CAROL’S BIZNESS VIEWS
AntiGlobalBanking- Until regulators are hired with the same quant skills as traders, get compensated at least as well, and have cross-border reach, Jamie Dimon, Congress, Obama- nobody can change Wall Street! Broken record alert. How many times do I have to say it?
Yerp: Tear Down Those Walls- Once again I resurrect the “Yerp” specter. As Frank Bruni writes in April 22, 2012 NYTimes, graffiti on walls in Portugal tells the tale. Frustration, futility. Greece, Spain, too. Germany holds the purse strings, but they are also losers. The stronger economies are being pulled down by cultural clashes with unlike-minded governments. It was bound to happen. Another ‘I thought so’ moment from the 1992 idea. As they tear down each other’s walls, will ours crumble with theirs?
Dollars for Dissing- I know a lot of bad things about ABN AMRO. I could write a non-fiction slam piece or a fictionalized novel of corporate greed and intrigue. Maybe someday I will. In the meantime, there are so many “former employees” of major global institutions who could do so, but haven’t. Goldman guy wrote his op-ed whine just in time for the narrative to be perfect for his story.
GoldmanGreedy?- OpEd NYTimes. Goldman guy disses culture at Goldman Sachs as he resigns. Me thinks his bonus was crappy. There’s more to this story. Client first? Never. Profit first. Always. As quants get smarter and bolder, bonuses for outré derivatives sky-rocketed. Pushing the envelope? Of course. That’s what they do. That’s what they will continue to do. Duh.
BainStreet- As Occupy Wall Street gets dismantled, the focus returns to Main Street. Big banks are not the “bane” of our existence, neither are large corporations. Without them, we have no economic base nor growth. It’s the “too big to fail” phenomenon that is the real issue. Regulators with no depth of financial knowledge, laws with no teeth. Look at Congress getting legal insider trading information and acting on it. Who writes the rules? Who enforces them? I was running the Boston office of a behemoth bank when Romney was still at Bain Capital there in the mid-late 90′s. We took senior strips of their mezzanine deals. Some created jobs, others eliminated them. ‘Flip-flopper’? No. Romney’s a pragmatist businessman who wants to close the deal.
YerpOut- Back in the early 90′s when there was talk of a European Union forming with one currency, I was a naysayer. I could not imagine countries with centuries of distinct cultures, languages, economic roots ever agreeing on anything as one entity. An article in The Economist, entitled ‘Yerp’ caught my attention at the time. It was a kindred cynical satirical view using the American tourist term for the continent. “We’re heading off to ‘Yerp’ for vacation in August.” As if Europe were just one big happy country. Never thought it could actually become so. Wrong. The EU formed in 1998 with the Euro its common currency. However, as Paul Krugman says today, maybe we were right.
ElevatorEcon- Dow up 100, down 200, up 300, down 50. So what? Daily elevator market reports are meaningless. Has the actual level gone below 10,500 or above 11,500 in years? No. Where else is there to put money? CD’s, money market, bonds, treasuries? Might as well put your money under the mattress. Same return. Not that there’s anything wrong with that. Risk. Reward. It’s silly to invest in individual stocks these days, value analysis no longer predictive nor rational. Management, balance sheet, free cash flow don’t drive stock price. Quants play games with derivatives and other new financial doo-dads such that mere mortals and especially rating agencies and regulators can never keep up. So, if you’re in equities, stay in industry sectors that make sense for the long term. And, if you’re a geezer, stuff your bucks under the bed.
Rating Agencies Redux- Back in 1982, Crocker Bank of San Francisco was a major financial force in the U.S. Then it decided to invest in Latin America. Sovereign risk analysis is where I started my career there. We did a pretty accurate job in-house with input from managers in every country. Rating agencies gave inaccurate favorable ratings for several countries, based on bean counting and superficial data. Crocker made decisions based on their ratings. RIP soon thereafter. 20 years later, never changed my opinion of these rating agencies no matter their assessments of private corporate, financial or public sectors, they were clueless. AA+ really?! Who cares what S&P thinks?
EconQuake, August 2011- Shifting faults. Germany can’t hold together tectonic States. Euro on the brink. Asia shaky. America reverberating from shock waves of government dysfunction. Confidence cratering. Liquidity tight long term. Banks, large corporations doing more with less. Big profits. Sitting on cash. Where to put it? What’s going to replace dinosaur industries? There’s nothing on the horizon to mend the cracks. The world is flat, a whole earth economy. It’ll be quite a while ’til the global aftershocks subside. At least through 2012.
Then, either the Mayans are right or there will be a new seismic bubble.
