Oct
28
2011
As you might imagine, a great deal of time, effort, and monetary investment has been expended in the past few months in re-designing and re-programming www.StockResearchPortal.com.
Yesterday, the first day following our website conversion, our traffic was particularly encouraging. We would greatly appreciate any positive or negative comments you may have on the ‘look, feel, and navigation’ of the new design.
Comments on how you think we can improve it, in order to make your use of it easier or more efficient, will also be greatly appreciated. Please write to us at info@stockresearchportal.com. Thanks in advance.
Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.
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Oct
28
2011
I suggest you take the time to read an October 20 article written by Robert Skidelsky, a member of the British House of Lords, and Professor Emeritus of Political Economy at Warwick University. Titled ‘Recovery before Reform’ – reading time 5 minutes, this article for me summarizes one of the fundamental reasons the economies of the developed countries (particularly the U.K, the U.S. and Eurozone countries) have come to the state they currently are in, and a fundamental reason why I think meaningful recovery will only come when one or more ‘financial shocks’ force politicians to confront what Skidelsky calls ‘Money Power’.
Skidelsky briefly reviews the U.S. Glass-Steagall Act of 1933 which he says “aimed to prevent commercial banks from gambling with their depositors’ money by mandating the institutional separation of retail and investment banking. The result was 65 years of relative financial stability”. Skidelsky then says that ‘Money Power’ petitioned (my word) with the aid of what Skidelsky calls “its apologist cohort of economists” to have Glass-Steagall repealed – which U.S. President Clinton and his Administration did in 1999. After that repeal commercial and investment banks could merge and, as Skidelsky says “the composite entities were authorized to provide a full range of banking services, including underwriting and other trading activities’.
This brief history lesson does not touch on globalization, developed country loss of manufacturing jobs to low labour rate jurisdictions, or the resultant widened imbalance in country specific trade surpluses and deficits. Hence in my view it doesn’t tell the whole story. However, for me it tells an important part of the story of the economic decline, and what I see as an ongoing economic decline, of the developed country economies relative to the economic improvement in China and other developing countries.
As I read Skidelsky’s article, his central message is that for economic recovery to be meaningfully sustained in the developed countries the very banks whose activities contributed to, if not caused, part of the current financial and economic fragility have to be prepared to advance credit to then spawn economic growth in those countries. My comments:
- I think anyone who spends time criticizing individuals or financial and other business institutions for current economic conditions in their own country or globally is wasting time and energy. The exception to this would be ‘criticism through meaningful and prosecuted litigation’ of individuals and institutions – but I think by and large that would be counterproductive at this point to developed country economic sustainability and prospective growth. I am definitely not including Mr. Skidelsky in the group of writers and media commentators who spend time in criticism. He does not do that in his article. He simply recounts what he believes to be facts, and reaches a conclusion;
- to the extent we can learn from results of past activities, we ought to do that. In this regard, I think in theory the Banking System structure in the developed countries should revert to a Glass-Steagall model. However, as a practical matter, that said, ‘you can’t take things away from people and leave them happy’ and ‘he who owns the gold makes the rules’. Like it or not, in the U.S. in particular it seems to me the ‘System’ of political donations, favours, and partisanship will preclude that from happening unless major financial crisis forces it as a ‘last resort measure’;
- I don’t see how the ‘Banks’ in the U.K, the U.S. and the Eurozone can extend meaningful credit given the state of their balance sheets as they report them – let alone what I suspect to be the ‘worse than reported’ state of their balance sheets if the former accounting mark-to-market rules were applied to them today; and,
- as a result, while what Mr. Skidelsky says strikes me as being largely right in theory, I don’t see it happening in practice. I simply don’t see the developed country (read U.K., U.S. and Eurozone) ‘Banks’ benevolently extending credit in the current circumstances and environment. The only place I see that credit extension coming from are Federal Governments, and think they already are ‘tapped out’ if they want to keep inflation low in our existing fiat currencies system; and,
- even if extensive credit was extended in the developed countries to promote economic growth I don’t believe there is any reason to believe it would seriously succeed given the redistribution of manufacturing jobs that has taken place, and the continued technological change that generally promotes increasing capital intensity and reduced manufacturing jobs that has taken (and continues to take) place.
I believe you will find Mr. Skidelsky’s article worthwhile. Please write at info@stockresearchportal.com if you read it and disagree with my commentary on the issue it raises.
Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.
