I don't often agree with the Obama administration. So I have to say that I was surprised when I heard it had a plan to reduce the risk of another banking crisis. It wants to prohibit banks that are protected by deposit insurance from engaging in risky, proprietary trading, and it wants to break up some of the very largest banks.
I made both those recommendations in my forthcoming book "Alchemists of Loss" (Wiley 2010). The book, written jointly with Kevin Dowd, a British finance professor, should debut sometime late this spring(we sent the manuscript to the publisher last weekend - what a relief!). But after I studied the Obama plan further, I realized that I shouldn't have been surprised - the idea's sponsor was former U.S. Federal Reserve Chairman Paul A. Volcker.
Why Volcker's plan doesn’t go far enough...
Wall Street's Stranglehold on the Economy Is Choking Americans
America's Founding Fathers were afraid of any concentration of power in the republic. They were particularly afraid that banking interests could hijack our fledgling democracy.
And yet today, 234 years later, our Founding Fathers' worst fears have come true. Wall Street's stranglehold on the economy threatens our very prosperity, and the future of a truly democratic republic.
It's high time we address the truth about Wall Street's tyranny and set a course for a more secure economic future - one that's anchored by a safe banking system, not a system rigged by banks.
How Wall Street is Choking America? Read on...
With T-Bill Yields at Zero, it's Time to Beware of the "Bond Bears"
There is some interesting action unfolding in the dark corners of the credit market.
Although this exploratory sojourn takes us fairly far afield from our regular stomping grounds in the equity markets, it could have important implications for our investments. So grab a thinking cap, and let's go exploring.
First, let's have some context. As you know, governments around the world have unleashed tons of stimulus spending over the last year. Against a recessionary backdrop, it's no surprise that tax revenue has plummeted while fiscal deficits have soared.
Open Letter to Timothy Geithner: Is Your Nose Getting Longer?
Dear Treasury Secretary Geithner:
I noticed you recently told the Japanese press that you intended to maintain a strong dollar, and that the Obama administration would bring the U.S. fiscal deficit back to a "sustainable balance."
Tell me, don't you feel your nose extending like Pinocchio's when you tell these fibs to innocent Asians?
The dollar is not strong. In fact, it's sinking to record levels of weakness, and it's going to stay that way, for three reasons:
Could Goldman Sachs Share GM's Fate?
Investment banks have gotten fat off the land since 1982, when the great U.S. bull market got its start. Their business has multiplied many-fold, and their earnings have soared into the stratosphere, to a level far higher than any other sector. Now, JPMorgan Chase & Co. (NYSE: JPM) has issued a report suggesting that investment-banking [...]
G20 Leaders Meet to Rebalance World's Economy While Imposing Banking Reforms
Leaders from the G20 nations, which represent 85% of the global economy, will hold an economic summit in Pittsburgh this week to determine how they can keep the economic recovery on track while rebalancing growth and imposing new regulatory restrictions on banks. U.S. President Barack Obama and his overseas counterparts will meet for the third [...]