pointofdespo

Tuesday, September 25, 2012

Going Out of Business the "Old Fashioned Way"

One of the more memorable financial ad campaigns in history bit the dust today, that of actor John Houseman who we frequently heard say "They [Smith Barney] make money the old-fashioned way — they earn it."

Smith Barney is no more. It is now "Morgan Stanley Wealth Management" a joint venture with Citigroup.

And so it is ... Smith Barney Officially Bites the Dust

Morgan Stanley announced today that it has renamed its U.S. wealth management business Morgan Stanley Wealth Management, dropping the Smith Barney name from the joint venture it co-owns with Citigroup Inc.

“The Smith Barney name stood for investment excellence for three-quarters of a century, and Morgan Stanley Wealth Management will provide the first-class service that has distinguished Morgan Stanley as a firm for more than 75 years,” Morgan Stanley chief executive James Gorman said in a statement. “Today, as we move forward under one name, we are culminating a three-year effort to integrate two outstanding franchises.”

Morgan Stanley launched a new Smith Barney-less advertising campaign today.

The ash heap of history is littered with the names of venerable brokerage houses either subsumed into other firms or driven out of business by financial crises. Lehman Brothers Holdings Inc. and Bear Stearns Cos. Inc. are the most recent examples.

Smith Barney was one of the more recognized names on Wall Street for many years. Anyone over 40 likely remembers the firm's 1980s ad campaign in which actor John Houseman intoned in his best blue-blood accent “[Smith Barney] makes money the old-fashioned way — they earn it.”

Old Fashioned Video

The above clip from DealBook Can the S.E.C. Win an Insider Case the Old-Fashioned Way?

Over thirty years ago, the actor John Houseman intoned about brokerage firm Smith Barney: “They make money the old-fashioned way. They earn it.”

A recent decision of the United States Court of Appeals for the Second Circuit may result in a test of whether the Securities and Exchange Commission can prove an insider trading case the old-fashioned way – by putting on a circumstantial case built around a well-timed trade and contacts with an insider. ....

Ash Heap of History

Supposedly the "Smith Barney name stood for investment excellence for three-quarters of a century" yet they are shutting it down.

How did that happen?

My guess is "they earned it".

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Thanks! (and a Reminder)

As a result of a Facebook push late last week, the Les Turner ALS Foundation moved up 25 places from 100th place to 75th place in competition for $5 million in grants from JPMorgan Chase.

That was good enough to win a $20,000 grant from JPMorgan.

Things went viral towards the end, with the winner getting a whopping 93,534 votes. Here is a link to the Charity Leaderboard.

Les Turner is on the 8th page with a total of 2469 votes.

Thanks to everyone who voted. The funds obtained by your support will help to changes lives.It was an uphill battle because the demographic profile of bloggers who simply do not use Facebook that much.

Raffle Reminder and Totals Update

September 27, is the last day on which you can purchase raffle tickets, but donations continue.

If you are unfamiliar with the raffle, please see My Wife Joanne Has Passed Away; Stop and Smell the Lilacs.

The raffle was created in honor of my wife, Joanne, of 27 years, who succumbed to Lew Gehrig's disease (ALS), on May 16 of this year.

Results as of Monday 9-25-2012

Donations $45,266
Tickets $311,400
Corporate Sponsorships $30,000
JPMorgan Grant Campaign $20,000

Les Turner gets half of raffle ticket sales and 100% of everything else. Thus the direct benefit to Les Turner as a result of the above is $250,966.

Corporate Sponsors

GoldMoney and SitkaPacific were $10,000 donors. The other corporate sponsor was anonymous.

Also the Hussman Foundation is matching (Up to $100,000) any donation (not raffle tickets) made between August 29 and September 27.

Please see Investment Conference Featuring John Hussman, Michael Pettis, Jim Chanos, John Mauldin, Mike "Mish" Shedlock, Chris Martenson for details of a Wine Country Economic Conference as well as the Hussman Foundation's very generous matching grant.

Donations From 40 Countries

Donations have come in from 40 countries now, up from 22 on May 15.

If times are tough, and they may very well be, then please consider a cash donation of $10 or more. Every bit helps.

Checks

To make a cash donation by check or money order, please send a check or money order to
Lacey Wood
Mish Campaign
Les Turner ALS Foundation
5550 W. Touhy Avenue, Suite 302 Skokie, IL 60077
847.679.3311 (Main)
Any questions, please call the above number.

