected it would become the Fiasco of the decade.

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Economic Stability: Still in Question in the U.S. & EU

The mixed economic indicators have been a source of much debate among analysts. The softer than expected Jobs Report, along with the spiking gas prices have turned the optimistic economic forecast on its head. An article in the Wall Street journal indicated the industries that were previously driving the economic recovery in the past year have slowed, noting that others economic indicators have stepped up their place. I'd say that's as accurate observation and interesting fodder for economists. For example: the housing market appears to be gaining a good deal of traction, and consumer spending has been consistently growing, and gaining momentum. Experts say that the up-beat consumer spending data is linked more to the unusual warm Winter, and thus not so much a real indication of a positive consumer outlook. The market has fluctuated in the last quarter of 2011, but it cannot be disputed that the DOW has flourished in spite of the slow economy to its highest levels above 13, 000. It also appears that the market seems to be a lot less sensitive to the news across the Atlantic than last year. The Ratings agency, S&P downgraded Spain's debt in January and again in March, but the market barely responded to the news. This is somewhat surprising considering the impact the Euro crisis would have on our economy if things were to spiral out of control. Perhaps the market had already compensated for the news in the last quarter of 2011, since the downgrade for France and Spain had been anticipated.

Indications That support Optimism

Consumer spending has been a great influence on the economy, having a direct impact on the retail industry revenues. It should be noted that two thirds of national GDP is made up revenues from consumer spending. Consumer spending is indeed an important aspect of analyzing the economic forecast. The Housing market is showing signs of life, as housing purchases in the first quarter increased 19%. More dramatic statistics have been coming out of Miami and New York, but it’s still too soon to exhale

Indications That support Pessimism

The rising oil prices have become an unavoidable threat to the recovery, but for some inexplicable reason consumers are taking advantage of the prices and low financing interest rates. The jobs report came in at 120,000 new jobs, which is the lowest number in several months. This could indicate that employers are not completely convinced that the economy is on the road to solid footing. Let's face it the perception of the economy is the most important aspect of the forecast. Economists and analyst can talk endlessly, but if the investors' perceptions do not concur, they stay out of the market, or get out.

The fact is there are both positive and negative influences at work, making it more challenging to decipher the indicators. If I had to take a stab at analyzing the economic indicators, I'd be likely to lean toward an optimistic forecast because of the sheer impact that consumer spending has on the GDP, and the deep discounts in the housing values which have spurred buying. Also, the earning reports illustrated that banks are thriving amid restrictive finance reforms, and retailers are reporting positive earnings that beat analysts' expectations. Tourism in the country reached an all-time high amounting to billions in added revenues in New York alone. We will just have to wait ad see, it could really go either direction in the coming months.

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Stimulus-Interuptus: Feds Take Away the Punch Bowl

The economic indicators are all signaling a stabilizing, recovering economy. However, the disappointing jobs report may indicate that we’re not quite ready to pop the Champaign. In a March meeting held by the Federal Reserve, the published minutes show the feds believe that the economy is strong enough to stand on its own. No need to intervene to help it along. In the meantime, the markets reacted in a bag way.

The market sell off last week, was a response to the Federal Reserve taking the position that the economy no longer needs their assistance, which means no “stimulus”. A Chief Market Analyst, Doug Cote, was quoted as saying that the Feds were “taking away the punch bowl, the markets don’t like these punch bowls being taken away”. You can glean from this statement that the economic punch bowls were heavily spiked over the past 4 years to get up to this point. In fact, since the beginning of the U.S. Deep Recession, the government worked feverishly to steer the economy away from the cliff it was headed for. This meant the Federal Reserve and the White House actively propping up the financial market and the economy by implementing a cocktail of fiscal and monetary policies, which included numerous rounds of stimulus packages for various faltering industries.

