Forum Post: "Wall Street is Little More than Glorified Crack House" /// ECRI Sticks with US Recession Call; So Does John Hussman /// with Odds Above 80%; So Do I /// SF Fed has 50-50 Odds
Posted 6 years ago on Dec. 10, 2011, 11:16 a.m. EST by MonetizingDiscontent
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America's "Largest Minority-Owned And Operated Investment Bank" Shuts Down
Solyndra, Ener1, and now Kaufman Bros - The current economy may not be very good at creating jobs, even minority-focused ones, but its track record in inverse job creation is rapidly becoming second to none. Bloomberg reports... http://www.bloomberg.com/news/2012-01-31/kaufman-bros-closes-as-bank-succumbs.html ...that "Kaufman Bros. LP, the minority-owned investment bank that helped unwind U.S. stakes in bailed-out financial companies, ceased operations as of yesterday, according to a notice posted on its website. Chief Executive Officer Benny Lorenzo told employees that New York-based Kaufman was closing immediately in a meeting yesterday after trading closed, according to two people with knowledge of the matter, who declined to be identified because they weren’t authorized to speak publicly. Neither Lorenzo nor Chief Financial Officer Gerard Durkin returned messages left on their office and mobile phones yesterday and today."
More amusing is the following description: "The company, which also has offices in San Francisco, said it was sought out by institutional investors, hedge funds and government agencies to help meet diversity goals." No comment. The closure notice can be found on the company's website... http://www.kbro.com/ ...And so another bank bites the dust. Many more coming.
Kaufman was founded in 1995 and billed itself as “the country’s largest minority-owned and operated investment banking and advisory firm” focused on technology, media, telecommunications, green technology and health care. The firm said in June that it helped advisory clients raise more than $50 billion since 1999.
The company, which also has offices in San Francisco, said it was sought out by institutional investors, hedge funds and government agencies to help meet diversity goals. Kaufman’s website said the firm participated in public offerings of Citigroup Inc. and American International Group Inc. as the U.S. Treasury Department disposed of stakes accumulated when it bailed out the firms during the financial crisis.
Lorenzo was born in the Dominican Republic and holds degrees from Cornell University and Harvard Business School, according to a company statement. He acquired a majority stake in March 2009 and became chairman and CEO in June of that year, according to the firm. Co-founder Craig Kaufman ceded those titles and became a managing director with co-founder Robert Kaufman, the firm said. Craig Kaufman didn’t respond to a message left at his office.
And here is why bank earnings in Q1 are going to be the worst yet:
Art Cashin Explains Why Several Hundred Thousand Jobs Are About To "Vaporize"
Two days ago we learned that when MF Global goes bankrupt, billions in cash can just "vaporize" (no, really - see here... http://www.zerohedge.com/news/3-months-after-mf-global-bankruptcy-we-find-12-billion-or-more-client-money-has-vaporized ...and of course, in the passive voice. can't say something like Jon Corzine vaporized $1.2+ billion in client money now can we).
Next we have Art Cashin explain why it is that the US economy is about to see several hundred thousand jobs "vaporize" as well. Perhaps "vaporize" should be the motto of the current Administration: confidence "vaporized", hope "vaporized", and "evaporation" you can believe in, as it condenses on the teleprompter...
From Art Cashin UBS Financial Services:
Disappointing Jobs - While everyone seems to debating what the non-farm payroll numb will be Friday, a few are looking toward the annual revisions in the much debated Birth/Death model.
As you probably recall, it does not refer to the birth or death of humans. The badly named model refers to the birth and death of businesses. Each January the BLS revises the number, usually vaporizing thousands of jobs.
We were going to try and calculate the likely revision, but our sharp-eyed friend over at Bloomberg, Rich Yamarone, as usual, beat us to it. Here’s what he wrote in his Notepad column recently:
The Net Birth/Death (NBD) statistic adjustment – an adjustment the BLS uses to account for job creation or loss with respect to births and deaths of businesses – is always the weakest during January. Over the last five years the NBD for January has averaged -335k. [January 2011: -339k, January 2010: -427k, January2009: -356k, January 2008: -378k, January2007: -175k.]
So, if past is prologue, we could see three or four hundred thousand jobs vanish. Nothing like a dependable indicator.
