LinkedIn: A Growing Enterprise: What is LinkedIn? It is the world’s largest professional network with over 40 mi.. http://bit.ly/L840z

When will the Recession End?

This is a much debated topic in which many Economists can battle it out for long amounts of time. Some believe that it will be all over by Mid-2009, some by the end of 2009, others think it will be an extended recession that won't end until past 2010. The question is who really knows? No one. One the recession will not be over until all Financial Institutions are put back into normal day by day operations. Personally I believe it still is far too early for anyone to predict when these turbulent times will end. The key is to see if the Obama Administrations initiatives end up being effect policy change. A resurgence in the housing market is a critical process and that relies on the banks effectiveness to begin lending. Currently wit the LIBOR dropping consistently in the past three months it looks as if interest rates will continue to depreciate making banks less willing to lend money. Credit strains continue however we have seen the overall markets strengthen overtime. The Obama administration's large stimulus package should add to aggregate demand in a timely way, complementing aggressive, often unprecedented, action from the Fed. It still is too early however to make any time table as of when the plan will work. I have many worries about the potential for near-term deflation or longer-term high inflation could not be dismissed out of hand but had self-correction mechanisms. Currently we are withdrawing excess liquidity in response to the Financial Crisis. One key aspect in which I believe we are failing the economy on is the constant bailouts and the unwillingness to apply personal responsibilities to companies failures. An ending quote from the British MEP applies perfectly to current times. "It’s that you’re carrying on willfully worsening our situation, wantonly spending what little we have left. You cannot carry on forever squeezing the productive bit of the economy in order to fund an unprecedented engorgement of the unproductive bit. You cannot spend your way out of recession or borrow your way out of debt."

Can We Put a Value on Toxic Assets?

Wall Street sure saw a spark today igniting the markets to run on a 6.8% increase. This all coming after the Government and Federal Reserve released more details on their plan to purchase back $1 trillion in liquid real-estate assets. The goal is by removing devalued loans and securities from the banks balance sheets we will be able to help them start lending again and get credit flowing again. Obama stimulated this action with the goals of helping credit markets with have crashed. Obama feels that without the flow of credit small business will be unable to come back something that use to thrive in America. Questions still arise though on how the U.S. Federal Reserve's plan to buy back toxic assets will pan out. Many still have stipulations on how this will affect the U.S. economy and whether or not private investors like Hedge Funds and Private Equity Firms will truly be interested in purchasing these toxic assets? Currently I am not feeling too confident in the plan. The Obama administration has already done everything possible to alienate Wall Street and large Financial Institutions that by asking them now to partner up shows tremendous hubris. I believe our economic policies our becoming far too left. The government has come to a very thin line with almost Nationalizing some of our largest Financial Institutions. We need to decide what kind of economy we want, a Free Market Enterprise or a Government controlled one. My biggest concerns however come amid how to value the assets to be purchased without turning the balance sheets of the banks that are to be acquired upside down. If the prices are too low, then the balance sheets will turn insolvent, and a wave of defaults will occur. If the prices are too high, the taxpayers and purchasers will get screwed. I want to know who will be able to determine the true value and if they mess up who is too take the burden for another faulty mistake? There has never been any historical precedence where a program like this worked so only time will tell. If you are wondering who benefits? The beneficiaries will be the large institutions Goldman Sachs, Morgan Stanley as well as large private equity firms. In the end we will ultimately need to see the full details on the plan before we can assess any value. At the end of the day though this will just put the Big Boys like Goldman Sachs back in position to rule the U.S. financial world.

For more information about how to repair your Credit visit: FreeCreditRepair.me

In the Feds we Trust

The Federal Reserve can no longer send the interest rates lower. Interest rates are now at the lowest rates since 1987 when Jimmy Carter was in power. This report is coming after the Fed announced it would buy back $300 million in U.S. Treasury Securities and Mortgage Backed Securities. Essentially the Fed is now printing money to raise the credit supply which will in return lower the long-term rates of mortgages and other loans. Shocked by the news, Wall Street shot up on Wednesday. Bernanke made a gutsy call in this case yet I see it paying off long-term and this is why. With the infiltration of credit into our society the housing market may have finally hit rock bottom. With signs that mortgage rates will stabilize Americans can go back to buying Houses something that we say an abundance of in the years preceding to 2008. Bernanke has also situated a way for Hedge Funds to buy up the less-toxic mortgage backed assets. This will help shift the burden off the government and allow for Wall Street to both help out the economy yet profit at the same time. The infiltration of these new policies along with the new mark to market account rules is just what the economy needed. This boost should continue to send the Stock Market roaring this week as the buzz around Wall Street has been all "Hi Hoes" as of late. Side effects of this move will be the weakening of the dollar. This however is not much of a concern as when the economy turns around so will the dollar. Be sure to take advantage of this market volatility in the next several days. As of late Banks have been strong Day-Trade or Short-Short Term (Less than 3 Days) plays. You should see similarity in Tech as I see that industry poised for a rally with the news of Cisco shifting to the Server business, Google with the launch of Telecom, and Apple who has a hidden agenda. Enjoy it while it lasts because who knows how many more positive days this market can handle.