The Bush Administration, followed by the Obama Administration pulled out all the stops to get the Country back on solid footing with programs which included; the bailout of Banks and the big three auto makers, tax payers stimulus refund, the homeowners’ assistance and first home buyer programs, and even forgiveness of old student loans - the list goes on. Now, the market has to go “Cold turkey”, and function without a safety net. This was obviously an unpleasant reality when the news send trimmers throughout the investment community, sending the DOW and other major indices in a mild tailspin.

The next quarter will be a critical benchmark for forecasting where the economy actually is, and what that means for Main Street, and the rest of the world

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Goldman Sachs: Filing for Moral Bankruptcy

The investment Banking community was stunned by the hard hitting statements made by Goldman’s former executive, Greg Smith. Smith's scathing, but heartfelt remarks, published in the OpEd section of the New York Times, was the topic of lively debates and criticism around the globe this week.
After reading Smith’s behind-closed-doors account of what’s really going on at Goldman, it would seem that Wall Street’s gold plated, celebrated investment bank of 143 years has somehow lost its core values on which they built their brand of “Trust” and “Integrity”. Goldman Sachs was once an awe inspiring investment bank, whose brain trust is referred to as “the best and the brightest”, but they have certainly suffered from a leadership deficiency. Strong leadership or the lack thereof, is the basis of the rise and fall of many businesses – regardless of their size. It is the “leadership” of Steve Jobs who, upon returning to Apple, was able to bring the company from the brink and take it to quintessential plateau, far beyond anyone’s imagination. That’s leadership.

Mr. Smith’s commentary might have easily been dismissed as a disgruntled employee, were it not for the fact that he was a highly regarded executive director, who has spent over a decade of his career there. From my perspective, Smith gains credibility for his tone, and the manner in which he described the pride he felt being a part of Goldman, and praised the company that once was. He was convincing because of his effort to be constructive in his criticism - disclosing examples of the troubling shift away from providing investment advice in the best interest of the client. Rather than simply throw destructive daggers and below-the-belt punches that serve only to damage the company, his rant was respectful but unyielding. Smith had the power to do a lot more damage than he did. Keep in mind, never once did he accuse Goldman of fraudulent practices.
Mr. Smith’s piece focused on Morals, Ethics and Integrity, which was summarily lacking, apparently much like the leadership. Smiths cited his leaving the company because he could no longer stomach the Goldman that has emerged. The shift in focus from Client-centered investment services to, revenue-driven “elephant hunting” (Smith, 2012) has eroded the company’s code of ethics to the bare bones. Having developed an unnatural preoccupation with taking every allowable advantage of the client, Goldman Sachs is left morally bankrupt.

Let us all be reminded of the Senate hearings, and the SEC investigations of 2010 and 2011, which resulted in fines and a multi-million dollar settlement. Meanwhile, the public has barely had a chance to digest the law suits that have come from international companies claiming Goldman mislead them about the rouge mortgage-backed securities they purchased from Goldman, without so much as a warning.
The firm’s Chief Executive Lloyd Blankfein and Chief Operating Officer Gary Cohn issued a statement more than 24 hours after the OpEd sent global shockwaves throughout the investment community. As expected, they were essentially denying the allegations made by Smith. Unfortunately, it was too little, and about $2.2 billion too late, as the value of the company took a dramatic hit after Smith's public resignation letter went viral. The stock recovered all but $800 million in value the following day, due to investor excitement about positive economic statements from the Federal Reserve, and stronger than expected retail data. Still, intangible losses are mounting where trust, good will, and brand are concerned. For this reason, many question the wisdon behind the delayed reaction from Goldman. It's too early to tell what the fall out will be, and Goldman's overall Damage Control Strategy is yet to be seen.

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Anonymous said......

Great article Katherine! The Goldman crew only needed 10 BILLION dollars (place pinky to corner of mouth)to stay afloat after the greatest heist on the planet by these guys: http://projects.propublica.org/bailout/list
It only took Goldman (Gold,man!)a couple of years to repay 10 Billion dollars... what does that tell me about how easy money comes to them?
At least one of them is admitting being morally bankrupt! It's about time!
We should have done what Iceland did instead of screwing over the people.
Now what?
http://projects.propublica.org/bailout/entities/237-goldman-sachs
Chris G / Mar 18, 2012 05:17 PM

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K. Reilly said......

