Why Wall Street Loves Quantitative Easing - Rick Newman (usnews.com)

 

Federal Reserve Chairman Ben Bernanke in Jackson Hole, Wyo.

The Federal Reserve's "quantitative easing" strategy is controversial, and even unpopular—except on Wall Street.



At a recent panel discussion of top Wall Street economists sponsored by New York University's Stern School of Business, there was general agreement that more Fed action—which has now arrived in the form of a fresh, open-ended plan to buy about $40 billion worth of mortgage-backed bonds every month--is required to boost the lackluster economy.

"The weak labor market warrants further action," said Peter Hooper, chief economist for Deutsche Bank Securities. "The Fed certainly has some potency with quantitative easing."

More easing by the Fed runs the risk of causing higher inflation in the future, since the Fed is effectively printing money when it buys bonds or other securities on the open market. The Fed's intervention also raises questions about whether improvements in the economy are sustainable, or merely the result of artificial government support that has to end at some point.

The Fed's critics include many Republicans who view the Fed as a kind of star chamber operating way beyond its mandate to keep inflation and unemployment in check. GOP presidential candidate Mitt Romney opposes more easing by the Fed. "I think [easing] and other Fed stimulus is not going to help this economy," he said in August. Romney has also said he wouldn't reappoint Fed Chairman Ben Bernanke when his term expires in 2014.


But Romney's former colleagues in the financial industry are bigger fans of Bernanke, since his policies have been a boon for Wall Street firms. One of the primary purposes of quantitative easing is to drive down interest rates and lure investors out of safe investments like treasury securities, and into riskier investments such as stocks. The basic purpose is to help rebuild individual investment portfolios, make big companies more confident about spending and making deals, and generate more overall optimism about the economy.

One of the first beneficiaries is Wall Street, since rising stock prices draw more buyers off the sidelines, boost sales commissions at brokerages, and generate more investment banking activity. And the Fed's plan has generally worked, with an unmistakable correlation between its QE programs and a stock-market rally that's now in its fourth year.

The Fed quietly began quantitative easing in late 2008, then announced a much more aggressive program in the spring of 2009. Two lesser easing programs followed. Since the Fed doubled down on QE in 2009, the S&P 500 stock index has risen by more than 150 percent. "Anyone who has owned stocks in the past few years has fed at the trough of Bernanke," the financial website YCharts declared recently.

 
Prior to the latest round of easing—dubbed QE3—many analysts felt further Fed action would have a limited impact on stocks, since the shock value has worn off and investors have already barreled into stocks over the past few weeks, in anticipation of another bump courtesy of the Fed. But the Fed surprised the markets with a new commitment to buying bonds indefinitely, until unemployment improves. "This program is more aggressive than market expectations," Moody's Analytics explained to clients. Stocks leapt on the news.

Wall Street honchos, like people nearly everywhere, have also become cynical about Congress or any other part of the government doing anything soon to resolve Washington's huge debt problem, improve the business environment, or otherwise aid the economy. "Policymarkers are not going to get serious about solving these problems until the economy and the public feels some pain," said David Greenlaw, chief U.S. fixed income economist for Morgan Stanley, at the Stern event.

So even if the Fed's power is diminished, it's still the only entity that seems willing and able to do anything to boost the economy. Wall Street will worry later about the repercussions.


Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. 

Follow him on Twitter: @rickjnewman.

Tags:

Wall Street,

Federal Reserve,

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Why Wall Street Loves Quantitative Easing - Rick Newman (usnews.com)

 Link:  http://www.usnews.com/news/blogs/rick-newman/2012/09/12/why-wall-street-loves-quantitative-easing

Whistle-Blower Awarded $104 Million by I.R.S.

 This character is lavischiously rewarded for turning in clients who partook in his schemes.  Does this seem right?
 

Whistle-Blower Awarded $104 Million by I.R.S.

By DAVID KOCIENIEWSKI 

 

Bradley Birkenfeld, who got out of jail last month after serving time for helping Americans dodge taxes, received a lavish bonus for his role in exposing tax schemes at UBS.

Today's Headlines: Israeli Sharpens Call for United States to Set Iran Trigger - buddhha4@gmail.com - Gmail

Pablo Picasso in the 1950's with Lost Painting

Hagley Museum and Library


Picasso, second from left, in the 1950s. A glimpse of "Seated Woman With Red Hat" is visible at the bottom of the photo.