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Oct
28
2011
Begin with acceptance of a proposition that over time in an economic environment reward and risk are co-related. If that is true, I can’t see how one can disagree that there is something ‘more than fundamentally wrong’ with a societal system that enables one small segment of society to economically benefit on a personal level from taking third-party (i.e. non-personal) risk without also taking personal risk – and at the expense of the society at large that they are members of. Yet that is exactly what has been – and seemingly continues to be – the economic result of the ‘Big Banking System’ in the United States and other developed countries. Investment Bankers and Corporate Executives reading this likely will say “but of course we take personal risk. We could lose our jobs if we don’t produce ever increasing quarterly profit results”. While that may be true to some degree, that is not the personal risk I am referring to. The personal risk I am referring to is ‘litigation risk’ – i.e. the risk that they be sued personally for their actions on behalf of their employers. The consequence as I see things? At some point such a system is at serious risk of not being sustainable.
I write this on Sunday, October 23, 2011 as I reflect on a New York Times article published Saturday titled ‘Banks Collapse in Europe Points to Global Risks’ – reading time 6 minutes. For anyone who has followed the economic events as they have unfolded in the United States prior to and after September, 2008, there ought to be nothing new in concept, or particularly surprising, in this article. At a high level the article says to me – and I think might have been better titled – ‘How Much Is Enough?’ The article discusses the collapse of Belgian-French bank Dexia, and outlines what may prove to be what I take to be ‘indirect exposures to counter-party risks by some of the large U.S. Investment Banks – including Goldman Sachs and Morgan Stanley. The article says, and I think perhaps very importantly as things may transpire, that:
“Given the global and interconnected nature of the financial system, institutions around the world have other types of indirect risk to European debt problems. But the scope of these ties is not fully known, because the exposure is hidden by complex transactions that do not have to be reported in detail”.
The article ends by quoting a former official of the Federal Reserve Bank of Cleveland:
“In the short run, it would help if the authorities would say they refuse to provide publicly funded money for the payoffs of derivatives. This is like using public funds to support your local casino. It is difficult to see how this is good for society in the long run”.
As I read the article, the principal questions the article asks are:
- going forward, how much of a burden should taxpayers bear to support banks that made ill-advised loans or trades? My view: Taxpayers should bear none of the burden, notwithstanding the behavior of the American Government in and after 2008 to date. As I see things, all that is happening here, unless fundamental social and economic behaviors change and don’t subsequently revert to what has happened historically, is that for Government to continue to support the Big Banks with bailouts simply postpones the inevitable; and,
- had the U.S. Government not bailed out the Big Banks in 2008, would the executives of those Banks have taken the same risks after 2008 that they now seem to have taken when supporting countries such as Greece, and other financial institutions such as Dexia? My view: I really have no idea, but my guess would be that Investment Bankers after 2008 have been more interested in generating income and bonuses ‘while the sun still shines’ than governing their actions by an underlying belief they will always be bailed out. I don’t know whether the majority of Investment Bankers in the prevailing financial markets and prevailing world economies think short-term or long-term, but I suspect much more the former than the latter. I also think that whether Bankers believe they face personal litigation risk as a result of their business activities, or face only personal employment and corporate business risk in respect of those activities, very likely influences their individual and collective behavior.
Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.
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Oct
27
2011
Further to my October 14 e-mail, last evening we converted www.StockResearchPortal.com to a ‘Paid Content’ website. We apologize for any inconvenience our conversion last evening caused website Subscribers. When you next visit our website we trust you will find it much ‘cleaner’ and more easily navigated. The following information is important to our website conversion:
- Some of our content will always be available at no cost to website visitors;
- We highly value our current Subscribers. As a reward to our Subscribers for their past support, beginning today through Friday, December 16 we are offering our existing Subscribers ‘Paid Content’ subscription rates of Cdn$24/month for a twelve month period, and Cdn$227/year for one year. These rates are discounted by 40% from what will be our standard monthly and annual rates of Cdn$39.75 and Cdn$377.00 respectively. Our standard monthly and annual rates have been set in consultation with two ‘website pricing’ specialists. Those standard monthly and annual rates have purposefully have been set at levels believed by those specialists to be conservative;
- We believe that in most jurisdictions our subscription fees may be deductible for income tax purposes. Please consult your income tax advisor;
- Subscribers to our website who have subscribed at no cost will be able to use our website as they previously have up to and including December 16 without paying our discounted monthly or annual subscription fee. If current Subscribers elect not to pay our discounted subscription fee, they will be unable to access our Paid Content after December 16 unless they then pay our standard subscription rates;
- We continue to improve our Subscriber research experience and expand our coverage and proprietary features. As noted, when you visit our website you will experience an updated look, feel, and improved navigation protocol. In the next few weeks we will be adding (1) improved and more extensive ‘company insider trading analysis tables’, (2) a ‘Peer Group Price Indexing and Comparison System, and (3) an improved ‘country risk’ analysis capability – too mention only our currently programmed and ‘scheduled for release’ new proprietary features.
Please write to us at info@stockresearchportal.com if you have questions or comments with respect to our website conversion.
Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.
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