Financial Crisis
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The Sovereign Debt Crisis: Bad For Europe, Good For U.S. Stocks
For several months now, we've been talking about the post-financial-crisis "new world order" that's emerged from the speculative excesses, recessionary realities and regulatory breakdowns of recent years. This new world order has created a world of lucrative new profit opportunities - that are governed by a new set of profit rules.
In terms of that whole new rules/new profit opportunities paradigm, here's one that may surprise you: The ongoing European crisis could end up as a net positive for U.S. stocks.
Let me explain...
To see how Europe's travails can aid U.S. stocks, please read on... -
Stock Market Strategies for the Post-Financial-Crisis 'New World Order'
For many investors, the recent thousand-point plunge by the U.S. stock market was probably the proverbial last straw.
So let me be perfectly clear about the point that I want to make here: Sitting on the sidelines could be the investment mistake of a lifetime. The post-financial-crisis "new world order" that's emerged from the speculative excesses, recessionary realities and regulatory breakdowns of recent years has created a world of lucrative new profit opportunities - governed by a new set of profit rules.
Let me explain...
To discover the next generation of global-stock-market winners, read on...
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As Scary as it Seems, Greek Debt Crisis Won't Spawn Second Global Meltdown
The Greek debt crisis is starting to display an uncanny resemblance to the subprime crisis that sank the U.S. housing market, sent the global economy into a tailspin and touched off the worst financial crisis since the Great Depression.
Indeed, Greece has behaved very much like a subprime country:
- It has borrowed more money than it can possibly repay - all the while lying to everybody about its true state of affairs.
- "Liar loans" have been made, in Greece's case, to enable the country to "cook the books" with regard to its budget deficits.
- New problems continue to emerge - apart from the liar loans - making it impossible to be sure all the troubles have been unveiled.
- And as was the case with the subprime-mortgage crisis, embattled Wall Street investment-banking-giant Goldman Sachs Group Inc. (NYSE: GS) appears to have been intimately involved in the business.
To understand why the Greek debt crisis won't spawn another global financial crisis, please read on... -
How the Goldman Sachs Fraud Case Could Accelerate Wall Street Reform
When the U.S. Securities and Exchange Commission announced Friday that it had filed a fraud action against Goldman Sachs Group Inc. (NYSE: GS), the news hit the financial markets like a carefully targeted bomb.
The Goldman Sachs fraud case, which relates to the investment bank's subprime-mortgage business, caused the financial giant's shares to nosedive 12.8%. The fallout spread to the broader markets, too, causing the Dow Jones Industrial Average to drop 1.1% and the Standard & Poor's 500 Index to skid 1.6%.
That reaction wasn't overblown.
Depending on how rough the SEC wants to play it, the case has the potential to shut down the cartel known as Wall Street. It could even jump-start the kind of sweeping overhaul that legal or regulatory reformists have so far failed to launch.
To see how the government fraud case against Goldman Sachs could force Wall Street to reform, please read on...
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Fastest Recovery Ever Could Push Corporate Profits to Record Highs in 2010
Sometimes we get a little carried away talking about esoteric subjects like bulls, bears, supply, demand, moving averages and the like. But if you just want to focus on something real, then look at corporate profits. When they're rising from a low, that's good; when they're flat-lining or declining, that's bad. Pretty simple.
Much of the rally of the past year has been in anticipation of a profit recovery. And now that recovery is actually coming in a bit better than bulls expected, which is why they are able to elbow bears so effectively. ISI Group now figures that corporate profits will clock in at +38.8% for the first quarter (year over year) of 2010, then +42.4% in the second quarter, +36.8% in the third quarter and then +30% in the fourth quarter (against harder comparisons). That would put profits in 2010 up a record 36.1% overall.
To read more about how corporate earnings will shape the market click here.
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Lehman Execs Have No One to Blame but Themselves
The U.S. bankruptcy-court examiner investigating the collapse of Lehman Brothers Holdings Inc. issued a stinging report Friday that accused senior executives of freewheeling accounting practices that led to the largest bankruptcy in U.S. history and sparked the worst financial crisis since the Great Depression.
The 2200-page report, authored by Anton Valukas, chairman of the Chicago-based law firm Jenner & Block LLP, also excoriated Wall Street investment banks, including JPMorgan Chase & Co. (NYSE: JPM) and Citigroup Inc. (NYSE: C) for finally pushing Lehman over the edge by demanding more collateral and changing guarantee agreements, Bloomberg News reported.
But the report says ultimate responsibility for its collapse can be attributed to a wrong-headed business model that rewarded excessive risk and encouraged leverage - problems that were brought to a head by the investment banks and government agencies.
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Billonaire Investor George Soros Questions the Euro's Future
In an editorial penned for the Financial Times, billionaire investing icon George Soros said that while Greece could be salvaged by a makeshift financial-rescue package, bigger problems lie ahead for the euro.
According to weekend news reports, Germany's finance ministry has sketched out a plan under which countries using the euro currency will provide between $27 billion and $33.7 billion (20 billion and 25 billion euros) in aid for Greece, which is teetering on the brink of default.
Soros says that "a makeshift assistance should be enough for Greece," but warns that the growing threats posed by other debt-laden, euro-member countries - particularly Spain, Italy, Portugal and Ireland - could prove overwhelming.
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Arctic Chill Frames Divergence in G-7 Economic Policies at Canada Meet
In between bites of seal meat and dogsled races, the financial heads of the Group of Seven (G-7) countries met near the Arctic Circle in Canada last weekend to hammer out differences in how their respective countries will approach monetary policy as the economic recovery takes hold. Windchill temperatures hovered around -40C in Iqaluit, just [...]