Arts - Image - NYTimes.com

http://www.nytimes.com/2012/09/13/arts/design/forgotten-picasso-is-windfall-for-evansville-museum.html?_r=1

Long-Forgotten Picasso Is a Museum’s Windfall

Evansville Museum of Arts, History & Science

Long-Forgotten Picasso Is a Museum’s Windfall

Picasso’s “Seated Woman With Red Hat” was found at an Indiana museum.

By PATRICIA COHEN


When Arlan Ettinger, the president of Guernsey’s auction house in New York, first called the Evansville Museum of Arts, History and Science back in February to ask about a layered glass mosaic by Picasso that he had traced to the museum, officials there said, in effect, “Sorry, wrong number.” They had never heard of it.

A day or two later the museum called back, Mr. Ettinger said. Spurred by his query officials discovered that this rare work was there in Indiana after all, mislabeled and stashed in an old shipping crate for more than 40 years.

“You could sort of hear corks popping at their end of the line,” Mr. Ettinger said.

Rather than display their newfound Picasso treasure, however, officials have decided to sell it, using Mr. Ettinger’s company.

It is nearly impossible to put a price tag on the piece, “Seated Woman With Red Hat,” since this kind of work has not been on the market for nearly half a century, experts say. But Mr. Ettinger said he hoped to sell it for $30 million to $40 million, more than five times the museum’s entire $6 million endowment.

The potential windfall has raised a grab bag of questions for museums large and small beyond, “Have you checked the basement lately?”

What responsibility, for example, do institutions have to hold on to donated works and display them? And how should valuable art be handled when it threatens to tax an institution’s resources and confuse its mission?

Some residents of Evansville, for instance, have complained that this rare artwork is being sold off without their even getting a chance to see it.

But R. Steven Krohn, president of the museum’s board, said in a statement that keeping “Seated Woman With Red Hat” just did not make sense: “Now that we have a full understanding of the requirements and additional expenses to display, secure, preserve and insure the piece, it is clear those additional costs would place a prohibitive financial burden on the museum.”

Although the museum owns some works from banner names like Georgia O’Keeffe and Renoir, its entire art collection is valued at only $10 million. Its recent expansion was devoted to building up its interactive science exhibitions, including a theater.

The museum declined to specify what changes would be needed and how much they would cost, but caring for an extremely valuable work can be burdensome. Advancements in technology have made protection more affordable, said Robert Marentette, the security chief at the Art Gallery of Hamilton in Ontario, but the added that costs of securing such works can “suck revenue out of tight operating budgets.” Insurance premiums can also be extremely expensive, he added.

“The bottom line is and will always be the level of risk one decides to operate under,” he said. “In this case it seems the risk and associated costs are high and not acceptable to the board and members.”

The work, a three-foot-high portrait of Marie-Thérèse Walter, Picasso’s French mistress, is one of about 50 glass paintings known as gemmaux that Picasso created in the mid-1950s at the Malherbe Studio in France. The unfamiliar word is a reason that this portrait lay in the museum’s storage for nearly half a century. It was incorrectly labeled in documents as having been created by the nonexistent artist “Gemmaux,” not Picasso, the museum said. (“Gemmail” is the singular, and the name of the technique.)

Gemmaux are made of multicolored pieces of glass, layered and then fused together with liquid enamel, a technique first developed by the French artist Jean Crotti. “Seated Woman With Red Hat” is encased in a wooden shadow box so that it can be illuminated from the back.

“It’s just a wonderful thing to see,” said Mr. Ettinger, who visited Evansville. “Unlike flat canvas, it really sparkles; 2-D pictures don’t do it justice.”

He conceded that his multimillion-dollar estimate is partly guesswork and instinct, since Picasso’s gemmaux are relatively unknown and are rarely sold. The artist gave half of them to his collaborators, the Malherbe family. He sold the rest, with some going to private collectors like Nelson Rockefeller, Emperor Hirohito of Japan and Prince Rainier of Monaco.

The pioneering industrial designer Raymond Loewy, who owned “Seated Woman With Red Hat,” promised to donate it to the Evansville museum in 1963. According to The Indianapolis Star, it was appraised for tax purposes at the time for $20,000.

The museum has chosen to skip a public auction. Mr. Ettinger said that sellers sometimes think private sales can be faster and simpler, but he acknowledged, “At the end of the day, like any work of art, it’s worth what somebody will pay for it.”

The Corning Museum of Glass in upstate New York has three gemmaux by Picasso, none of which are on display. As it turns out, the Corning museum had been researching them recently to assess whether to exhibit them once its planned expansion is completed in 2014.