CNBC Republican Debate- BizBate- Bottom Line. Great debate. CNBC moderators demanded net answers. No gross profits for prurient media value. With the exception of ‘platitude Perry pause’, candidates were kept to economic topics. Huntsman and Romney prevailed on global knowledge. Private competition good, God help the environment. Balance sheet of our times. Fannie & Freddy out. Lucy & Ricky in. Too small to succeed, too big to fail. How to reconcile this P&L? Healthcare outsourced to WalMart.
Debt Ceiling Scariness? Jack Cafferty asked what his viewers’ biggest fear would be if the U.S. doesn’t raise the debt ceiling. He read my response live on the air during CNN’s Situation Room, July 18, 2011.
U.S. Treasury Secretary Portends Bad Times for Long Time- Tim Geithner says rough economic times will persist for a long time to come. Do you agree. See if I do here on July 11, 2011′s CNN Cafferty File.
HuntsMen- Mormon wars? Huntsman v. Romney? Jon Huntsman, Sr. and I go back to 1986 in the banking bizness. Jon, Jr. dipped in and out of Huntsman Chemical, and was on hand when his Dad gave me a salute at the family’s Park City ski lodge in 1994. Not surprised that Jon Jr. would run for Prez, but shocked that he’d do it this year against another Mormon. That doesn’t happen in LDS-land. Huntsmans and Romneys have deep ties to each other and the Church. Huntsman’s campaign advisors come from the McCain camp. There’s gotta be more to this story… June 2011
Spend, Don’t Cut- Old SF pal, Laura Tyson’s op-ed in the Financial Times promotes more spending during this economic downturn. She was Clinton’s economic adviser, maybe we should listen? Laura’s a Smith College Alum.
Budget Madness, Tipping Point- The unspoken code is that the country is at a cultural tipping point. Atlas shrugging on the right, wealth sharing on the left. Producers vs. Moochers. The truth lies in between. Both ends of the class spectrum are gaming the system, poor and rich. The middle class gets stuck with the real burden. Thus, Tea Party is born. Socialization of risk vs. privatization of reward. But, don’t take anybody’s Medicare away.
Stop Whining Women!- Pay Equality Day?! Give me a break. Carrie Lukas, Wall Street Journal reports that men and women make the same amount for the same work if time and job type are equal. In many cases, women make more. The myth that women make 77% of what men do is based on mix of career paths, and actual hours put in. No more whining women daze. Please.
Upside Down Econ- College tuition costs higher than ever. Job market shrinking. Life span longer than ever. Retirement benefits, savings insufficient. More people living longer, less income generation. Something’s gotta give. It’s not going to be easy or pretty.
MuniBonds- If you think money managers overvalue them, you’re right!
GoldFacer- Once again, regulators have no idea what ‘quants’ are doing inside Goldman Sachs, and soon all big investment banks. Not only was Glass-Steagall blown to bits long ago, it’s worse. We’ve returned to pre-regulatory 1930-daze, secret back room deals. One investor, Goldman Sachs’ one share of Facebook can be sold out of sight of public scrutiny. No valuation, analysis data need be disclosed to anyone. By the time the SEC et al hear about it from staff who may read the Wall Street Journal, Goldman and inside traders will have reaped a gazillion in profits. Already on to the next game.
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Carol Colitti Levine was a Senior Vice President and one of the first women Managing Directors at ABN AMRO, the Dutch Bank. After 14 years as a relationship manager in San Francisco, she ran the Boston office for 5 years; then became a Regional Managing Director at the Park Avenue office, NY.
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Carol’s 2010 Essay Titles:
Yerp- Will the EU last?
WomenInBiznessToday- Something’s gotta give.
GoldRising- Is China stockpiling? Is it the next bubble? Another recession?
Banks Now Being Sucked In by China- Danger, Jamie Dimon!
Decades of Difficulty Doing Bizness in China- Dynastic strategies.
Wall Street 2- Lessons from “Greed is Good” Days.
‘American’ Brands- Dove soap? Nope.
Derivatives Should Stay with Banks- Sheila Bair is right.
Caveat Emptor- Big banks that made big mistakes.
Naked Ladies Really Did Wreck the Economy! Regulators watching porn.
Naked Ladies Redux- The SEC – same song, different key.
Goldman Sachs Fraud? Not if disclosed.
MegaBanks Get Unfair Advantage- Too Big to Fail.
Picking Individual Stocks No Longer Works- “Quants”.
Barbarians and Liars Live On- Crashes come and go, greed endures.
Why have “Financial Advisors”? - If they have to work…
The Big Bank is not Your Bank- If you need credit forget it.
Greatly enjoyed your insights on how the market has become totally distorted due to unscrupulous trading practices that mock the very nature of honorable capitalist enterprise. But I think you’re being way too hard on the SEC. Those Quants hold MIT doctorates in physics and mathematics. An MBA in accounting from Babson can’t be expected to keep up.
The Big Short by Michael Lewis was great, highly recommend