ALBERT HERTER

Archive for June, 2010|Monthly archive page

‘A CLOSER LOOK AT THE SECOND LEG DOWN IN HOUSING,’ via John Maudlin at Investors Insight, Outside the Box.

In Uncategorized on June 29, 2010 at 01:01

A Closer Look at the Second Leg Down in Housing

Our story so far:

Following the 2000-03 DotCom crash, then Fed Chair Alan Greenspan brought Fed Funds rates down to ultra-low levels. Under 2% for 3 years, and at 1% for more than a year.

Rates this low – and for that long – were simply unprecedented. They wreaked havoc with the traditional fixed income market. Bond managers were forced to scramble for yield; they found it in investment grade, triple-A rated residential mortgage-backed securities (RMBS). The higher yield was created by securitizing mortgages, using an unhealthy slug of riskier, sub-prime mortgages.

The demand for RMBS paper was nearly insatiable. Wall Street sucked up as much sub-prime paper as could be legitimately, then illegitimately, produced. The Lend-to-securitize-nonbank mortgage writers responded to the demand by abdicating traditional lending standards. These firms handed out 30-year mortgages to people who in no conceivable way could afford to repay them. The mortgage underwriter’s hope was for no default over the warranty period of the mortgage – typically, just 90 or 180 days. After that, the loans were Wall Street’s problem.

The Greenspan Fed, in charge of supervising financial lending institutions, looked the other way.

The net result was a massive national credit bubble, and a housing boom. (A true housing bubble only formed in a handful of regions). The credit bubble allowed tens of millions of Americans to become, however temporarily, home-owners.

Consider: In 1992, some 4 million homes per year were being purchased. A decade later, that number had risen 25% to annual sales of five million. A mere three years later, annual sales were over 7 million units – a 40% increase.

From 2002 to 2007, the abdication of lending standards – who cares about credit scores, incomes, debt load, assets, even a job! – helped to create millions of new homeowners. And thanks to the ultra low rates, prices had exploded. The combination of new, unsophisticated buyers and rapidly rising prices was a dangerous combination.

Buyers of limited financial means – who en masse overpaid for their houses at historically low rates – were recipes for disaster. As the Fed began its cyclical tightening, price appreciation slowed, than reversed. As sales plummeted, prices fell. Since 2006, five million of those buyers were foreclosed upon, with another 4-5 million likely to come.

Which more or less brings you up to date.

Today, residential real estate confronts numerous headwinds: Credit, once given to anyone who could fog a mirror, is now tight. Today, demand is far below what it was during most of the past decade. Home prices are still unwinding from artificially high levels, and remain over-priced. Inventory is elevated. A huge supply of shadow inventory is out there: Speculators and flippers who overpaid but have held onto their properties await modestly higher prices to sell. Bank owned real estate (REOs) continues to increase. That’s before we get to the fact that unemployment remains high, and is unlikely to improve anytime soon. Oh, and wages have been flat for a decade.

This are not encouraging factors about housing.

This is known, or at least should be by those who have looked at the data. I cannot explain why some economists still have not figured this out.

In my analysis, price stands out as being the prime mover of the next leg down. High unemployment, and a decade of flat wages aren’t helping to create any new housing demand. And the millions in homes they cannot afford will eventually add more pressure to inventory and prices. Indeed, we are still working

But the bottom line is Home prices remain too high: There can be no doubt that home prices have moved way down from the 2005-06 peaks. How did I reach the conclusion that, even after a 33% decrease in prices, home prices are high?

By using traditional metrics: Whether we are looking at US housing stock as a percentage of GDP or Median income versus home prices or even ownership versus renting costs, prices remain elevated. Indeed, we see prices remain above historic means.

Consider price relative to income. From 1977 to 2010, the median US home price was 4.1 times median household income. But as the chart below shows, Home prices are still above that mean. Oh, and that mean is artificially elevated due to the 2002-07 boom. It’s the same with home prices relative to rentals, or housing value as percentage of GDP.

Further, we should not assume that prices merely mean revert back to historic levels. What usually happens when markets get wildly overvalued – and a ~3 standard deviation price move sure qualifies — is they get resolved not by reverting to the mean, but by careening far beyond it.

We can look at numerous other factors. Employment, inventory, REOs, credit, another wave of foreclosures. etc. But the bottom line remains that prices must revert to a sustainable level, and we simply aren’t there – yet.

Yes, government policies temporarily stopped prices from finding their natural levels. Now that the tax credit has ended, and most mortgage modifications are failing, the prior downtrend in price is likely to now resume.