“We really don’t have a clue of what the current market value is of our own pieces,” said Karol Wight, Corning’s executive director. “It seems like after they made their debut in the ’50s they just sort of became out of fashion, and no one’s really paid attention to them.”

With the worldwide attention the Evansville find has received, that has certainly changed.







Forgotten Picasso Is Windfall for Evansville Museum - NYTimes.com

 Link:  http://www.nytimes.com/2012/09/13/arts/design/forgotten-picasso-is-windfall-for-evansville-museum.html?_r=1


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Architecture

Risky Business Pays Off For Wall Street: Financial Crisis Penalties Pale Compared To Profits

 
 What is wrong with America?  Where is the outcry?


To listen to bankers tell it, President Barack Obama has been their worst nightmare. But considering how easy banks have actually had it since the financial crisis, Obama seems to be a banker's dream come true.

The banks can count the Dodd-Frank financial reform act, some $2 billion in penalties, and occasional criticism from the president and other Democrats among the horrors they have had to endure since the crisis.

Relative to the profits they made before and after, these don't even rise to the level of minor inconveniences. And that makes it more likely we'll see more bank misdeeds in the future.

"This doesn't just reward past crime; 
it incentivizes future crime," Dennis Kelleher, CEO of the nonprofit group Better Markets, said of the penalties the banks have paid since the crisis. "It's less than the cost of doing business."

There have not been, and likely never will be, any federal criminal convictions for crisis-era bank misdeeds.

Obama's Justice Department doesn't even bother keeping statistics on convictions related to the financial crisis, the Wall Street Journal reported earlier this year. 

High-profile cases against executives at Goldman Sachs, American International Group, Lehman Brothers and Countrywide Financial, institutions at the center of the crisis, have been dropped.

The Securities and Exchange Commission has done most of the heavy lifting in exacting some measure of justice from banks and bankers for crisis-era misdeeds, but not so heavy that the SEC might actually develop muscles or anything.

Unlike the Justice Department, the SEC does keep stats on its efforts, such as they are: It has charged 112 people and banks in the wake of the crisis, including 55 top executives. It has extracted $2.19 billion in penalties and other cash from the banks and bankers.

But $2 billion is a rounding error in comparison to the profits the banks raked in before and after the crisis, and the damage they did to the economy during the crisis. 

Kelleher of Better Markets estimates that Wall Street paid out $200 billion in bonuses between 2003 and 2011.

And in the year before its London Whale trading debacle, JPMorgan Chase alone was making nearly $5 billion per quarter, on average, in net income after taxes, meaning it could pay the entire industry's crisis-era fines twice over with just three months of work. 

Give JPMorgan a few years, and it could cover the entire industry's $2 billion in fines 20 times over: In the three years leading up to the crisis year of 2008, the bank made $38 billion in after-tax profit. 

In the three years that followed, JPMorgan made $48 billion. In 2008, its profits tumbled all the way down to $5.6 billion, or nearly three times the total fines paid by banks as a result of the crisis.

And that is just one bank, albeit the largest bank in America by assets.

Even a far smaller bank, Goldman Sachs, could bear the brunt of the entire industry's regulatory fines very easily if it had to.

Goldman has paid the largest single fine by far as a result of the crisis, $550 million to settle charges that it misled investors! about bundles of bad mortgages that were hand-picked by other investors betting against them. 



The bank made $8.4 billion in profit in 2010, the year it agreed to the fine. 

It has made more than $26 billion in the past three years and nearly $27 billion in the three years before the crisis. 

In the crisis year of 2008, Goldman turned a total after-tax profit of $2.3 billion -- enough to pay the entire industry's crisis tab.

Meanwhile, the big banks benefited for years after the crisis from an armada of government-subsidized lending programs.

One initiative alone, the Term Liquidity Guarantee Program, likely saved banks an estimated $24 billion in borrowing costs.


Of course, this has not stopped the banks from lobbying furiously against financial regulatory reform to prevent another crisis.
 The securities industry has spent more than $250 million in lobbying since 2010, according to the Center for Responsive Politics.


That money was focused most intensely on periods in the past few years when the Dodd-Frank reform act was being passed or shaped, according to the Wall Street Journal.

The banks have also had plenty of cash to throw at political campaigns. 

Wall Street has spent $164 million on the current election, the Center for Responsive Politics reported on Wednesday, putting the financial industry on pace to trump the record $170 million it spent on the 2008 campaign.

Some of that cash has gone to Obama and other Democrats, but most of it is going to Mitt Romney and his fellow Republicans, who have pledged to repeal Dodd-Frank.

