While many retail investors have fled from highly volatile equity markets and outflows from equity mutual funds have reached historic proportions (ICI reported that investor holdings in stock mutual funds decreased by 9.5% in September), the ongoing zero interest rate policy of the Federal Reserve has lowered the return on Treasuries and all other fixed asset classes likewise offer returns that barely, if at all, keep pace with inflation.
As stocks made huge moves in October, many retail investors missed out, and it's likely that more will pile into the rally, sensing that the problems stemming from Europe have passed and it's once again safe to invest in stocks. That rationale may or may not prove correct, but, whatever the case, being at least partially invested in stocks is a solid strategy in good times or bad.
If one is inclined to jump in, the easiest way is to plug right in from the comfort of home or office through one of the many online brokerages available. The range of online brokerage products and services has expanded greatly since the infancy of the internet back in the late 1990s, and it pays to research the various options available.
According to a recent ICI report, households with internet access owning mutual funds is nearly universal, with ninety-one percent of all households owning mutual funds have internet access with ninety-eight percent aged 35-44 connected to the internet from their homes.
Additionally, the report goes on to say that eighty-four percent of mutual fund–owning households with internet access went online for financial purposes, such as to check their bank or investment accounts, obtain investment information, or buy or sell investments, though only nineteen percent used the internet for trading purposes, so there is still plenty of room for more home use of online brokerages.
What any good online brokerage provides in the way of online brokerage products and services starts with a stable and easy-to-use interface, simplifying the process of buying or selling stocks, ETFs or mutual funds. Beyond that, one would be advised to seek a brokerage that does not have maintenance or inactivity fees, offers free dividend reinvestment plans and options trading at a low price per contract.
Other features may include free research tools such as screeners, tracking and historical comparisons, but fees are by far the main differentiator of online brokerages. Many offer packages of free trades for new users, low cost stock trades and the ability to have broker-assisted trades for special circumstances. Fees for mutual fund trading should be minimal to free. For users who wish to trade on margin, rates vary widely and should be investigated thoroughly. The ability to transfer funds without hassle over the internet, to and from a personal checking account should be standard. Low minimum requirements, both for an initial funding and ongoing transfers is also a must.
A number of brokerages have expanded beyond stocks and mutual funds to forex, commodities and bonds, so an astute investor should prepare a list of requirements and priorities before opening any online account.
Stocks inherently have risk, so there's no reason to add to the risk and frustration by choosing an online brokerage that doesn't fulfill all of one's needs.
Sunday, October 30, 2011
Friday, October 28, 2011
Markets Calm After Massive Post-Eurofix Advance
For a day, at least, US equity markets responded in a fashion similar to what most wizened investors are accustomed. There were no wild swings or sudden accelerations, flash-crashes or HFT-inspired momentum runs. Volume was slight, as investors took a wait-and-see approach after Thursday's massive run-up, inspired by the market salve applied by European leaders.
One can imagine that said leaders engaged in some hearty back-slapping, after delay upon delay in dealing with the three separate issues involving the stability of the Euro as a currency and the Eurozone as a political/economic entity. Recapping, Greek bond-holders were to receive a 50% haircut, banks would get about $140 billion in recapitalizations and the size of the EFSF would be expanded to Euro 1 Trillion, or about $1.4 Trillion US. After negotiations had spilled into Thursday morning, the Europeans actually did deliver an outline that would satiate most of the news-hungry financial journalists and provided a framework for what is sure to be a fluid situation for months and years to come in one of the world's largest economic blocs.
For that, investors took a casual Friday attitude with them today, shoring up positions, taking profits and generally tape-watching to see if there would be any disruption to the relative calm. There were not, globally, as Asian markets were mostly higher, while European bourses and US equity markets were flat to split.
The Dow traded in a narrow range of less than 90 points, the NASDAQ and S&P 500 following with similar patterns. It was like a financial seventies flashback, without the disco music, flared jeans or leisure suits, thank goodness.
Only economic data releases could possibly upset the mood, but those delivered early in the day - personal income up 0.1%, personal spending rising by 0.6% and the University of Michigan's Consumer Sentiment gauge surprisingly up to a reading of 60.9 in October after a posting of 57.5 in September - were, for the most part, benign.
