Jim Rogers on Bloomberg: stocks may fall

Jim Rogers joins Bloomberg TV for a lengthy discussion about the economy and the outlook for global stock markets and commodities.

Also up for discussion: the vote on Bernanke's 2nd term as Fed Chairman, and why the world would be better off without central banks. Go get 'em, Jim.

Hat tip to the gang at Business Insider.

Related articles and posts:

1. Ben Bernanke: man of the year? - Finance Trends.

2. Jim Rogers on CNBC, Tech Ticker - Finance Trends.

Barron's Roundtable 2010: quick thoughts

Happened to glance through the first installment of Barron's 2010 Roundtable this past week at the library.

When I say "glance through", I should clarify; I glance through all the parts I don't care about (comments from Abby Cohen, et. al) and carefully read the sections where Marc Faber and Felix Zulauf (and if time allows, Meryl Witmer or Fred Hickey) are talking.

Sometimes I'll stop and read Bill Gross' comments, but I think that has more to do with the fact that you never know what he is going to say these days, and it's interesting to see how his remarks line up with some of his (and PIMCO's) previous sentiments and actions.

Anyway, if you saw the 2009 roundtable report card, you'll notice that everyone's picks for last year were well in the black overall. Compare that to 2008's roundtable results (largely disastrous) and you'll see that roundtable participant greatly benefited from the broad market rally we saw during 2009.

No, I don't chalk this up to skill on (most of) their parts. In fact, the phrase that went through my head on examining this year's report card was, "they got their asses saved (by this rally) after last year's calls". Well, 2008 was pretty brutal all around.

Marc Faber seems to be the performance standout of last year's roundtable. The breadth and number of his calls in 2009 far outpaced the rest, and strong equity markets certainly helped keep his long positions positive. Still, it's amazing to look down at that 2009 report card and see every one of those picks in positive territory. The others did pretty well, too.

Enough of that. Let's see what the group have to say in the latest installment of Barron's 2010 Roundtable, shall we?

Related articles and posts:

1. Barron's Roundtable 2009 notes - Finance Trends.

2. 2008 Barron's Roundtable review - Finance Trends.

A new form of Glass-Steagall?

As noted on Twitter, FT Alphaville is abuzz today with news of Obama's plan to limit the "size and scope" of large US banks.

Here's an excerpt from the administration's press release:

"“While the financial system is far stronger today than it was a year one year ago, it is still operating under the exact same rules that led to its near collapse,” said President Barack Obama.

“My resolve to reform the system is only strengthened when I see a return to old practices at some of the very firms fighting reform; and when I see record profits at some of the very firms claiming that they cannot lend more to small business, cannot keep credit card rates low, and cannot refund taxpayers for the bailout. It is exactly this kind of irresponsibility that makes clear reform is necessary.”

The proposal would:

1. Limit the Scope - The President and his economic team will work with Congress to ensure that no bank or financial institution that contains a bank will own, invest in or sponsor a hedge fund or a private equity fund, or proprietary trading operations unrelated to serving customers for its own profit.

2. Limit the Size - The President also announced a new proposal to limit the consolidation of our financial sector. The President’s proposal will place broader limits on the excessive growth of the market share of liabilities at the largest financial firms, to supplement existing caps on the market share of deposits."

It goes on to say that the President will work very closely with others (the illustrious Chris Dodd and Barney Frank, to name a few) to benefit consumers, close loopholes, and end the "Too Big to Fail" mentality.

This is tragically hilarious when you consider that these same large banks attained their TBTF status with the help of government bailouts and their ensuing moral hazard risks. So once again, government wants to "solve" the very problems they helped create in the first place.

For more insight on this proposed "Glass-Steagall II" legislation, and the rise of "too big to fail" banks, see our related articles section below.

Related articles and posts:

1. Obama gets tough on Wall Street banks - FT.com

2. Banks are bigger problem now: Niall Ferguson - Finance Trends.

3. Obama moves to restrict big banks - WSJ.com

Stephen Colbert on the financial crisis

www.colbertnation.com

Colbert Report Full Episodes Political Humor Economy

Stephen Colbert: The Word - Honor Bound (via Credit Writedowns).

Clever take on the financial crisis and the morality of walking away from your mortgage. Your thoughts?

Brown wins, Dems lose key Senate seat

More on the Massachusetts special election from the FT, "Democrats lose key Senate seat":

"Democrats were dealt a blow on Tuesday night when Republican Scott Brown won the Massachusetts Senate seat controlled by the Kennedy family for 56 years in an electrifying special election.