Credit Card

You can make a donation or purchase raffle tickets by credit card on the Les Turner ALS Site.

Raffle Ticket Entries are split 50-50 with ticket buyers in a drawing to be held November 8. Ticket sales end September 27, but you can still make a donation at any time.

Some people emailed they did not like entering the information fields required. However, the purpose is only to ensure the foundation knows how to get in touch with raffle winners!

People move, phone numbers change, and email addresses change. It's as simple as that.

The site is secure.

Tickets Sold

There have been 1557 tickets sold. Raffle ticket numbers will be assigned randomly by October 12 with the drawing on November 8.

There are 10 winners, so as of Monday, there is roughly a 1-in-156 chance of winning a nice dollar prize. Compare that to your state lottery!

1st Prize (10/60th of total pot)
2nd Prize (6/60th of total pot)
3rd Prize (3/60th of total pot)
4th Prize (3/60th of total pot)
5th Prize (3/60th of total pot)
6th Prize (1/60th of total pot)
7th Prize (1/60th of total pot)
8th Prize (1/60th of total pot)
9th Prize (1/60th of total pot)
10th Prize (1/60th of total pot)

I expressed prize amounts in 60th's to so you can see 50% (30/60) of the money going to ticket holders. As of now 10th place would be worth about $5,190 and first place a very nice $51,900!

Philosophic Point of View

Whether you make a donation or not, please stop and smell the lilacs. Joanne did, at every opportunity.

Once again ... Goodbye Joanne we love you and miss you.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Polls Shows American Believe There is Too Much Government Regulation; Government Regulation a Leading Cause of the Housing Bubble

Gallup Polls show Little Appetite in U.S. for More Gov't Regulation of Business

Americans say there is too much (47%) rather than too little (26%) government regulation of business and industry, with 24% saying the amount of regulation is about right. Americans have been most likely to say there is too much regulation of business over the last several years, but prior to 2006, Americans' views on the issue of government regulation of business were more mixed.

Question: In general, do you think there is too much, too little, or about the right amount of government regulation of business and industry?

The collapse of Lehman Bros., the failure of the secondary mortgage market, and other business problems in 2008 and 2009 might have been expected to increase Americans' desire for more government control of business and industry. But that was not the case. Americans' views that there is too much government regulation in fact began to rise in 2009, perhaps in response to the new Obama administration and new business regulation policies such as Dodd-Frank, reaching an all-time high of 50% in 2011 before settling down slightly this year to 47%.

There has been little change since 2003 in the percentage of Americans saying there is too little regulation of business. The changes that have occurred in recent years have involved shifts between the percentages choosing the "too much" and "about right" alternatives.

The polls look a lot different if you break down the results by political party.

77% of Republicans say there is too much regulation and only 9% think there is too little.
46% of independents think there is too much regulation, and 24% too little.
25% of democrats think there is too much regulation, and a whopping 42% think there is too little.

Cause of the Financial Collapse

The Democrats are simply wrong. One of the reasons we are in this mess is because of too much regulation. Here several examples.

President Kennedy allowed forced collective bargaining of public unions which eventually drove cities and states to fiscal ruin.
The Fed micromanages interest rates and that was a huge factor in creating the housing bubble. Note the Fed was created as a result of government regulation.
Congress had hundreds of affordable housing programs including Fannie Mae and Freddie Mac. Affordable housing programs and lending mandates such as the Community Reinvestment Act also contributed to the housing bubble
The SEC anointed Moody's, Fitch, and the S&P as "Nationally Recognized Statistical Rating Organization (NRSRO)". Once again this regulation came back to bite years later when the ratings agencies labeled pure garbage as "AAA"

Time To Break Up The Credit Rating Cartel

Let's take a closer look at point number four. I discussed the ratings agencies in depth in Time To Break Up The Credit Rating Cartel

The rating agencies were originally research firms. They were paid by those looking to buy bonds or make loans to a company. If a rating company did poorly it lost business. If it did poorly too often it went out of business.

Low and behold the SEC came along in 1975 and ruined a perfectly viable business construct by mandating that debt be rated by a Nationally Recognized Statistical Rating Organization (NRSRO). It originally named seven such rating companies but the number fluctuated between 5 and 7 over the years.

Establishment of the NRSRO did three things (all bad):

1) It made it extremely difficult to become "nationally recognized" as a rating agency when all debt had to be rated by someone who was already nationally recognized.
2) In effect it created a nice monopoly for those in the designated group.
3) It turned upside down the model of who had to pay. Previously debt buyers would go to the ratings companies to know what they were buying. The new model was issuers of debt had to pay to get it rated or they couldn't sell it. Of course this led to shopping around to see who would give the debt the highest rating.