In fact, the American Bankers Association is expected to vote Thursday on whether to form a super PAC to donate money to Senate candidates who want to roll back financial reform, Bloomberg reports.

As Bloomberg's Phil Mattingly wrote recently in a separate story, a full Dodd-Frank repeal probably wouldn't happen even during a Romney administration and with Republicans in control of both houses of Congress.

Instead, the banks would prefer to get some of the toothier aspects of the law repealed, leaving "a patina of protection for investors and consumers," as Mattingly wrote.

That doesn't sound all that far from the situation today, with Dodd-Frank implementation already hopelessly muddled by bank lobbying.

If there is a silver lining to this story (or a dark cloud for the banks), it is the appropriately harsh punishment the stock market has rendered.

Combined, JPMorgan, Bank of America, Citigroup, Goldman Sachs, Morgan Stanley and AIG have lost a whopping $594 billion in stock-market value since the end of 2006, just before the dawn of the crisis, according to FactSet data.

Many shareholders are suing the banks over their crisis-era behavior.

Citigroup recently settled one such suit for $590 million.

The banks have also suffered lasting damage to their reputations, leaving them vulnerable to more regulation and higher capital requirements around the world, which could crimp their profitability in the years ahead. But that also means the banks could eventually seek other, more creative ways to make money. 

Given the lack of severe consequences following the worst financial crisis since the Great Depression, it is hard to imagine bankers seeing much downside in gambling with the global economy once again.



HuffPost Live will be taking a comprehensive look at the corrupting influence of money on our politics on Sept. 6 from 12-4 p.m. EDT and 6-10 p.m. EDT. Click here to check it out -- and join the conversation.


Risky Business Pays Off For Wall Street: Financial Crisis Penalties Pale Compared To Profits

Link:  http://www.huffingtonpost.com/2012/09/06/wall-street-financial-crisis-penalties_n_1858738.html

The Madness of Crowds

"I can calculate the motion of heavenly bodies, but not the madness of people."
-Sir Isaac Newton, after losing 20,000 pounds in Britain's south sea Bubble of 1720

Research: Body language tells, youre rich or poor

 

 

 

 

Research: Body language tells, you're rich or poor

Karachi, Feb 06, 2009 (Asia Pulse Data Source via COMTEX) --

Other than clothes, house and flashy cars, the socio-economic status ((SES) can be guessed by one's body language, says a new study.

Psychologists Michael W. Kraus and Dacher Keltner of the University of California, Berkeley found that non-verbal cues (that is body language) could indicate our SES.

From the study, the researchers videotaped participants as they got to know one another in one-on-one interview sessions. During these taped sessions, the researchers looked for two types of behaviours: disengagement behaviours (including fidgeting with personal objects and doodling) and engagement behaviours (including head nodding, laughing and eye contact).

 The results indicated that nonverbal cues can give away a persons SES. Volunteers whose parents were from upper SES backgrounds displayed more disengagement-related behaviours compared to participants from lower SES backgrounds.

Besides, when a separate group of observers were shown 60-second clips of the videos, they were able to correctly guess the participants SES background, based on their body language. The researchers note that this is the first study to show a relation between SES and social engagement behaviour. They surmise that people from upper SES backgrounds who are wealthy and have access to prestigious institutions tend to be less dependent on others.


This lack of dependence among upper SES people is displayed in their nonverbal behaviours during social interactions, concluded the psychologists.

Read more: http://www.tmcnet.com/usubmit/2009/02/07/3971124.htm#ixzz25uNpWf9B

 Link:  http://www.tmcnet.com/usubmit/2009/02/07/3971124.htm

Research: Body language tells, youre rich or poor

What is the Difference Between a Fee-Only Financial Advisor and a Fee Based Financial Advisor?

What is a Fee-Only Financial Advisor vs. a Fee Based Financial Advisor?

By Dana Anspach, About.com Guide

 

Definition: Another word for a fee-only financial advisor would be a NO COMMISSION advisor as a fee only advisor can only receive compensation directly from you (like a CPA or attorney) verses being paid by commissions from products they sell.

A fee-only financial advisor cannot receive compensation from a brokerage firm, a mutual fund company, an insurance company, or from any other source than you. This means they represent you and your interests when giving you advice. After all, think about where someone's paycheck comes from, and that will tell you quite a bit about where their loyalty lies.
This fee may be charged as a percentage of the assets they manage for you, and thus debited out of your account each quarter, or it could be a flat annual fee, or hourly rate.  These are three of the six ways that financial advisors charge fees.