Mr Brown’s victory in one of the US’s most liberal states will deprive President Barack Obama’s party of its 60-seat “super majority” in the Senate and make it much more difficult for Democrats to pass healthcare reform legislation.

Analysts said it would inflict a heavy psychological blow as Mr Obama marked his first anniversary in office, and highlighted the extent to which the gloss had come off his presidency. The loss in the party stronghold also raised concerns for Democrats seeking re-election in more moderate states later this year..."

I know some people were keeping a real close eye on this special election tonight. Maybe some of you have some insights on the implications of this win for Brown and the Republicans?

FT notes that Dem candidate Martha Coakley was expected to "coast" to victory just a few weeks ago. Looks like voters in Massachusetts decided otherwise tonight.

Helping Haiti: private charity vs. govt. aid

Reuters update on the situation in post-earthquake Haiti.

If you would like to donate to an effective private charity that will help Haitians in the weeks and months ahead, please see trader Quint Tatro's blog for info on how you can help send needed food and medical supplies through his charity mission to Haiti.

Any recommendations you might have for other reputable private charities (in which the vast majority of donated funds & supplies are directly sent to the people in need) are very welcome. Please post the organization info and links in the comments section.

If you'd like to get a further insight into the problems that have long plagued Haiti, and the effectiveness of private charity versus government "aid", please the Mises blog post, "Helping Haiti", and the articles in our related links section below. Thank you.

Related articles and posts:

1. Countries in contrast: one land, two fates - National Post.

2. Real economic reform for a hurting Haiti - Mises.org.

What's the true state of state finances?

US states are in rather poor shape, financially speaking, and California's latest debt downgrade has shined a light on this topic once again.

This brings us to today's question: are California's fiscal problems indicative of a larger trend toward deteriorating state finances and budget shortfalls?

I'd like to start out by thanking Gregor Macdonald and the Stocktwits gang for discussing some of these issues in the last Sunday's MacroTwits hour on Stocktwits TV and for sharing some of the links I'll be posting for you here today.

For an opener on why state finances are important, let's get a quick overview from Business Insider:

"Last week we mentioned how states are still grappling with monster budget gaps, and that they'll inevitably resort to slashing spending to remain solvent.

This, of course, will be a drag on GDP, and act counter to any pro-stimulus efforts Uncle Sam will maintain."

They go on to cite (as Gregor did) the recent Rockefeller Institute report, "Recession or No Recession, State Tax Revenues Remain Negative" (PDF), which finds that the trend in state and local taxes has been "clearly downward" from its previous mid-decade highs.

An introductory paragraph from that report:

"During the third quarter of 2009, total state tax collections as well as collections from two major sources — sales tax and personal income — all declined for the fourth consecutive quarter. Overall tax collections in the July-September quarter fell by 10.9 percent from the same quarter of the previous year.

We have compiled historical data from the Census Bureau Web site going back to 1962. Both nominal and inflation adjusted figures indicate that the first three quarters of 2009 marked the largest decline in state tax collections at least since 1963."

Meanwhile, Reuters reports positive growth in sales tax collections for a group of states mostly concentrated in the Midwest. Unfortunately, they note that the numbers could change quickly for these states, as they benefited from federal bailouts of the automotive industry which, in turn, boosted local manufacturing activity.

Lastly, Mish has posted some comments and data on California and the states' finances that I found informative and would urge you all to check out. Here are some excerpted comments from Mish on state deficits and the large credit ratings agencies:

"In the United States, a fiscal crisis is hitting states like Arizona, Illinois, Kentucky, California, Virginia, and Illinois. California has a whopping 56% deficit as a percent of its General Fund Budget according to the Center on Budget and Policy Priorities...

....There is little doubt California should be rated as junk already. Dick Larkin notes they give the states a lot of rope and wonders: "Frankly I can't understood why it took S&P so long."

...The big three rating agencies get paid on the quantity of debt they rate not the quality of their ratings. The higher they rate, the more business they get. For more on the problem as well as what to do about it, please see Time To Break Up The Credit Rating Cartel."

So there is a lot of material to look over here, but I hope this post will give you a pretty comprehensive start to any research you might want to do on this subject. I will continue to read through the Rockefeller Institute report and keep an ear open to your thoughts on "the true state of state finances". Have a great weekend, everybody.