With that I have to sit back and laugh at one of the original opening statements in this article: "I do not think that the market can discipline ratings agencies sufficiently," said Mr Mindich, chief executive of Eton Park Capital and a former colleague of Hank Paulson, the Treasury secretary, at Goldman Sachs, the investment bank.

Clearly Mr. Mindich does not understand the free market. The problems arose because the free market was disrupted by a misguided mandate by the SEC.

The Solution is Amazingly Easy

Government sponsorship of organizations and intervention into free markets always creates these kinds of problems. The cure is not an executive shuffle, third party verification or half-measures and more regulation that mask over the issues by splitting functions within an organization. The SEC created this problem by creating the NRSRO. The problem is easily fixable. It's time to break up the cartel by eliminating the rules that created it. Moody's, Fitch, and the S&P should have to sink or swim by the accuracy of their ratings just like everyone else. Ratings would be a lot better if corporations had to live or die by them. Free market competition, not additional regulation is the cure.

Government Regulation a Leading Cause of the Housing Bubble

Many point to elimination of Glass-Stagall as the cause of the crisis. They are wrong. Glass-Steagall would not have stopped the securitizion process or passing the trash to Fannie Mae or investors. It would not have stopped the AAA rating scam of Moody's, Fitch, and the S&P.

A case can be made for Glass-Steagall on the grounds that separation of duties wouls prevent fraud, and regulations designed to preserve property rights and prevent fraud are reasonable. However, Glass-Steagall would have done nothing to stop the housing bubble or subsequent crash.

The key point is government regulation, the Fed, and fractional reserve lending are the primary causes of numerous boom-bust cycles.

Regulation should focus on fraud prevention and preservation of property rights, not misguided social agenda like "affordable housing". Government never makes anything affordable.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Monday, September 24, 2012

Toronto New Home Sales Plunge 64 Percent; Lowest August on Record

New home sales in Toronto plunged 64% in the wake of government's changes to insured mortgages (30yr to 25yr) and home equity line of credit restrictions (80% max to 65% max) which took effect in July.

Lowest August on Record

Reader Corey emailed the above comments and a news link from the Canada BILD Association: New Home Sales Slip in August.

According to RealNet Canada Inc., BILD's official source of new home market intelligence, the 1,242 homes sold in August 2012 add up to the lowest monthly sales since 2009 and the lowest August on record. Year-to-date sales have remained on par with 2010 but below its record-breaking 2011 predecessor.

"The federal government has been working on reducing household debt levels and recently adjusted mortgage lending rules. August was the first full month with the new rules in place and it appears these regulations have affected consumer confidence, resulting in significantly reduced sales of new homes," explained BILD President and CEO Bryan Tuckey. "BILD will be carefully monitoring new home sales during the next three months to see if this decline becomes a trend."

August '12	Low Rise			High Rise			Total
Region	2010	2011	2012	2010	2011	2012	2010	2011	2012
Durham	182	206	119	7	7	12	189	213	131
Halton	241	610	75	24	283	15	265	893	90
Peel	202	281	267	89	63	66	291	344	333
Toronto	18	47	22	751	1,027	469	769	1,074	491
York	356	385	114	108	587	83	464	972	197
GTA	999	1,529	597	979	1,967	645	1,978	3,496	1,242
GTA % Chg			-60.95%			-67.21%			-64.47
Jan-Aug	11,212	12,357	10,710	12,347	18,055	13,591	23,559	30,412	24,301

"Slip" hardly seems the operative word. Crash is more like it.

Also consider Bernanke Declares War on Canadian Economy (Rest of the World Too)

Addendum:

I said Canada previously but those sales are specifically the Toronto region.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Monday, September 3, 2012

Lasting Impressionist

New York City. Swoon!

I just spent four days in the city that never sleeps doing what all thirty-something ladies do in Manhattan. Shop, sip and sightsee.

If you have never been to the Museum of Modern Art (MoMA), I would highly recommend it, specifically the fourth and fifth floors where you will find all of the most notable artists of the 19^thand 20^th centuries. Perhaps the names Picasso, van Gogh, Kandinsky, Chagall, Matisse, Severini, and Monet ring a bell?