To find the right fee only financial advisor, go through the seven steps in 7 Steps to Finding the Best Financial Advisor.

Fee-Based Is NOT The Same As A Fee-Only Financial Advisor

A fee based financial advisor can receive fees paid by you, and commissions paid to them by a brokerage firm, mutual fund company, insurance company, or investment partnership.

Even though both fee-only and fee based financial advisors may have accounts they manage where they charge a percentage of the assets they manage, the investments they place inside these accounts can be very different.

Fee-only financial advisors have a fiduciary responsibility to choose investments that are in your best interest. They typically use investments that have low internal expenses such as no load mutual funds, stocks and bonds; investments that have no 12b1 fees.



Dana Anspach, CFP^®, RMA^TM, has been the About.com Guide to MoneyOver55 since 2008. She is the founder of Sensible Money, LLC, and a practicing fee-only financial advisor who specializes in developing retirement income plans for people age 55 or older. You can learn more about Dana in her bio.

Also Known As: fee only financial planner or fee only advisor

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What is the Difference Between a Fee-Only Financial Advisor and a Fee Based Financial Advisor?

AIDS Healthcre Foundation critical of Gilead Sciences, CEO for share sales

AIDS Healthcare Foundation (AHF), the nation’s largest HIV/AIDS nonprofit medical provider and a vocal critic of runaway drug pricing and AIDS drug profiteering, today criticized John Martin, CEO of Gilead Sciences, the leading HIV/AIDS drug maker, for cashing out at the public’s expense over his recent sale of 145,450 shares of Gilead stock (worth about $8.5 million), which according to the website SeekingAlpha.com, took place on September 4th. 

Martin had over $54.5 million in reported compensation last year at Gilead, an amount that placed him 10th on Forbes’ List of the 100 highest paid CEOs in the United States. 

Martin’s stock sale followed on the heels of news early last week that Gilead chose tosetits Wholesale Acquisition Price (WAC) for Stribild, its latest entry in the AIDS drug market, a four-in-one, once-a-day tablet—at $28,500 per patient, per year—a record price for a first line combination therapy and a price that led to some,

“…disappointment and controversy within the larger HIV community,” according to a separate press release issued by the ADAP Crisis Task Force (ACTF) of the National Alliance of State & Territorial AIDS Directors (NASTAD). 

 Gilead manufactures the most commonly prescribed HIV/AIDS drugs, as well as some of the highest priced ones. Stribild entered the market priced 37% higher than Atripla, Gilead’s best selling HIV/AIDS combination therapy.

“It’s apparently no longer enough for John Martin, Gilead’s CEO, to be one of the highest paid executives in the nation. Last year, he made tens of millions of dollars by selling lifesaving medications at such high prices that thousands of Americans in desperate need could not access them and were placed on waiting lists,” said Michael Weinstein, AHF’s President.

“Now, on the heels of setting a record wholesale price for Stribild, Martin cashes out over 145,000 shares of his stock, after the stock enjoyed a healthy bump following the pricing announcement for Stribild.

Greed certainly pays! Meanwhile, despite recent price concessions negotiated in secret with the ADAP Crisis Task Force, the price of Stribild will wreak havoc with hard-hit and cash-strapped states and aid programs like Medicaid and Medicare.

People living with HIV/AIDS, their families, friends and communities should be up in arms over this sort of corporate greed in the face of life-or-death need, as it is the taxpayers who foot the bill for government health care programs—like state AIDS Drug Assistance Programs, a significant contributor to Gilead’s—and John Martin’s—profit margin and wealth.”

According to the SeekingAlpha.com website, “John Martin sold 145,450 shares on September 4 and currently holds 1,989,938 shares of the company. Dr. Martin joined Gilead Sciences in 1990 and currently serves as Chairman of the Board of Directors and Chief Executive Officer.”

AIDS Healthcare Foundation (AHF), the largest global AIDS organization, currently provides medical care and/or services to more than 176,756 individuals in 27 countries worldwide in the US, Africa, Latin America/Caribbean, the Asia/Pacific Region and Eastern Europe.




To learn more about AHF, please visit our website: www.aidshealth.org, find us on Facebook: www.facebook.com/aidshealth and follow us on Twitter: @aidshealthcare.



Business Wire
http://www.businesswire.com/

Last updated on: 08/09/2012 08:00:03

Read more: http://www.pharmiweb.com/pressreleases/pressrel.asp?ROW_ID=63595#ixzz25uL2U8p3

AHF: Greed Pays—Gilead’s John Martin Cashes Out at Public’s Expense - News Press Release | PharmiWeb.com