American vision, Citizen responsibilty, GOP's Vision, Leadership, Learn, understanding economic events

If a firm is ”too big to fail,” it is … too big.

Today’s Political two cents:

Rants against Sotomayor will only accelerate the GOP certain split:

  • A) A radical wing claiming rights to the “WASP” legacy power, this seemingly popular and boisterous faction full of bile is left to keeping tabs on every transgression a la Taliban in here you will find the entertainers Media types that claim they are not the media because they fight the ‘Liberal Media” also defending “conservatives” values while displaying the most un-conservative values.
  • B) Another group will tent more open minded figures that allow differences of opinion in an imperfect world, here you will find: Gates, McCain, Powell real life Heroes and Veterans and business men and women such as Ms. Carly Fiorina or someone like Ms. Marissa Mayer from Google (I do not know her party affiliation though)
  • C) And hopefully my wish list: Innovators and entrepreneurs and others who have the character of their convictions. It would be nice to see in this group General H. Norman Schwarzkopf, Jr., Carol Barts(Yahoo) and High tech entrepreneurs. Why is it that all real deal entrepreneurs and innovators avoid the GOP: Steven Jobs(Apple), Sergei & Brin(Google), self made billionaire Tom Golisano founder of Paychex who helped create the Independence Party rather than join the GOP.

EQUITY INDEXES

VALUE CHANGE % CHANGE
Topix 893.20 0.35 0.04
Hang Seng 17,885.27 893.71 5.26
Singapore Straits Times 2,280.31 -25.77 -1.12
S&P/ASX 3,751.50 -49.60 -1.30

HEADLINE: Investor Flight. “If a firm is ‘too big to fail,’ it is … too big” I love this quote by Thomas F. Cooley  in Forbes on line also  he says ‘First, the very notion of “too big to fail” is dangerous. It suggests that there is an insurance policy that says, no matter how risky your behavior, we will make sure you stay in business. It encourages banks to get bigger (or more interconnected), and it subsidizes risky behavior.  Second, it leaves ambiguous the important issue of who gets protected in the event of insolvency–the equity holders, creditors, subordinated debt holders, etc. It seems fair to say that the solutions that have developed on the fly have done severe damage to the notion that there is a well-ordered capital structure that means something.’  Because the growing trend in public opinion is that Banks will be deemed to big too fail and that Banks will be protected at the expense of the investor will we see an Investor flight?

  • The present financial crisis is not the problem nor a symptom but the consequence of  of  the public apathy for community issues of money, probably is the direct result of lack of pragmatism in the mathematical curriculum or in other words fear of real world math. But at the bottom I smell the ancient separation of math and money in elementary school where the proper instincts and passions are developed and we have to wait to graduate school to really learn that math and money have always been in our every day lives, This is a likely result of the fading  Banking Oligarchy. Fading!?? Yes sir, you are watching it, that is why you don’t understand what is going on.
  • In his article “Market Share thinking as old school thinking article” Mr. Adrian Kingsley-Hughes explores briefly the awareness that obsolescence in what thinking model we use to to determine our impact in the world. The vast difference between relying on the meaning of a static value of a metric versus the trend of a sequence of values.
  • There are brokers making money right now in this difficult market regardless of whether the index is low  or high because the study the trends of the market.

Innovation: Marissa Mayer from Google explains how the concept of 20% or 1 day a week engineers are given room to work on what they are passionate about, this is Google method of discovering Innovation in a disciplined manner, becase, Ms Mayer says, you do not know how a new product will be received.

COMMODITY FUTURES

VALUE CHANGE % CHANGE
Oil 62.88 -0.57 -0.90
Gold 948.40 -6.80 -0.71
Natural Gas 3.61 -0.02 -0.69

EQUITY INDEXES

VALUE CHANGE % CHANGE
DJStoxx 600 210.41 1.45 0.69
FTSE 100 4,416.23 4.51 0.10
DAX 30 5,000.77 15.17 0.30
CAC 40 3,294.86 24.77 0.76
S&P/MIB 20,312.00 15.00 0.07

EUROPE MOST ACTIVE BY VOLUME

PRICE % CHANGE VOLUME
UNICREDIT SPA 1.87 1.08 189248342
VODAFONE GROUP 118.5 0.59 173871427
MILLWALL HLDGS 0.0205 -6.82 161299393
ROYAL BK SCOTLAN 39.2 -2.49 126695708
LLOYDS BANKING 65.5 -1.95 90971975
BANCO SANTANDER 7.54 0.53 90023610
INTL GOLD EXPLOR 0.67 11.67 78265446
BP PLC 505 -0.05 65890575
BARCLAYS PLC 290 0.26 64149343
ENI SPA 17.07 -0.99 60358311

Today’s term: Annual Report

An annual publication that public corporations must provide to shareholders to describe their operations and financial conditions. The front part of the report often contains an impressive combination of graphics, photos and an accompanying narrative, all of which chronicle the company’s activities over the past year. The back part of the report contains detailed financial and operational information.