The Future of the Hedge Funds

If you want to see ups and downs similar to the Dow, check out the public perception of Hedge Funds. A short time ago every MBA student dreamed of becoming a Hedge Fund manager and investors rushed at any opportunity to place their assets in the funds. Since then, Hedge Funds have been blamed for artificially inflating the price of oil last summer and for contributing to this looming recession. The media still hammers down the funds calling them "former masters of the universe," and how the compensation to managers is obscene. We have seen the same back track among investors as since assets were redeemed over $152 billion have been taken out of Funds, even ones with positive returns. Like any industry Hedge Funds have both their good and bad practices. Anyone who believes that Hedge Funds will disappear is living in a fantasy world? Quite the opposite will happen, in fact I see the Hedge Fund industry thriving over time as they continue to attract the best managers and the most sophisticated investors. Any regulation among this industry will come from within not from a form of SEC interaction. In fact, many funds are trying to become stricter on their policies. For instance, many want to impose further gates which will lengthen the time table before an investor can redeem their investment. Those who claim Hedge Fund are overpaid and that the '2 and 20' fee structure is overzealous have failed to analyze the annual returns of Hedge Funds compared to Mutual Funds and Stock Indexes. In 2008, Hedge Funds were down 19.98%, compare this however to the 40% deficit that the S%P suffered. On the contrary over 1/3 of the Hedge Funds managed to make a profit whereas only 1 out of 1,700 Mutual Funds made a profit in 2008. At the end of 2008, there was 50 times more chance that you would make money from a Hedge Fund compared to a Mutual Fund. What about these fees now? As for the number of funds among the world, currently 10,000. Expect too see this number dip down to 6,000 with many funds merging, etc. However long-term, we still have much room to grow among Hedge Funds as they are still very young among the Financial world. Many Politicians on both sides of the aisle have called for more oversight on hedge funds, including a suggestion for mandatory "registration." What would registration really accomplish? Most Hedge Funds outside the U.S. will continue to stay there and not need to register. All the big fund are registered and the Government tracks all there holdings. The middle funds have no point to be registered just for what registrations sake and so the government can handle a bunch of more data that they will do nothing with. For those scared of more Ponzi schemes, Madoff, was registered with the Securities & Exchange Commission. Maybe that is something that needs to be checked out the SEC? The hedge fund industry will work out its excesses carried over from the past five years and become a stronger collective of funds and fund managers. Most of the lame ducks will leave, until the industry once again begins to experience excessive growth. Oversight must and will improve. Lessons will be learned. And investors will continue to flock to hedge funds because the industry will continue to attract the best managers with the smartest strategies. Hedge funds can adapt to markets something funds lack which is why they will continue to deliver top-tier rates.

If you would like to further discuss this topic check out the link below which will direct you to a discussion board. Click Here

The Tricky World of Derivatives

With the Government calling for stricter regulation by the SEC on Wall Street, I am saying its pointless. The SEC will always be one step behind Wall Street for the simple fact is the bright Financial minds will always chose Wall Street over the SEC and Government for the money. Wall Street breeds innovation, if you were to shut down all current operations (Derivatives, Hedging, etc) they would only develop another way to make as they call it 'Easy Money'. Just look we are only 10 years from the founding of Long Term Capital look where that brought us. Those who thought that the SEC needed to regulate the hedging of Derivatives must realize that Derivatives aren't to blame. Derivatives are financial contracts, or financial instruments, whose values are derived from the value of something else usually an underlying asset such as commodities, equities, residential mortgages, commercial real estate, loans, bonds, an index, consumer price index. Almost anything can be used to underline the value of a derivative. The main types of derivatives you would see are forwards, futures, options, and swaps. Derivatives can be used to mitigate the risk of economic loss arising from changes in the value of the underlying. This activity is known as hedging. Alternatively, derivatives can be used by investors to increase the profit arising if the value of the underlying moves in the direction they expect. This activity is known as speculation. Most see this as something only Wall Street understands meaning that only Wall Street profits. One this is untrue, it is not a complicated process. I learned Derivatives in less than 3 months by reading. Anyways derivatives help free up capital, provide liquidity, and allowed markets to trade freely, something which benefits fall in line to everyone. The problem with derivatives last summer was no one understood the pricing of Wall Street. To add to the problem these transactions were taking place when underlying markets were unstable. If markets were not so shaky then the derivatives would have just matured or not been bought. Supply outgrew demand and since Derivatives were speculative they were the first markets to fail and first to blame.