Hey Chris G., thanks for your comment. I also checked out the propublica.org link, which I enjoyed scanning through. Sorry for the delayed response. :)

The Price of Deception: Settlement for Mortagage Underwriters Finalized

The Price of Deception: Settlement for Mortagage Underwriters Finalized
The big 5 mortgage services are forced to finally face music. In the past several months banks and underwriters were preparing to sign off on the highly anticipated settlement. As Attorney Generals nationwaide descended upon Washington to iron out the details of the settlement last month, industry analyst were left to speculate. We've reported about the widespread abuses in the mortgage industry, which culminated in thousands of forclosures being thrown out of court or temporarily halted. The housing industry which is the last of the economic indicators to show signs of a turnaround, is believed to be the catalyst for the financial callapse of 2008. As the rest of the financial markets began a massive melt-down, the foreclose rate was an an average of 45% nationwide by 2009. The Obama administration tried its best to stop the bleeding with several homeowner assistance programs, but it appeared the abuses had taken its toll on the market. It simply had to run its course.
It was later realized that many of the mortgage documents were not filled out properly, (leaving a questions as to what loan provider was attached to which property). This prompted intensified scrutiny, leading to a long over due investigation. During the investigation a freeze was placed on all foreclosures allowing homeowners to stay put for while until the matter was thoroughly reviewed. The implosion of the housing market slowly revealed a myriad of issues that involved abuse, fraud and deception, causing massive declines in property values. The term upside-down mortgages was commonly used to describe the steep depreciation property values that sank below the underlying mortagage owed. Later, the proliferation of foreclosures uncovered the ROBO signing scandal (mentioned above) involving, forged signatures and flawed paperwork which precipitated unfounded evictions. Imagine the devastation of homeowners being forced out of their homes, only to find it was due to erroneous paperwork.

An effort to correct the abusive behavior illustrated by the mortgage lenders and banks has finally come to a head. The "pow wow" of federal officials and attorney generals from all 50 states resulted in an outline of the terms of the settlement. Mortgage Servicers were bracing for a multi-billion dollar hit, which was announced yesterday (February.9th). The settlement is said to be a painful $25 billion in penalties and fines. News had circulated in December that there are a few sticking points in the deal, which was met with disapproval from a few of the Attorney Generals, namely Eric Schneiderman of New York.
The Obama Aministration was pushing to have the deal signed and sealed before the State of the Union Address, but that was a long shot. Surprisingly, he made no mention of it in his speech. Industry analysts and experts correctly speculated that fines would be around $25 billion, but were unclear as to the specifics of the homeowner assistance programs. I've been anxious to see the details of the settlement doe myself. Some aspects of the settlement will include limited aid from banks to overwhelmed homeowners, by reducing their loan principle. We can expect to see structured Principle Forgiveness programs, which will apply to a small number of mortgages that are wholely-owned by the banks, while Bank refinancings will be another form of aid to home owners.
The housing market woes of the past three years have eroded bank share prices and caused immeasurable blows to their reputation and goodwill. Trust and confidence of the public in Banks may be a thing of the past.


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K Reilly
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Crimes & Misdemeanors: FBI Closes in on Large Wall St. Funds

The FBI has arrested key members of a ring woking out of several states, including New York. Similar to the Galleon Group, these guys traded information concerning publicly traded companies in an apparent conspiracy to commit insider trading fraud. This ring was so productive, they were able to generate financial gains that rival the Galleon Hedge fund, who's founder recently received an 11 year sentence for insider trading. One of the hedge funds involved, Level Global Investors, raked in over $50 million in gains alone. The court documents state that a ring of traders and analysts, who formed an insider trading club, swapped information that resulted in over $60 millions in illegal profits.