Neither the Bush nor the Obama White House understood this. The assumption has been that if we can modify mortgages or voluntarily refrain from foreclosures, the  residential RE market will stabilize. Through a combination of mortgage mods and buyers tax credits, the government has managed to create artificial demand and keep more supply off of the markets for a short time. But as we have seen, that fix was at best temporary.

One of the things that Markets are best at is price discovery – the determination of a price for a specific item through basic supply and demand factors. Without the heavy hand of the government intervening, the residential real estate market is about to experience what price discovery is all about . . .

~~~

Understanding this and applying it to trading are two different skill sets. That is why we prefer to rely on quantitative tools to help identify opportunities and problem areas before most people are aware of them – before they become front-page news.

The Fusion IQ system generates buy, sell and neutral signals based upon algorithms developed over many years. It is designed so that unemotional, objective criteria determine what is worth keeping or selling. We don’t create these signals, the system does.

Let’s put our Housing conversation above into some context. Consider from a Trader’s perspective the opportunity for a downside trade in the Home Builders. Our quantitative rankings flashed a warning sign on the Residential Construction Group several weeks ago.

You can see the sector went to a Sell signal early in June:

As the charts below reveal, two of the major homebuilders look particularly weak:  both Toll Brothers (TOL) and KB Homes (KBH) gave good tradable Sell signals some time ago that traders acted upon.

If you look at a long term chart of these two, they could revisit their lows from March 2009.  That would be a huge round trip.

Let’s look at another company that is in the News: BP.  It flipped from a Buy to a Neutral in mid-April, around $59 dollars. On April 20, it went to a Sell Signal – at $52. Numerous clients have inquired about it. It is still on a sell signal, and we have advised clients to do no more than put a toe in the water. It is better to wait for more positive signals before jumping in with both feet. Wait for the stock to be above its 20 or 50 day moving average – or for a new Buy Signal to be issued.

Retail stocks have been getting hammered lately. But BJs is holding up well. Think of it as the best house in a bad neighborhood. We bought some when it went to buy signal in march of this year. Despite the market pulling back, BJs is still holding up well. It is ranked 85 (out of a 100) and is currently on a neutral signal. (That means don’t add to it, but don’t sell it yet either).

The flip side of the BP spill are companies that are needed to help clean up the Gulf of Mexico oil spill. Clean Harbors is one such firm. It went to a Buy Signal back on April 29, 2010 at about $57 dollars. The stock is now approaching $70, has a technical ranking of 94 out of 100, and is still on a Buy signal. (Note to traders — CLH, which has a market cap of $1.8 billion dollars, has a 10 day average volume of 250k — its not very liquid, so tread lightly).

Lastly, let’s look at our entire universe of stocks to see what we can learn about the recent changes in timing signals and score rankings.

The first chart below shows a modest number of Buy signals and increasing numbers of new Sell signals. However, both are dominated by Neutrals. Often, this is a sign of a range-bound market.  That is reflected in the 75% cash position in our managed accounts.

The Technical scores tell a similar story. Three months ago, there were more than 4000 stocks ranked greater than 70 (out of a 100). That number has dropped to below 3,000. The lowest ranked group has ticked up from 2500 to just under 3000. This also reflects a modest balance, and has not reached any extremes.

Both charts reflect a market lacking in direction and institutional conviction.

Until the picture clears up, we remain uncommitted, keeping a healthy amount of cash in our accounts. We advise readers do the same . . .

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‘7 LESSONS THE WORLD CUP OFFERS ON THE STOCK MARKET,’ by Brett Arends in the Wall St. Journal. via fidelity.com.

In Uncategorized on June 25, 2010 at 18:51

7 lessons the World Cup offers on the stock market

BY  BRETT ARENDS,  THE WALL STREET JOURNAL — 06/23/10

You can learn a lot from watching the World Cup–and not just about soccer. As I’ve tuned into the games I’ve started to realize how many ways it’s just like the stock market–and how it can actually teach you a useful thing or two about making money.

Don’t believe me? Here are seven lessons that “the beautiful game” can teach you about the money game:

1. Don’t be shocked by “shocks”

Who would imagine that France, finalists four years ago, would crash out in such humiliation? That England would draw with Algeria? That Switzerland would beat Spain?

Yet these “shocks” happen all the time.

Many years ago, when I wrote a book about futures betting on soccer, a top bookmaker in London told me his firm made good money on unlikely events such as these. The gambling public, he said, typically underestimates the chances on an upset.

And so it is in the investing world. Nassim Nicholas Taleb calls such unlikely events “black swans.” As English comic novelist P.G. Wodehouse once put it, “never confuse the unusual with the impossible.” Not long ago it seemed impossible that, say, Lehman Brothers (LEHMQ

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) or General Motors could go bankrupt.

As we have been reminded in recent years, the unusual happens. The only thing surprising is that so many people are surprised.