AIG's Inexcusable Actions

American International Group (AIG) is paying out over $165 million in executive bonuses after a history breaking quarter. The funny thing is this record breaking quarter was for the worst 4th quarter losses in Corporate History, a whopping $61.5 billion. President Barack Obama said it straight up that this is "recklessness and greed" coming at the worst time, especially for a company who is currently running off $175 billion worth of tax-payer subsided money. It just doesn't make sense how AIG executives and Derivative Traders warrant any bonuses. Damage control should be firing these "Executive Losers." This is why Wall Street is so hated by the majority of the public. The antics banks pull are inexcusable, especially in current times when the unemployment rate is sky rocketing to new found levels. The average joe has no idea why these executives are getting paid ridiculous amounts of money for failing over all cylinders. Everyday Americans around the country work hard, meet their responsibilities without the benefit of government bailouts and multimillion-dollar bonuses. So how come from Main Street to Wall Street we aren't all playing by the same rules? It was refreshing news to hear Barack Obama take a firm stance on this issue and make it a personal motive to reverse the lucrative bonuses. "How do they justify this outrage to the taxpayers who are keeping the company afloat," the president said. Noting that AIG has "received substantial sums" of federal aid from the federal government, Obama said he has asked Treasury Secretary Timothy Geithner "to use that leverage and pursue every legal avenue to block these bonuses and make the American taxpayers whole." "This isn't just a matter of dollars and cents," he added. "It's about our fundamental values." These $165 million in executive payouts went out Sunday night and it was part of a larger total payout of $450 million. The injustice they are doing is something that needs to be looked at. If anyone in the bank had true character they would decline any bonuses wanting the money to be re-invested within AIG to help bring the company back to its old state. With lenders still lagging behind compared to the resurgence among banks, there are many holes in which we could find to patch up. Lending is a critical process in ending the economic crisis and unless we can manage/control the lenders we will never see any form of economic success.

If you would like to further discuss this topic check out the link below which will direct you to a discussion board. Click Here

Money Never Sleeps: Wall Street's Sequel

For those of you Finance loving fans great news as I recently found out that 20th Century Fox is developing a sequel to Oliver Stone’s 1987 drama Wall Street. The studio has signed deals with the original producer and also the writer. Stephen Schiff script Money Never Sleeps will follow Gordon Gekko’s release from jail and entry into the exciting world of hedge funds. The project is being set-up as a potential starring vehicle for Michael Douglas. Oliver Stone is not expected to return as director. The original Wall Street was a fabulous movie with many classic lines such as ”Greed is Good.” “Lunch is for wimps.” “What’s worth doing is worth doing for money.” “If you need a friend, get a dog.” and some amazing speaches by Gordon Gecko. The first movie was a classic, one that ever trader, analyst, or anyone who works on Wall Street for that fact has memorized. Just hope they don't tarnish Gordon Gecko's image again as he is a true capitalist genius. 

If you would like to further discuss this topic check out the link below which will direct you to a discussion board. Click Here

Goldman Sach's Culture of Success

With all the stipulation over the Banking Industry, many people are not sure how to play the industry. Some consider Banks to be bullish now that both Citi (C) and JPMorgan (JPM) announced that they have made a profit in the starting months of 2009. Others think that their is still far too many toxic assets on the banks books to make them a strong buy for another year or two. My belief is that if you want to invest within the industry then you need to go for the best of breed companies. In the Financial world, that only brings up one name Goldman Sachs (GS). Currently I am a big fan of Goldman Sachs as they have been able to avoid the large amounts of debt and toxic assets that the majority of other banks currently have. The company took on very little government borrowed money in fact they stated that they did not even need the injection of capital yet supposedly the Government force fed it to them. Anyways, the company plans to have it paid off by mid 2009 to allow the extravagant executive bonuses to continue. Goldman's books look marvelous in current times and when you mirror them to other banks. I see a large room in growth for Goldman's revenue when you factor in the long term the equity markets will rise profiting Goldman's Proprietary Trading market which brings in the majority of the companies profits. Another are for growth I see is among M&A, Merger and Acquisitions. In current economic times with the credit crisis looming, there is a large group of companies who will have to make the decision to merge or be bought versus going bankrupt. Goldman is the gold standard when it comes to running M&A's so expect them to get the majority of the jobs. The company is known for their culture of success and I can see that coming to life.

Google Voice to Destroy the Competition

The Internet Mega-Giant Google (GOOG) looks to grow bigger claiming they are throwing off the gloves and will now take on the entire Telecom Industry. Google promises to offer users free calling and one-stop control over features such as text messaging, internet, etc. This new-line service is called Google Voice and it aims to not just take on Internet calling shops like eBay's (EBAY) Skype and Vonage (VG) but also threaten Verizon (VZ), AT&T (T), Comcast (CMCSA), Time Warner Cable (TWC), and Cablevision (CVC). Google voice will be designed to allow users to check messages of several phone accounts, read voice messages converted to text, send text messages, call within the U.S. for Free, and access Google's Free Directory. Mainly the goal is to bypass the Phone company altogether. Google's big step is making John Chambers CEO of Cisco prediction 11 years ago correct. He stated that "As the majority of load on the network becomes data and video, voice will become free. First, it will commoditize, then, literally, it will become free." When this statement was first said it shocked people as telecoms at the time were making great profits. Google still has some work to do with the service, for instance figure out how to make money off a $0 service. The Long-Term Outlook positions Google to be the next generation company and dominate any form of communication where its internet, email, or now phone. If this service can one day become successful then Google has paved the path to be an $1,000 stock. As for the competitors, they need to have a backup plan as why would anyone pay $100s a month to AT&T or Verizon when Google offers similar service for free. If they cannot adapt to the way the industry is changing the companies will be in for some tough times ahead.