To say that it was a dull day was most likely an understatement and while some might decry the fact that there was no follow-through, one must consider the levels at which stocks are trading. October 2011 is on track to be not only the best October in the history of the Dow Jones Industrial Average, but the best month in terms of points gained in that index's long and storied history. There was probably as much chatter about the World Series as there was about stock moves. Investors have staked out positions and appear, for now, to be standing pat. A rest at these current levels would be neither surprising nor unusual. Even a further profit-taking decline would be an almost welcome reaction.
Macro-economic events have overshadowed what is usually a busy earnings season, though not completely. There is a sense that market turmoil has abated and global stocks are doing just fine, in deference to the protesters carousing in the Wall Street area and other cities.
Like kids after a raucous recess period, maybe all Wall Street wanted, or needed, was a time out.
There's a World Series game seven on Friday and an autumn weekend ahead. We'll worry about next week when it arrives.
Dow 12,231.11, +22.56 (0.18%)
NASDAQ 2,737.15, -1.48 (0.05%)
S&P 500 1,285.08, +0.49 (0.04%)
NYSE Compos 7,803.94, -10.05 (0.13%)
NASDAQ Volume 1,862,553,500
NYSE Volume 4,536,691,500
Combined NYSE & NASDAQ Advance - Decline: 2844-2792
Combined NYSE & NASDAQ New highs - New lows: 125-34
WTI crude oil: 93.32, -0.64
Gold: 1,747.20, -0.50
Silver: 35.29, +0.18
One can imagine that said leaders engaged in some hearty back-slapping, after delay upon delay in dealing with the three separate issues involving the stability of the Euro as a currency and the Eurozone as a political/economic entity. Recapping, Greek bond-holders were to receive a 50% haircut, banks would get about $140 billion in recapitalizations and the size of the EFSF would be expanded to Euro 1 Trillion, or about $1.4 Trillion US. After negotiations had spilled into Thursday morning, the Europeans actually did deliver an outline that would satiate most of the news-hungry financial journalists and provided a framework for what is sure to be a fluid situation for months and years to come in one of the world's largest economic blocs.
For that, investors took a casual Friday attitude with them today, shoring up positions, taking profits and generally tape-watching to see if there would be any disruption to the relative calm. There were not, globally, as Asian markets were mostly higher, while European bourses and US equity markets were flat to split.
The Dow traded in a narrow range of less than 90 points, the NASDAQ and S&P 500 following with similar patterns. It was like a financial seventies flashback, without the disco music, flared jeans or leisure suits, thank goodness.
Only economic data releases could possibly upset the mood, but those delivered early in the day - personal income up 0.1%, personal spending rising by 0.6% and the University of Michigan's Consumer Sentiment gauge surprisingly up to a reading of 60.9 in October after a posting of 57.5 in September - were, for the most part, benign.
To say that it was a dull day was most likely an understatement and while some might decry the fact that there was no follow-through, one must consider the levels at which stocks are trading. October 2011 is on track to be not only the best October in the history of the Dow Jones Industrial Average, but the best month in terms of points gained in that index's long and storied history. There was probably as much chatter about the World Series as there was about stock moves. Investors have staked out positions and appear, for now, to be standing pat. A rest at these current levels would be neither surprising nor unusual. Even a further profit-taking decline would be an almost welcome reaction.
Macro-economic events have overshadowed what is usually a busy earnings season, though not completely. There is a sense that market turmoil has abated and global stocks are doing just fine, in deference to the protesters carousing in the Wall Street area and other cities.
Like kids after a raucous recess period, maybe all Wall Street wanted, or needed, was a time out.
There's a World Series game seven on Friday and an autumn weekend ahead. We'll worry about next week when it arrives.