As the voices of "Occupy Wall Street" draw attention to the stark imbalances of the privileged 1%, the fraud saga continues. According to the , Wall Street Journal the government has already prosecuted 63 people on charges of insider trading, yielding 56 guilty pleas or convictions. This marks an unprecedented number of cases procsecuted concerning insider trading in a three year period. Judging by this unrelenting onslought of crimes and Misdemeanors, it would appear that the Finance Reform Act is about as valuable as wall paper. That is not to demean the efforts of law makers or the Obama Administration, its merely a commentary on the industry's commitment to an "any means necessary" approach to capitalism. The only consolation is that the Feds and the SEC seem to be paying closer attention to the activities and trade patterns of hedge funds and other financial institutions that engage in trading. There's fresh optimism about the economic forecast, as job reports and other market indicators send a strong message of recovery. Neverthless, with the reluctance traders, money managers and banks to change their habits to avoid a repeat of a financial collapse, sends another message altogether: They still don't get it, and its likely that they never will.

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U.S. Manufacturing: Myth Dismanteled

I, like many others, was convinced that America's manufacturing output was minuscule in comparison to other countries like China, India and Mexico. It certainly appeared what was left of the manufacturing industry was hanging on a thread. As it turns out, nothing could be further from the truth.
We've all heard economists, politicians and professors mouthing off about the vast declines in U.S. manufacturing, and the erosion of jobs in that sector. Over the years, I have read countless articles complaining about America's short sided move away from manufacturing in place of innovations such as technology, and service related jobs.
The voices of dismay grew louder and evermore judgmental during the height of the recession, as unemployment climbed to 10%. After reading Friedman's "the World is Flat" I was now convinced that the US had really bet the future on technology and white collar service industries, having recklessly turned its back on the Manufacturing industry. During the industrial revolution, America excelled in manufacturing, which made us the number one economy - and the envy of the world at one point. The perception was further ingrained ten years after the passing of NAFTA, which precipitated an outsourcing frenzy. It was now “coming home to roost” as my grandmother used to say. Senator Joseph Lieberman submitted a report concerning this very issue in 2004, entitled “Offshore Outsourcing and America’s Competitive Edge: Losing Out in the High Technology R&D and Services”. It was an obituary of statistics that indicated that we were all but buried.

It appears that his purpose was to sounding the alarm, and stimulate discussion toward finding solutions during the Bush Administration. Although he touched upon the outsourcing concerns, ultimately his paper dealt with a broader issue, which I believe to be a compelling argument for the need for America to refocus its attention toward developing a brain trust of highly skilled talent in Engineering, Biotechnology and Science Technology to ensure that this country will better compete with the brain trust emerging from India, Russia and China in the future.
NAFTA, which was thought to be a trailblazing trade agreement when it was first past by Bill Clinton (in the 90s), in hindsight, it was the catalyst for the loss of millions of manufacturing jobs. This trade agreement, meant that China was no longer the only country corporations could get cheap labor without heavy tariffs or taxes. There was now Mexico, as an outsourcing option that was more accessible. This would enable companies to save money, shipping time and reducing time zone issues. It's no surprise that corporations would want to take advantage of the reduced cost of goods in search of higher profit margins. Between 1990 and 2004 the US workforce has lost over 7.5 million manufacturing jobs. Although 4.5 million manufacturing jobs have been added back, making the net loss approximately 3 million in lost manufacturing jobs (Source: U.S. Dept. of Labor). By the end of millennium, Imports had far exceeded our exports creating a widening trade deficit economists and analyst had voiced concerns about for decades. The US trade deficit with China alone has increased 44% between 2001 and 2010, amounting to over $190 billion from $114 billion. The increased trade deficit with China can be linked to the loss of 2.9 million jobs during the same period. Although the statistics are not easy to swallow, they were the building block of the Myth that America had abandoned the Manufacturing industry. In all fairness, economic indicators such as manufacturing, exports, job creation and jobs lost are the foundation for formulating forecasts for near-term economic status and provide a glimpse of potential long term ramifications. GDP and import/ export trade ratios are also utilized as a compus for growth and global growth comparisons. One morning, as I cleaning up and sifting through old article clippings (Im old school, what can I say) I stumbled upon a Wall Street Journal article by Mark Perry, which touted the flourishing manufacturing output in the U.S. What? I thought. I was quick to abandon my cleaning project (this was as good an excuse as any), to get to the bottom of this piece. The article prompted me to conduct a little research to substantiate this myth busting claim. There is no denying that there have been a continuous loss of jobs in the manufacturing sector.