The Fed’s Rain Dance at the Bottom of the Stairs
-01/30/20120- Wolf Richter http://www.testosteronepit.com/
Apparently, Charles Plosser, president of the Philadelphia Fed, had failed to check with his handlers when he said on CNBC this morning that the Fed might have to raise short-term interest rates later this year—from practically zero to almost zero, I guess—though just last Thursday, the Federal Open Markets Committee had announced the extension of its zero-interest-rate policy (ZIRP) through late 2014.
We’ve been getting the same song and dance from the Fed about its "highly accommodative” monetary policy and "exceptionally low" interest rates since 2009. And by now we've been programmed to believe that extensions will continue ad infinitum, despite some dissenting voices here and there. In the process, the country has become hooked on low interest rates, and even the idea of raising them, or the mere mention of it, causes bouts of painful withdrawal symptoms.
At first, the expectation was that the “exceptionally low” rates would last 6 months, but now it's been three years, and three more years have already been added to the schedule, so six years in total, and soon, it'll be 20 years, à la Japanese, which isn’t exactly the paragon of a healthy economy. While there are cosmetic differences between the two, they do share ZIRP, out-of-control budget deficits, a ballooning national debt, and a political refusal to deal with reality—aided and abetted by a central bank.
It's an ugly situation. Short-term treasury yields are at practically zero, 5-year yields hit a new all-time low of 0.71%, and even 30-year yields dipped below 3%. Savings accounts, money market funds, and short-term CDs yield just about nothing. Yet inflation... http://www.bls.gov/news.release/cpi.nr0.htm ...was 3% in 2011. The many trillions of dollars that individuals, institutions, and countries hold in these assets are slowly being ground down by inflation, but without compensation in form of yield. Financial repression. And the largest slo-mo ripoff in the history of mankind. For more on that whole debacle, and for good laugh, read.... Dear Ben, Please Print Us More Money. http://www.testosteronepit.com/home/2011/8/26/dear-ben-please-print-us-more-money.html
Wages have not kept up with inflation either, not since the wage peak of 2000. Every number hammers home that point.... Oh wait. Not every number. Personal income increased 0.5% in December, according to today’s report by the Bureau of Economic Analysis... http://www.bea.gov/newsreleases/national/pi/2012/pi1211.htm ...This coincided with a flatish December PCE inflation indicator, giving workers the first real wage increase in many months. Last week, the Bureau of Labor Statistics... http://www.bls.gov/news.release/realer.nr0.htm ...reported a similar phenomenon: a rise in hourly earnings of 0.2% in December and a flat CPI. Real wages increased! A rare event that should be celebrated around the country with a good American brew.
But for the year, real wages were still down 0.9%. For production and non-supervisory workers, the lower echelons of the labor force, real wages for the year were down 1.6%. So, one month hasn’t solved the problem yet. Yet it shows the beneficial effect of taking inflation out of the equation: real wages actually rise. A few months of this, and who knows—consumers might actually buy something with this extra money without having to borrow from the future.
NO, said the Fed, panicking at the mere thought of rising real wages. There shall be no break for workers. Real wages aren’t low enough yet. And so the Fed announced an inflation target: no less than 2% as measured by its low-ball PCE inflation index. So, closer to a CPI of 3.0%. Plenty of inflation to bring down real wages and demolish entire categories of investors, but not so much as to cause a revolt—in the hope that it would stimulate the economy? It’s a rain dance at the bottom of the stairs.
They misjudged the inexplicable American consumer. Consumer optimism, an oxymoron in the current climate, has been rising from morose multi-year lows in August to levels not seen since, well, May. And it whipped hope into a froth: rising confidence would pump up spending, which would pump up everything else. But the toughest creature out there that no one has been able to subdue yet.... The Inexplicable American Consumer strikes back. http://www.testosteronepit.com/home/2012/1/13/the-inexplicable-american-consumer-takes-a-breath.html
Visualize: The European Super Highway of Debt
from demonocracyinfo: (((See Larger Image Here))) http://demonocracy.info/
This info-graphic shows how much banks loaned to Portugal, Ireland, Italy, Greece & Spain. Europe is in deep crisis. The following images illustrate how much must be repaid.