When I arrived on the 5^thfloor, there was one gold-framed piece that was guarded, crowded, and photographed more than any other piece of art, Vincent van Gogh’s Starry Night. But that wasn’t what garnered my attention and sparked my mind. It was back in a corner, in a separate room, where I fell into the vast heaven of Monet.

There was a distinct air about this area of MoMA. You could sense the awe and wonder as people quietly stood or sat on the benches in front of the sprawling canvases, where two of his Water Lilies series filled two entire walls. You could hear the respect, as this was the quietest place in MoMA.

After I swirled out of the lavender and pale pink trance I was in, I wanted to know more. So I read about Mr. Claude Monet. And was stunned. These pieces took twelve years to create…come again?!

Astonished, I still wanted to know more. So after my trip ended, and I arrived home via turbulence and oh so friendly TSA, I did what any person who wants to learn more about anything does…I Googled it.

For those of you, who are like me, and maybe are not as well versed in notable artists like Monet, here is what you need to know:

• He was 74 when he started his Water Lilies series.

• His eyesight was failing during the twelve-year span that he painted these pieces leading him to be criticized for their blurriness.

• After he passed, the Water Lilies stayed in Giverny for twenty years until they were rediscovered by curators.

Oh Monet, you silly French hen! You epitomized three life lessons that if recognized before you die, can help you live.

Here are three life lessons I learned from Monet:

1. It’s never too late to begin. At 74 years young, Monet began painting the pieces that now he is most recognized for. I hear people regularly at 34 or 44 or 54 saying “it’s too late”. I scoff at them. If a man of 74 and failing eyesight can begin a new project then why can’t you do anything? Go back to school, change careers, have a baby, or travel more. It’s only too late to begin if you allow it to be too late or if you are dead. Are you dead?

2. It takes time to create a masterpiece. Twelve years for Monet. What about you? Most quit too soon, because it is hard, or isn’t immediate gratification as society has come to expect. Most won’t continually pursue something that takes months, years, or decades to perfect. Hello diet pills and steroids! The easy road doesn’t create a masterpiece, hard work and time creates masterpieces. What are you working on?

3. It takes time for others to recognize and appreciate your accomplishments. Just because you see the brilliance behind your masterpiece doesn’t mean others will. You may be considered “crazy”, “off”, “nuts”, or “different” like Steve Jobs was. But with hard work, determination, and passion, your masterpiece will shine for others to admire and appreciate, eventually if not immediately.

I understand now why Monet was considered the founder of French impressionist painting, because his artwork left a lasting impression on my eyes, heart, and working soul.

See my entire gallery of favorite pieces from MoMA by going here: Lasting Impressionist Album

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Monday, August 6, 2012

I am a Victoria's Secret Model

I am a Victoria’s Secret Model.

I am America’s Next Top Model.

I am the next American Idol.

I am Top Chef.

I am the next best-selling author.

At least in my head I am.

I’m also a realist and I understand I’m a pear-shaped, shaky soprano, take-out queen.

But in my head I’m a lot of things. That’s where all of my dreams, aspirations, and confidence live, in the conscience of my being. What’s swimming in the depths of your core? What are you dreaming of achieving?

As I’ve aged I’ve realized a few things about dreams. They coincide greatly with your confidence. You are either your worst critic or your best cheerleader. All greatness comes from a core belief inside you, not from your mom, dad, brother, sister, dog, friend, boss, or spouse. It comes solely from you. Do tell me, who is lining your subconscious sideline, a critic or a cheerleader?

Growing up I was teased about my big nose (um, duh, I’m Italian). In high school, I didn’t go to prom. I wasn’t even asked. In college, I was self-conscience about my hips, thighs and butt. I felt bad about myself. And when the many would compliment me, contrary to what the few had critiqued me on, I would brush it off. Because it was easier to believe what the critics would say – because that is what I believed.

And then something happened. Little by little, I built upon the small and fleeting moments of self-love. I contribute a lot of this revelation to maturing and determining that I’m not going to live based on what others think of me. The other part came from the encouraging words of others, being successful in my work, and allowing the real Stephanie to stand up.

Here is how you can begin believing you are more than what you think you are:

1. Accept and believe the compliments you receive. When someone decides to say something of a complimentary nature, it is downright rude of you not to accept it. So be polite and say thank you. Most people are trained to challenge or argue compliments. Who taught you that? Didn’t your mother teach you better than that? Don’t discount their compliment because of your own self-doubt. Instead build upon it. When you start with a thank you and focus on what they have told you, you will begin to build up your own self-confidence.