The Auto industry is just one of the industries that suffered a loss of nearly 1.5 manufacturing jobs, as the Big Three auto makers sought bailouts and closed factories in an attempt to save their faltering operations. Statistics covering the period from 1990 through 2009 indicate a loss of nearly 5 million manufacturing jobs, which meant a displacement of factory workers and managers who were forced to rebuild their skill-set by training in new industries, or returning to school, or both. The displaced workers that did not, either remained out of work, or ended up taking unskilled positions at lower pay. This is an unfortunate side effect of changing times and  advancing technology. Nevertheless, the manufacturing industry has been rebuilding itself while no one was looking.  Although many factury jobs are gone forever, as they have been replaced with computers, we have increased our productivity 3-fold. According to the Federal Reserve, the value of  our manufacturing output in of 2009 was $2.72 trillion (in 2000 dollars). Today’s factory worker is so productive that their average output "value" is estimated at $234,220. This means that the output per worker is three times as high as it was 30 years ago, and twice the productivity of 1990.  An article written by Dr. Walter E. Williams for WND.com in 2010 stated the following "the Federal Reserve estimated  the value of U.S. manufacturing output  in 2008 was about $3.7 trillion". He went on to say,  "if the U.S. manufacturing sector were a separate economy, with its own GDP, it would be tied with Germany as the world’s fourth-richest economy".  We're still struggling to climb out of the economic recession, but it should be clear that we're making our way back to being a stong economy, that's decidedly back in the manufactuing business.

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K. Reilly
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The Economy and Politics

If the positive momentum of the US economy continues throughout the year, and that’s a big IF, the presumptive GOP nominee Mitt Romney could have a tough time in November.

Let’s look at the current stats: the unemployment rate dropped to a near three-year low of 8.5 percent, with payrolls increasing by 200,000 in December - the biggest rise in three months. The economy added 1.6 million jobs last year, the most since 2006, and the jobless rate, which peaked at 10 percent in October 2009, has dropped 0.6 percentage point in the last four months. Commercial investment is up by 10% and inflation is relatively low.

Could Barack Obama be happier? I don’t think so. He welcomed the news and urged Congress to extend a two-month payroll tax cut through 2012 to help sustain the recovery. "We're moving in the right direction. When Congress returns they should extend the middle-class tax cut for all of this year, to make sure we keep this recovery going," he said.

Still, all is far from perfect: Employment remains about 6.1 million below its pre-recession level and at December's pace of job growth, it would take about 2-1/2 years to win those jobs back. There are roughly 4.3 unemployed people for every job opening.Although construction and Courier jobs increased due to the mild weather and the holidays respectively, those jobs could be lost in January and the unemployment rate might rise as Americans who had abandoned the hunt for work are lured back into the labor market. Still, 23.7 million Americans are either out of work or underemployed.

The jobs data could be overshadowed by Europe's debt crisis. With the labor market far from healthy, the debt crisis in Europe unresolved and tensions over Iran threatening to drive up oil prices, re-election for the current administration is by no means guaranteed.

C. Cohn
Cohn-Reilly Report

_______________COMMENT


K. Reilly Said.....
I couldn't agree with you more. Although it looks good for the current administration, there are so many variables (mentioned in your article) that could reshape the country's direction and self perception. This will impact voter concerns, and who they believe will make it all better. Welcome back Charlie!

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K. Reilly /Jan 18, 2012 10:46 PM

France's nightmare realized:Is there life after downgrade for the EU

It is likely the one thing that kept France’s Prime Minister up at night. Protecting France’s credit rating was to become Sarkozy’s greatest challenge of the past 4 months, nevertheless, Sarkozy saw it coming. France and the other EU leaders were hoping to slide under the radar for a bit longer, before S&P focused its attention on the financially stressed members.