Dow 12,231.11, +22.56 (0.18%)
NASDAQ 2,737.15, -1.48 (0.05%)
S&P 500 1,285.08, +0.49 (0.04%)
NYSE Compos 7,803.94, -10.05 (0.13%)
NASDAQ Volume 1,862,553,500
NYSE Volume 4,536,691,500
Combined NYSE & NASDAQ Advance - Decline: 2844-2792
Combined NYSE & NASDAQ New highs - New lows: 125-34
WTI crude oil: 93.32, -0.64
Gold: 1,747.20, -0.50
Silver: 35.29, +0.18
Choosing the Right Money Market Account
With interest rates at historic lows, individuals and funds which are primarily risk-averse or on fixed incomes need to carefully choose their preferred investment vehicles, because inflation is going to eat into most of what's earned in either dividend-producing or fixed-rate investments.
Nonetheless, there are options which can be investigated in search of the best interest rates on money market accounts, where the goal is not growth nor income, but, rather, preservation of capital against the ravages of inflation, which is running at an annual rate of three to six percent, depending upon the source and one's own individual lifestyle choices.
Among the more flexible choices for investors these days are money market accounts, which, unlike certificates of deposit or US Treasury bonds, doesn't tie up an investor's capital for months or years at a time. Modern money market accounts can be found within offerings from brokerage accounts, through banks, credit unions or other lending or financial institutions, and the benefits of holding one's money in one are myriad, from limited tax liability to some which offer checking accounts upon which one can draw out funds or even debit cards tied to the account, which makes certain money market accounts not only wise investments, but useful choices in today's fast-paced environment.
Due to regulations and requirements under Regulation Q, which defines and governs money market accounts, most institutions limit the amount of money one can withdraw in a given time frame (usually monthly) or the number of transactions one can make within a money market account without incurring fees or penalties. Thus it makes good sense to investigate some of the literally thousands of web sites which offer comparisons or informational links concerning personal investing in money market accounts. Since money market accounts are regulated under the auspices of the US Treasury, understanding the rules and tax implications is a good first step to learning which funds or accounts fit best with your individual situation.
Once a decision is made to open such an account, a search for the best interest rates on money market accounts should be the next undertaking, though it pays to read the fine print, because, like all investment or financial accounts, there are multiple choices that may or may not be beneficial to your particular goals.
At worst, money market accounts are useful tools for keeping the money you do have, especially if you're concerned about volatility or risk in other markets, such as stocks, bonds, or derivatives, the most risky of all investments. Most money markets are government guaranteed against default, so any funds committed to them are as safe, if not safer, than money in a bank.
Flexibility is key, so choose a money market account that meets your established needs, offers a fair interest rate without onerous restrictions, and you'll sleep well at night, knowing your money is in a sound and secure environment.
Nonetheless, there are options which can be investigated in search of the best interest rates on money market accounts, where the goal is not growth nor income, but, rather, preservation of capital against the ravages of inflation, which is running at an annual rate of three to six percent, depending upon the source and one's own individual lifestyle choices.
Among the more flexible choices for investors these days are money market accounts, which, unlike certificates of deposit or US Treasury bonds, doesn't tie up an investor's capital for months or years at a time. Modern money market accounts can be found within offerings from brokerage accounts, through banks, credit unions or other lending or financial institutions, and the benefits of holding one's money in one are myriad, from limited tax liability to some which offer checking accounts upon which one can draw out funds or even debit cards tied to the account, which makes certain money market accounts not only wise investments, but useful choices in today's fast-paced environment.
Due to regulations and requirements under Regulation Q, which defines and governs money market accounts, most institutions limit the amount of money one can withdraw in a given time frame (usually monthly) or the number of transactions one can make within a money market account without incurring fees or penalties. Thus it makes good sense to investigate some of the literally thousands of web sites which offer comparisons or informational links concerning personal investing in money market accounts. Since money market accounts are regulated under the auspices of the US Treasury, understanding the rules and tax implications is a good first step to learning which funds or accounts fit best with your individual situation.
Once a decision is made to open such an account, a search for the best interest rates on money market accounts should be the next undertaking, though it pays to read the fine print, because, like all investment or financial accounts, there are multiple choices that may or may not be beneficial to your particular goals.
At worst, money market accounts are useful tools for keeping the money you do have, especially if you're concerned about volatility or risk in other markets, such as stocks, bonds, or derivatives, the most risky of all investments. Most money markets are government guaranteed against default, so any funds committed to them are as safe, if not safer, than money in a bank.