2. Write down self-love affirmations. There are things that you love about yourself. Come on, you’re sexy and you know it! Your job is to capture these and write them down. Just like goals, it’s easier to believe something when it’s written down. You don’t have to share these with anyone, BUT you do need to share them with yourself. Capture the thoughts, dreams, and aspirations that are in the corners of your heart and head. The thoughts you believe others would find you insane, for these are the real gems.

3. Ignore the critics. It’s not easy, but it is necessary to build your self-confidence. It may sting at first, but the easiest response is to treat the critic just like the cheerleader and say “thank you.” However, instead of accepting it, dismiss it. Easier said than done, I know. But it’s necessary. You are not living your life for anyone other than you. Once you realize this truth, you will break free from the chains of criticism.

4. Encourage others. You will in turn encourage yourself. If you want to build up your own self-belief, self-confidence, and self-love, start by building someone else’s. The positive words you speak to others will start to creep into your own subconscious, challenging you to believe more in yourself. Try it out. The worst that can happen is you help someone. Would that be so terrible?

These days I see my nose as a symbol of my heritage. I’m embracing my pear assets. And I believe it when someone tells me I’m beautiful. I believe it, because I, internally with all of who I am, truly believe it. Now where’s the runway?

I’m your Double-Tall, Non-Fat, No-Whip Sales Barista. How may I help you help yourself?

Monday, July 9, 2012

Less Meetings, More Music

“It was an okay day.”

“What could have made your OK day better?”

“Less meetings and more music.”

Hmmm…there’s an idea. Why not have both? Music Meetings.

I have a playlist on my iTunes titled, YES that I play right before I give a keynote. It puts me in the right state of mind, an Empire State of Mind.

You know that song you play to get amped up. You blast it out your speakers while driving to a big sales call, or during a race, or before taking the field. You are thinking of it right now. It’s full of rhythmic beats, melodies, bridges, choruses, storytelling lyrics and high notes that swallow your soul.

Music has a way of doing that. Scooping you up and whisking you to another place and time. To other memories, full of past places, tastes, and people.

What’s playing in your soul right now?

What lyrics are your heart writing and your mind singing?

Today, I’m a little New York (Snow Patrol) and a little Flake (Jack Johnson). And I’m always a little You and Tequila(Kenny Chesney).

I bet I just got you thinking of a song that reflects how you are feeling right now. And I can list a number of songs that will transport me somewhere else. So can you.

Get Low – Post Georgia vs. Clemson football game in the parking lot with Kristen.

Not Ready to Make Nice – 2am singing session with Nata and Ris

When I Get Where I’m Going – Grandpa’s viewing

Lady in Red – My Mom. Every. Single. Time.

Wonderful Tonight – Sandy Cayman beach with a harpist and a proposal.

Changes – Ready to take stage and take control with my keynote about change.

There is a special connection between music and mind. But what’s behind the music? Behind the melody, the bridge, the chorus and the voice?

Words.

Lyrics.

Musical mantra’s.

The way these musical mantras affects you is two-part.

Part-circumstance: Where was I? Who was I with? What was I doing when I heard this song?

Part-emotion: How does this make me feel? How do the lyrics speak to me?

It’s pretty powerful – music is language in the ultimate communicative state. More people listen to music than read. Disagree? Gleemuch? American Idol? The Voice? MTV? You don’t see Reading Rainbow on the television anymore these days, a sad truth.

Music has and will always be the great connector of the masses. There may be 50 Shades of Grey to challenge my theory on this.

What’s so attractive about music? It’s the songwriter’s ability to convey a message and an emotion through their words and melody.

What’s your song? What’s your message? What are you trying to convey that will transport people to another time and evoke pure emotion?

The next time you want to be persuasive in a board meeting, or during a performance review, or asking for a raise, or leading the team project, or even asking someone out on a date, I challenge you to write your words like a songwriter to tell your lyrical story. Make it a music meeting.

What's stopping you from presenting a musical mantra at your next meeting?

Write it. And then sing it out loud. Sing it loud. Sing it proud. Dare to go there. Be inspired. Be real. Be the next American Idol. Be You. And don’t be afraid to say what you really want to say. Risk it all.

Here’s my stab at a broken-hearted music mantra:

Was I just something to pass your time, fill your silence, and break your boredom?

Or was I someone who passed through your dreams, filled your mind, and broke your heart too?

Step aside Adele. Step aside.

I’m your Double-Tall, Non-Fat, No-Whip Sales Barista. How may I help you help yourself?