I’m sure that the historic downgrade of the US’s debt last year, made it all the more realistic for France. Well, last Friday was the day of reckoning for the Euro-zone, as members suffered downgrades on their debt. This was inevitable given the unresolved financial crisis which has consumed the EU in the past 18 months. Standard & Poor’s swooped down and left France and Austria stripped of their pristine Triple-A rating. It did not stop there, seven others EU members were downgraded including Italy, Portugal. Germany is the EU’s # 1 economy, and it was able to retain its triple-A rating. The anticipated, but dreaded downgrade of France’s debt, being EU’s #2 economy, will undoubtedly create a huge dilemma for the EU’s bailout plan.

As the downgrade of the European Union's #2 economy sinks in in the next couple of days, global perception of the European Union’s ability to bail itself out, leaves potential investors concerned. This of course translates to higher cost of borrowing. The entire bailout plan is in hinging on the EU’s ability to bounce back from this downgrade and swiftly move toward executing the bailout plan. The sooner the wheels begin turning toward resolving the issues, the better.

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K. Reilly
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Blue Chips in the Red: Kodak

In the digital world of imaging, the hardest hit in this sector, which should come as no surprise, was Kodak. The Wall Street Journal reported that Kodak may be filing for bankruptcy protection in the months to come. In the past three years, Kodak has incurred losses in 9 out of 12 quarters. For the 3rd quarter of 2011, Kodak's losses were estimated at $222 million, which had investors running for cover. Needless to say, their stock fell sharply last year. Although the company stock began the year trading at $3.00, Kodak's shares are presently fluctuating below .50 cents. Consequently, the New York Stock Exchange warned that they will move to delist Kodak if their stock price remains below $1 for over 6 months. Kodak is not quite in the "red" yet, but if the company continues operating at the same rate of quarterly losses they experienced in the third quarter of 2011, it is only a matter of time.

I remember purchasing stock in the company when I was about 18 years old, and I must have paid over $40 a share. I sold my Kodak shares when the price dipped to $23.00. That's when I realized that I really didn't have the stomach for the trading the market.

The Iconic Blue Chip, which had been a in the forefront of the imaging products and supplies for over 130 years, has lost its grip on the cutting edge. The once stellar company is struggling to reinvent itself in the new age of camera phones, desktop publishing, , and the digital transport, upload and storage of images. Let's face it, when was the last time you bought film, or dropped off film to be developed? The impact of the ever-changing technical environment couldn't be more evident, as Kodak's valuation has suffered an 80 percent loss in the past 52 weeks. Clearly, digital advancements, and steep foreign competition has taken its toll on Kodak, making them look more like a dinosaur than a ever. By June of 2011, the company's year-end target of $1.6 -to- $1.7 billion was revised to $1.3 - to- $1.4 billion, as a reflection of their reduced expectations. The third quarter earnings report was a dismal account of continued losses, shrinking their cash reserves to $862 million, from $957 million in the 2nd quarter. As it stands, Kodak is sitting on only 10% reserves, well below standard practice.

To tell the whole story, or at least put the current events in perspective, the eminent day of reckoning began nearly 12 years ago, as the tides started to shift away of processing, printing and "developing" photo images. Resisting the digital revolution, or buying time, Kodak began giving away Free Film with every film development pick-up. This was a good, albeit temporary strategy to insure repeat business. The disposable cameras was a wonderful product with a short life span,(no pun intended) but it did help to sustain revenues, and as reasonable amount of cash flow while the CEO and the his think-tank tried to come up with new "relevant" products and services. Alas, this is going to be a fight for survival with much at stake, and Kodak was seemingly not up to the challenge - or is it? Whatever the case, in the past decade, Kodak lost 95% of its value to the industry competition which bought new age, digital savvy products to the market.
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K. Reilly
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