3 Years After Lehman, We’ve Learned Nothing

Sep 14, 2011, 8:31 pm EDT

On Sept. 15, 2008, the world learned a debt-riddled Lehman Brothers would be no more. The Dow dropped more than 500 points that day, and a month later the index was off about 25%.

And that was only the beginning.

The corporate carnage that followed doesn’t deserve rehashing, since nearly every investor has a personal point of outrage. There was a death sentence for dividends, including a 68% cut in General Electric (NYSE:GE). There was the race to the bottom in the entire financial sector, with American International Group (NYSE:AIG) plunging 90% in seven trading days that fall. The list goes on. Read 

Greece: The Questions Investors Should Be Asking

Sep 14, 2011, 11:17 am EDT

Will Greece default, or won’t she? This seems to be the question on every investor’s lips, and the uncertainty surrounding the outcome has the markets on edge.

I have no inside information about how this crisis will be resolved, and even if I had the phones of every European leader bugged, I’m not sure the information gleaned would be particularly useful right now. The EU leaders tasked with resolving this crisis seem to have no more of a grasp on the situation than those of us on the outside.

No one said investing is easy or that it should be easy. Investing is an exercise in making difficult decisions under conditions of uncertainty. If we knew the future ahead of time, there would be no risk and thus no possibility for return — or loss. Read 

Irony to the Rescue?

Sep 14, 2011, 4:00 am EDT

Now, here’s a role reversal. Stocks roared back in the last hour of trading Monday and continued their rally Tuesday — on rumors that China and perhaps also the other members of the BRICs quartet (Brazil, Russia and India) might purchase a huge quantity of troubled euro zone sovereign debt.

For anybody with the slightest sense of history, it’s hard not to smile. Back in the fall of 1998, the financial world was flailing in a funk because Russia had just defaulted on its debts. Korea, Indonesia, Thailand and other emerging Asian economies were fighting to stave off collapse.

Now we’re told the emerging countries might be preparing to bail out the likes of Greece, Portugal and Ireland — possibly Italy and Spain, too! Read 

Moves to Make Before the Next FOMC Meeting

Sep 12, 2011, 2:18 pm EDT

The decisions made at the next Federal Open Market Committee meeting on Sept. 20-21 could affect market performance for years to come.

That’s why investors should prepare ahead of time.

Of course, there’s no way to predict exactly what U.S. Federal Reserve Chairman Ben Bernanke will do, but 20 years of experience in global markets suggest he’s considering five alternatives drawn from a rapidly diminishing menu of options: Read 

China: Going for a Knockout on Manufacturing

Sep 12, 2011, 9:39 am EDT

About a year ago, President Barack Obama toured Solyndra, a top manufacturer of solar photovoltaic (PV) systems. It was a centerpiece of cleantech — and how it would reinvigorate jobs. As a sign of importance of the company, the Department of Energy provided a $535 million loan guarantee.

Unfortunately, it has turned out to be a disaster. This month, Solyndra filed for bankruptcy, shut down its manufacturing facility and terminated about 1,100 employees.

The problem? Well, it looks like China has been even more aggressive with its alternative energy investments. The result has been a substantial drop in solar cell prices. Besides Solyndra, two other major U.S. solar firms have imploded during the past month, which include Evergreen Solar (PINK:ESLRQ) and Intel-backed (NASDAQ:INTC) SpectraWatt. Read 

The REALITY of the American Jobs Act — 7 Key Obama Issues

Sep 8, 2011, 10:17 pm EDT
The REALITY of the American Jobs Act — 7 Key Obama Issues

President Barack Obama spoke before a joint session of Congress on Thursday night to unveil his American Jobs Act. The headline facts: It’s a $447 billion effort that focuses on job creation and tax cuts and will be 100% paid for by yet-to-be-named reductions in spending.

Of course, the devil is in the detail. So here’s my analysis of the key points — and my effort to separate fact from fiction, and realistic expectations from political posturing.

Payroll Tax Cuts: Likely to happen, minimal impact. President Barack Obama pitched a redoubled payroll tax cut that would focus on both workers and businesses alike. The current payroll-tax reduction is set to expire in December, and had reduced Social Security taxes from 6.2% to 4.2%. Obama wants the cut not just sustained, but to go deeper in 2012, pushing the rate down to 3.1%. Employers who were paying the full 6.2% rate would also get a cut this time around, too. House Republican leader Eric Cantor reportedly was won over by cuts for businesses, so the GOP can get behind this part of the bill. Of course, passage and impact are two different questions. The previous payroll cut hasn’t exactly caused an economic boom, so it’s unlikely these tax reductions alone can move the needle or spur hiring. Consider that workers making $50,000 a year would see their take-home pay boosted by $1,550. A small comfort, but not much. Read 

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