In the case of mutual funds, an annual report is a required document that is made available to fund shareholders on a fiscal year basis. It discloses certain aspects of a fund’s  operations and financial condition. In contrast to corporate annual reports, mutual fund annual reports are best described as “plain vanilla” in terms of their presentation.
It was not until legislation was enacted after the stock market crash in 1929 that the annual report became a regular component of corporate financial reporting. Typically, an annual report will contain  the following sections:

-Financial Highlights
-Letter to the Shareholders
-Narrative Text, Graphics and Photos
-Management’s Discussion and Analysis
-Financial Statements
-Notes to Financial Statements
-Auditor’s Report
-Summary Financial Data
-Corporate Information

A mutual fund annual report, along with a fund’s prospectus and statement of additional information, is a source of multi-year fund data and performance, which is made available to fund shareholders as well as to prospective fund investors. Unfortunately, most of the information is quantitative rather than qualitative, which addresses the mandatory accounting disclosures required of mutual funds.

RedSerpent’s Index

Company              Ticker         Value          Change
Yahoo * YHOO        * $14.94      * -$0.34
Microsoft * MSFT         * $20.13      * -$0.21
Intel Corp * INTC          * $15.46      * -$0.02
Taser * TASR         * $4.20       * -$0.10
Cisco * CSCO         * $18.22      * -$0.27
James Funds * GLRBX     * $16.61       * -$0.20
Paychex * PAYX        * $26.93      * -$0.56

Learn

Controling Derivatives

This blog is a way to learn the needed basic understanding  of the  the finance world which affects our paychecks, retirement and communities. I’ll try to  share the ongoing learning process lets hope the results benefits us all those who are eager to learn a little mores. Am pro industry, pro corporation( the workers and community) and excellence in leadership certainly convinced by the severity of the recent crash about a minimun due diligence and vigilance.

FTSE 100 4,468 -0.31% € per £ 1.14 0.00%
S&P 903.47 -0.51% $ per £ 1.58 +0.11%
HANG SENG 17,337 -0.80% ¥ per $ 94.38 -0.52%
DAX 5,039 +1.60% WTI Crude 61.47 -0.92%

The salmon colored pages of Financial Times (page 7, wed/may/20/09) dedicated an entire page to Derivatives and the US administration tackling what many believe precipitated the global crisis. The article focused on a reality to be confronted and that is that Derivatives are very lucrative. Although the US administration in a short term strategy to contain the crisis with stress tests and loans derivatives are heavily used in British banks and they are outside the jurisdiction of American financial regulatory bodies.

F.T. reports that Mr. Geithner proposes:

  1. Demand all “standardised” derivatives to be centrally cleared to remove counterparty risk, even if they are not traded in the exchange.
  2. Encourage the industry to use regulated exchanges in addition to clearing platforms (because it is only the exchanges that investors get equal access to trading and price data, rather than to rely on a small club of dominant banks).
  3. The US Administration wants all institutions to record every derivative trade to enable supervisors to prevent  market abuse.
  4. Tighten the rules on capital and collateral provision to ensure all derivatives players have buffers to absorb any loses.

In a global economy the cooperation of Brussels (EU),  London and Asian bankers should not be  assumed and that bankers across both oceans are willing to let go of those profits, lack of transparency has benefits to the positions the bankers can take while trading over the counter. . Distribution of OTC (Over The Counter) derivatives as average daily turnover in 2007: UK-$2,105b  US-$959b  Japan-$226b  Singapore-$210b  Switzerland-$206b.

The risks to be reckoned with For the last nine years, since we had the Commodity Futures Modernization Act, there’s been a presumption that the OTC  derivatives markets–those are the markets which are occurring off exchanges–were more or less outside the purview of any single regulatory authority. Banks who took part in those markets might be regulated because they were banks. But the products themselves were not regulated, and institutions such as hedge funds, which were active in the OTC market, were often not regulated in those trades almost at all.

Crude oil. Nymex June West Texas Intermediate rose during the week to a six-month high of $60.08 a barrel, but yesterday moved back to $56.34, down $2.28 on the day and 3.9 per cent on the week.

COMMODITY FUTURES

VALUE CHANGE % CHANGE
Oil 61.41 -0.63 -1.02
Gold 942.40 5.00 0.53
Natural Gas 3.95 -0.02 -0.48