Flexibility is key, so choose a money market account that meets your established needs, offers a fair interest rate without onerous restrictions, and you'll sleep well at night, knowing your money is in a sound and secure environment.
Thursday, October 27, 2011
Global Stocks in Love with European Rescue Plan
If yesterday's gains were the equivalent of irrational exuberance, then today's stock risings around the world must be something akin to unconditional love for all things European, Euro, Eurozone or Euro-centric.
In the pre-dawn hours of Thursday, the meeting of leaders from the 17 nations comprising the the Eurozone - the nations employing the Euro as official currency - within the 27-nation European Union, broke from their marathon meeting and outlined a bold, yet still unfinished plan to stave off the collapse of Greece, keep key European banks solvent and expand the European Financial Stability Facility (yes, we know, you were wondering what EFSF stood for) to Euro 1 trillion ($1.41 trillion).
Greek debt-issuers, denominated mostly by major European banks, would be required to write down bonds by 50% (a haircut, as it is known), a proposal that many of the prominent banks had wished to avoid - and still may fight - was pushed through by the Eurozone leaders as a necessary action to keep the government of Greece from default and insolvency. The total amount to be written down on Greek debt came roughly to Euro 100 billion ($141 billion), though analysts debated the actual figure, most arguing the the recapitalization of the banks must be a much higher number.
Despite the lack of clarity over the details of the plan, stock indices around the world exploded to the upside on the news. The Hang Seng gained 3.26%, with other markets in the region all positive, though it was the European bourses themselves which registered the largest gains by far.
In Germany, the DAX finished more than 5% higher, the French CAC-40 soared 6.28% and Austria's ATX surged 6.11%. Other european markets registered significant gains.
While the European markets were notching higher through their afternoon, US futures were indication an explosive open with Dow futures in the green to the tune of - at times - more than 300 points. When US markets opened, the response was quick and certain, with all of the major indices higher in the early going, the NASDAQ setting the pace all day and finishing with a phenomenal gain of nearly 88 points and the S&P outdoing it with a 3.43% hike by days' end.
That Europe's long-awaited plan will proceed without hitches is uncertain, though there are sure to be bumps along the road. For now, however, the global stock market reaction appears to be showing broad approval and unequivocal support.
Buoying the euphoric sentiment in the US was the initial reading of US 3rd quarter GDP, which came in as expected, showing a growth rate of 2.5%, when skeptics of the somewhat-dormant US recovery had predicted much lower numbers, some believing that America was heading back into recession. With the holiday season fast approaching, chances for a double-dip recession have by now been effectively squashed.
Not only were stocks radically higher, with the Dow piercing the 12,000 threshold for the first time since August 1, the index on pace for it's best October ever, but commodities were also up sharply across the board, with oil, gold, silver, corn, soybean and wheat futures all posting superlative gains.
At the end of the day, the markets put on a show of global confidence not seen in some time, registering some of the best gains since the 2008-09 US financial catastrophe. What remains to be seen is whether the European leaders can actually implement the plan and keep the global economy churning. For today, at least, the consensus seems to be primed for their best efforts.
Dow 12,208.55, +339.51 (2.86%)
NASDAQ 2,738.63, +87.96 (3.32%)
S&P 500 1,284.59, +42.59 (3.43%)
NYSE Composite 7,813.99, +307.84 (4.10%)
NASDAQ Volume 2,851,696,750
NYSE Volume 6,600,709,000
Combined NYSE & NASDAQ Advance - Decline: 4956-827
Combined NYSE & NASDAQ New highs - New lows: 282-31
WTI crude oil: 93.96, +3.76
Gold: 1,747.70, +24.20
Silver: 35.11, +1.80
In the pre-dawn hours of Thursday, the meeting of leaders from the 17 nations comprising the the Eurozone - the nations employing the Euro as official currency - within the 27-nation European Union, broke from their marathon meeting and outlined a bold, yet still unfinished plan to stave off the collapse of Greece, keep key European banks solvent and expand the European Financial Stability Facility (yes, we know, you were wondering what EFSF stood for) to Euro 1 trillion ($1.41 trillion).
