Archives for March 2010

March 2010 - Page 7 of 11 - Money Morning - Only the News You Can Profit From

Lehman Execs Have No One to Blame but Themselves

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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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U.S., Britain Say EU Proposals Will Damage Hedge Fund Industry

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The European Union (EU) on Thursday defended its sweeping hedge-fund reform proposals against criticism from the United States and Britain.

British Prime Minister Gordon Brown met with French President Nicolas Sarkozy Friday in hopes of compromising on the proposed regulation.

Many EU countries are determined to change the hedge fund industry, which is often murky. The use of derivatives, such as credit-default swaps have been linked to the downfall of Lehman Bros. and exacerbating Greece's sovereign debt difficulties.

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BP Dives Into Brazil's Offshore Oil Industry With $7 Billion Deal

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British oil giant BP PLC (NYSE: BP) has finally entered Brazil's vaunted deepwater oil market with a $7 billion purchase of Devon Energy Corporation (NYSE: DVN) assets. BP yesterday (Thursday) announced it would acquire some of Devon's interests in Brazil, Azerbaijan and the Gulf of Mexico. BP also agreed to sell Devon a 50% stake […]

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New Banking Regulations ... Same Old Story

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U.S. banks, drunk with greed, drove the nation's economy to the brink of financial Armageddon.

To save U.S. banks from losing their license to dangle the nation's economy over a cliff, the U.S. Federal Reserve and the country's elected elite threw them a bailout party and gifted them with
the accounting- world's version of "Transformers. "

Unfortunately, new banking regulations aimed at solving these problems are little more than the same old song and dance that forced the bailout – and stuck U.S. taxpayers with a multi-trillion-dollar tab.

To see how reformers have failed to fix the banking system,

please read on...

The Scramble for Africa: Profiting From World's Largest Cache of Commodities

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In the quarter century stretching from the late-1880s to the First World War, there was a mad rush by the world's leading powers to occupy and annex African territory. Now, 100 years later, the world's elite again are scrambling to make their respective marks on the continent.

The methods of extraction have changed, but the end goal remains the same – to gain access to Africa's coveted bounty of commodities.

Most notably, Chinese interests have swarmed Africa, constructing roads, rail lines, municipal buildings, schools, ports, and pipelines in exchange for access to natural resources.

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Foreclosures Dropped in February, Helped by Rescue Programs and Poor Weather

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U.S. mortgage foreclosure filings dropped for the second straight month in February and posted the smallest annual increase in four years as government housing-rescue efforts and poor weather constrained bank repossessions, a report released by RealtyTrac Inc. showed today (Thursday).

RealtyTrac, which sells mortgage default data collected from more than 2,200 counties representing 90% of the U.S. population, said filings declined 2% from January. But filings were up only 6% from a year earlier, the smallest increase in four years.

"The 6% year-over-year increase we saw in February was the smallest annual increase we've seen since January 2006, when we began calculating year-over-year increases," James J. Saccacio, RealtyTrac chief executive officer said in a statement obtained by Reuters.

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What's In Store for U.S. Stocks in Light of Greece's Tragedy?

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The recent month of February was quite interesting for U.S. stocks, because while the Dow Jones Industrial Average rose 2.6%, it didn't exactly take a direct route to those gains: There were eight separate triple-digit moves in the Dow, both up and down.

At the root of that volatility were political and economic developments that challenged the rationale for the huge rally out of the March 2009 low. Bulls were basically rethinking their beliefs that the home-price plunge had abated, employment was on the verge of a big turnaround, governments could cut taxes and boost spending without end, and that interest rates would remain at zero for years.

I had prepared subscribers for much of this turmoil. Back in early November, I highlighted signs of trouble in the market for government debt well before the troubles in Dubai and Greece came to a head. In December, we started a dialogue on what to expect as the U.S. Federal Reserve withdrew liquidity from the economy and lifted interest rates. The upshot was a series of letters detailing why you should expect the first nine months of the year to trade flattish with a lot of volatility.

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European Bailout Fund Proposal ... Just Another Bad Idea

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Has bailout mania finally reached Europe?

The 16 nations that make up the Eurozone are seriously exploring the creation of a "European Monetary Fund," a bailout fund that would help euro-member countries that can't pay their debts.

This has the potential to be a pretty good idea. If structured correctly, the EMF could provide the discipline and stability that the euro needs.

However, I'm not holding my breath: Given the EU's track record, the EMF bailout plan will most likely evolve into yet another slush fund for politicians – as well as a drag on the European economy.

History proves Europe's bailout-fund proposal is unworkable. Read on to see why…

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A Year After the Bear-Market Bottom, Investors Must Still Pursue Profits - Without Ignoring Risk

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With the Standard & Poor's 500 Index up nearly 70% from the post-financial-crash low it set on March 9, 2009, U.S. stocks on Tuesday recorded their second-strongest showing ever for the first 12 months of a bull market.

But that near-record-setting performance brings to light two key issues.

  • First, despite the numbers that stand as evidence of the market's stunning surge, many still-shell-shocked investors refuse to label this as a true "bull market."
  • And second, no matter how great a market's performance has been, the real question to answer is "where do we go from here … and how do I position myself to maximize possible returns while mitigating risk as much as possible?"

Money Morning turned to several experts – including Money Morning Chief Investment Strategist Keith Fitz-Gerald, and respected market researcher Bespoke Investment Group LLC – for some perspective on both these topics.

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