Greek debt-issuers, denominated mostly by major European banks, would be required to write down bonds by 50% (a haircut, as it is known), a proposal that many of the prominent banks had wished to avoid - and still may fight - was pushed through by the Eurozone leaders as a necessary action to keep the government of Greece from default and insolvency. The total amount to be written down on Greek debt came roughly to Euro 100 billion ($141 billion), though analysts debated the actual figure, most arguing the the recapitalization of the banks must be a much higher number.
Despite the lack of clarity over the details of the plan, stock indices around the world exploded to the upside on the news. The Hang Seng gained 3.26%, with other markets in the region all positive, though it was the European bourses themselves which registered the largest gains by far.
In Germany, the DAX finished more than 5% higher, the French CAC-40 soared 6.28% and Austria's ATX surged 6.11%. Other european markets registered significant gains.
While the European markets were notching higher through their afternoon, US futures were indication an explosive open with Dow futures in the green to the tune of - at times - more than 300 points. When US markets opened, the response was quick and certain, with all of the major indices higher in the early going, the NASDAQ setting the pace all day and finishing with a phenomenal gain of nearly 88 points and the S&P outdoing it with a 3.43% hike by days' end.
That Europe's long-awaited plan will proceed without hitches is uncertain, though there are sure to be bumps along the road. For now, however, the global stock market reaction appears to be showing broad approval and unequivocal support.
Buoying the euphoric sentiment in the US was the initial reading of US 3rd quarter GDP, which came in as expected, showing a growth rate of 2.5%, when skeptics of the somewhat-dormant US recovery had predicted much lower numbers, some believing that America was heading back into recession. With the holiday season fast approaching, chances for a double-dip recession have by now been effectively squashed.
Not only were stocks radically higher, with the Dow piercing the 12,000 threshold for the first time since August 1, the index on pace for it's best October ever, but commodities were also up sharply across the board, with oil, gold, silver, corn, soybean and wheat futures all posting superlative gains.
At the end of the day, the markets put on a show of global confidence not seen in some time, registering some of the best gains since the 2008-09 US financial catastrophe. What remains to be seen is whether the European leaders can actually implement the plan and keep the global economy churning. For today, at least, the consensus seems to be primed for their best efforts.
Dow 12,208.55, +339.51 (2.86%)
NASDAQ 2,738.63, +87.96 (3.32%)
S&P 500 1,284.59, +42.59 (3.43%)
NYSE Composite 7,813.99, +307.84 (4.10%)
NASDAQ Volume 2,851,696,750
NYSE Volume 6,600,709,000
Combined NYSE & NASDAQ Advance - Decline: 4956-827
Combined NYSE & NASDAQ New highs - New lows: 282-31
WTI crude oil: 93.96, +3.76
Gold: 1,747.70, +24.20
Silver: 35.11, +1.80
Wednesday, October 26, 2011
Irrational Exuberance, Part II or Squared to the Power of X
Talk about irrational exuberance, the term applied to stock market speculation by the liar-crook-Fed Chairman Alan Greenspan back in the heady days of the internet revolution of 1996 (actually, December 5, 1996), when the "esteemed" Chairman uttered:
While Greenspan was a few years ahead of his time - the great dotcom bust occurred in 2000 - his warning to speculative investments was not well-heeded then, just as today, practically anybody not predicting unlimited growth potential and stocks soaring to new levels is routinely given short shrift by the establishment Wall Street press. But suppose someone were to look at the past three-and-a-half weeks (or, extrapolating out to the past three-and-a-half years)and say something to the effect:
Perhaps the imagined quotation is not quite as erudite or economically succinct as Greenspan's more famous lines, but the message is very clear, nonetheless and it is exactly how the Europeans plan to solve their various deep and myriad problems with finance. Most of the known world is so heavily indebted - spilt between governments, banks and businesses and individual households - that most should be barred from going further into debt. Fortunately for most Americans, this is exactly the case, as banks have not lent to anybody or anything besides the most creditworthy since the financial calamities of 2008. The mega-banks' own fears of their own imminent demise forced them into tighter lending standards after they realized (too late, though, since they are bankers, after all, they should have known better) that the trillions of dollars in mortgage loans made to people without adequate credit, jobs or income might just default and spread the contagion of massive debt default throughout the banking system.
Let's face it, they knew exactly what they were doing, peddling s&*t securities, disguised as top-shelf, AAA credit risk, by bundling together all of the garbage sub-prime, alt-A and payday loan-type mortgage junk into massive tranches of mortgage-backed securities and selling them to whomever came up with the cash. The bankers didn't really care that they would implode the system, knowing full well that their well-paid lackeys, aka bought-and-paid-for elected representatives of the US Congress and the Presidency would not allow them to fail. Besides, they had already absconded with billions of dollars in fees and other payments from the unsuspecting suckers they swindled.
Of course, this is now ancient history, as none of the bankers have gone to jail, nor even been investigated, much less tried for their egregious crimes. Instead we have the little show of insider trading by a couple of immigrants, Raj Rajaratnam (already indicted, tried and sentenced) and Rajat Gupta (indicted today on five counts of securities fraud and one count of conspiracy to commit securities fraud) to act as fall guys for the white, Wall Street elite.
Both are (were) rich, important and notably non-white and not natural-born American citizens. Rajaratnam was born in Sri Lanka and is of Tamil descent. Gupta was born in India. The message is clear. White guys who commit white collar crimes walk free. All others can, and likely will, be used as fall guys, protecting the brotherhood of the saintly banker elite. These guys may do jail time, but it won't be tough. Rajaratnam is already appealing his conviction and 11-year sentence, a process that could take years. Meanwhile, he's still free, at least until November 28. That's the date the judge set for him to surrender to authorities. Place your wagers on whether "Raj" flees the country or is admitted to a hospital. He suffers from multiple health issues, including diabetes.
It's pretty clear that these dark-skinned fellows are just actors in a well-scripted play that goeswell outside the bounds of traditional jurisprudence. Steal a car or a sell a dime bag of grass and justice will be meted out swiftly and surely. Steal billions of dollars and walk away.
So, expecting Wall Street to respond properly to the current European stupidity is just another example of the absurdity of economics, circa. 2011. Greece is already half-way to default, with Italy, Belgium and Spain close behind. Portugal and Ireland have lost their sovereignty to the international banking cartel, the citizens of those countries reduced to nothing more than indentured debt slaves. France teeters on the precipice of recession and the whole bunch will probably take down Germany - the only semi-stable country on the continent - with the lot.
All of that adds up to a buying frenzy of US stocks. If this isn't the most cockeyed, woeful example of irrational exuberance ever seen, I challenge anybody to make sense of it all. The contagion from the eventual failure of the Euro will spread like wildfire around the globe, affecting everything we buy, sell or touch. But until then, buy stocks, You can always sell them just before the next market crash.
Dow 11,869.04, +162.42 (1.39%)
NASDAQ 2,650.67, +12.25 (0.46%)
S&P 500 1,242.00, +12.95 (1.05%)
NYSE Composite 7,506.15, +105.33 (1.42%)
NASDAQ Volume 2,153,615,250
NYSE Volume 4,873,521,000
Combined NYSE & NASDAQ Advance - Decline: 4346-1278
Combined NYSE & NASDAQ New highs - New lows: 87-52
WTI crude oil: 90.92, -2.25
Gold: 1,723.50, +23.10
Silver: 33.31, +0.26
Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?
While Greenspan was a few years ahead of his time - the great dotcom bust occurred in 2000 - his warning to speculative investments was not well-heeded then, just as today, practically anybody not predicting unlimited growth potential and stocks soaring to new levels is routinely given short shrift by the establishment Wall Street press. But suppose someone were to look at the past three-and-a-half weeks (or, extrapolating out to the past three-and-a-half years)and say something to the effect:
Let me get this straight. The hopes of the US stock market are pinned to perpetual zero interest rates at home and hope that a collective of mostly bankrupt European nations will cobble together a lending facility designed to keep certain mostly Southern European governments from defaulting on their massive debts by bailing out banks and then borrowing even more hundreds of billions of euros from them. That sends stocks ten to twelve per cent higher over the course of the past three-and-a-half weeks and we haven't even seen details of the plan. I would call that either wishful thinking, a complete fake-out or irrational exuberance squared and to the power of X, X being the number of idiots who believe issuance of more debt will solve a problem that began because of excessive debt.
Perhaps the imagined quotation is not quite as erudite or economically succinct as Greenspan's more famous lines, but the message is very clear, nonetheless and it is exactly how the Europeans plan to solve their various deep and myriad problems with finance. Most of the known world is so heavily indebted - spilt between governments, banks and businesses and individual households - that most should be barred from going further into debt. Fortunately for most Americans, this is exactly the case, as banks have not lent to anybody or anything besides the most creditworthy since the financial calamities of 2008. The mega-banks' own fears of their own imminent demise forced them into tighter lending standards after they realized (too late, though, since they are bankers, after all, they should have known better) that the trillions of dollars in mortgage loans made to people without adequate credit, jobs or income might just default and spread the contagion of massive debt default throughout the banking system.
Let's face it, they knew exactly what they were doing, peddling s&*t securities, disguised as top-shelf, AAA credit risk, by bundling together all of the garbage sub-prime, alt-A and payday loan-type mortgage junk into massive tranches of mortgage-backed securities and selling them to whomever came up with the cash. The bankers didn't really care that they would implode the system, knowing full well that their well-paid lackeys, aka bought-and-paid-for elected representatives of the US Congress and the Presidency would not allow them to fail. Besides, they had already absconded with billions of dollars in fees and other payments from the unsuspecting suckers they swindled.
Of course, this is now ancient history, as none of the bankers have gone to jail, nor even been investigated, much less tried for their egregious crimes. Instead we have the little show of insider trading by a couple of immigrants, Raj Rajaratnam (already indicted, tried and sentenced) and Rajat Gupta (indicted today on five counts of securities fraud and one count of conspiracy to commit securities fraud) to act as fall guys for the white, Wall Street elite.
Both are (were) rich, important and notably non-white and not natural-born American citizens. Rajaratnam was born in Sri Lanka and is of Tamil descent. Gupta was born in India. The message is clear. White guys who commit white collar crimes walk free. All others can, and likely will, be used as fall guys, protecting the brotherhood of the saintly banker elite. These guys may do jail time, but it won't be tough. Rajaratnam is already appealing his conviction and 11-year sentence, a process that could take years. Meanwhile, he's still free, at least until November 28. That's the date the judge set for him to surrender to authorities. Place your wagers on whether "Raj" flees the country or is admitted to a hospital. He suffers from multiple health issues, including diabetes.
It's pretty clear that these dark-skinned fellows are just actors in a well-scripted play that goeswell outside the bounds of traditional jurisprudence. Steal a car or a sell a dime bag of grass and justice will be meted out swiftly and surely. Steal billions of dollars and walk away.
So, expecting Wall Street to respond properly to the current European stupidity is just another example of the absurdity of economics, circa. 2011. Greece is already half-way to default, with Italy, Belgium and Spain close behind. Portugal and Ireland have lost their sovereignty to the international banking cartel, the citizens of those countries reduced to nothing more than indentured debt slaves. France teeters on the precipice of recession and the whole bunch will probably take down Germany - the only semi-stable country on the continent - with the lot.
All of that adds up to a buying frenzy of US stocks. If this isn't the most cockeyed, woeful example of irrational exuberance ever seen, I challenge anybody to make sense of it all. The contagion from the eventual failure of the Euro will spread like wildfire around the globe, affecting everything we buy, sell or touch. But until then, buy stocks, You can always sell them just before the next market crash.
Dow 11,869.04, +162.42 (1.39%)
NASDAQ 2,650.67, +12.25 (0.46%)
S&P 500 1,242.00, +12.95 (1.05%)
NYSE Composite 7,506.15, +105.33 (1.42%)
NASDAQ Volume 2,153,615,250
NYSE Volume 4,873,521,000
Combined NYSE & NASDAQ Advance - Decline: 4346-1278
Combined NYSE & NASDAQ New highs - New lows: 87-52
WTI crude oil: 90.92, -2.25
Gold: 1,723.50, +23.10
Silver: 33.31, +0.26
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