2. You need a strong defense

There’s a saying in soccer: “It only takes a second to score a goal.” But as England’s hapless goalkeeper, Robert Green, could tell you after his schoolboy blunder against the United States last week, the truth is slightly different.

It only takes a second to concede a goal. Scoring one at the other end can take forever.

Investors know how it feels. The profits of a brilliant trade can be thrown away in a moment by a careless blunder.

Offense, trying to make money, is much more exciting than defense, trying not to lose it. But smart money management starts the other way around. After all, it takes a 100% profit to recover from a 50% loss. Or as value investors might put it: Rule number one, concede no goals. Rule number two? Never forget rule number one.

3. You have to think globally

The World Cup is one of the few times fans everywhere drop their obsession with the sporting events, players and teams at home and start to pay close attention to everyone else.

Sure, you’re rooting for Team USA. And the Japanese have been rooting for Japan, and so on. But everyone knows the biggest stories are teams like the Argentinians, the Portuguese and the Brazilians. And we’re all watching anyway.

Investors need to learn the same trick. “Home equity bias” has long been identified as a big problem in most portfolios. Most people keep way too much of their money in their home stock market. Studies have found that U.S. investors typically keep more than 80% of their equity portfolio in U.S. stocks. According to the Investment Company Institute, fewer than half of households that invest in mutual funds even own a fund that invests overseas.

It makes no sense. You already have big economic bets on the U.S. economy–your home, job and support network are all here. The U.S. only accounts for a third of the world’s stock markets by value, so if you just stick to the home market you’re missing out on two-thirds of the action.

Investing globally spreads your bets and gives you maximum diversification. A recent paper by AQR Capital Management, found that a global portfolio has typically given investors better long-term returns with less short-term turmoil.

4. Don’t get blinded by hope

I understand why someone from North Korea would choose to cheer for North Korea (0-for-2, nine goals allowed), no matter how badly the team does. After all it’s their country.

What I don’t understand are investors who stick with terrible investments all the way down, hoping and praying that bad management, bad strategy and bad products will somehow produce a good result. Hoping isn’t expecting. Unless they actually worked at the company, no one needed to be stuck with their shares in Washington Mutual (WAMUQ

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) or Fannie Mae (FNM

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) or General Motors. If it’s not making you happy, stop complaining or praying. Sell.

5. Patience wins

Once again the England team has proven, so far, a monumental disappointment to its fans at home. I used to live in England and watched this happen, oh, every four years.

Brazilian soccer legend Pele once explained the problem to a British TV reporter some years back. England, he said, needed to develop patience on the field.

They aren’t alone in this. Too many teams try for the quick kill–kicking the ball up field and hoping for the best. Great soccer teams–especially the Brazilians–take a very different approach. They are famous for passing the ball around dozens of times, waiting for just the right moment to strike. It works.

And so it is on the stock market, which Warren Buffett–possibly the Pele of investment–once called an efficient mechanism for transferring money from the active to the patient. Like most great investors, he’ll bide his time almost indefinitely, waiting for the chance on goal. It’s a better plan.

6. Watch your margin of safety

The Slovenians looked pretty comfortable after securing a two goal lead against the U.S. half way through the match. But in the end they were lucky to escape with a draw. These kinds of turnarounds happen all the time. You can’t get too comfortable. Almost anything can happen.

Ben Graham, the godfather of cautious “value” investing, reached a similar conclusion about his portfolio after the crash of 1929. Stock prices plummeted far further than he ever thought possible. (Real estate investors in the past few years have had a similar experience). That’s why Mr. Graham turned his attention to the concept of “margin of safety.” He recommended investors buy stocks when they are at least a third below their intrinsic value. Just in case.

7. Don’t pin all of your hopes on the referees

Financial regulators–including the Securities and Exchange Commission, the Treasury and the Federal Reserve–have come in for severe criticism in the wake of the financial crisis, and no wonder. They didn’t believe there was a housing bubble. They didn’t know the banks were playing shell games with their balance sheets. They didn’t know what was really going on in the derivatives market. The list is pitiful.

But if they want to feel better about themselves, they should probably tune in to some of the World Cup matches. Some of the refereeing has been simply extraordinary. First-time referee Koman Coulibaly has been left out of the next round after the controversial, and probably blown call in the USA-Slovenia game that cost the U.S. a win. It wasn’t the only controversy of the Cup. And if experience is any guide, it won’t be the last. Dubious refereeing is as much a feature of soccer as it is of the stock market. As for Mr. Coulibaly: Maybe we could find him a job on Wall Street–as a regulator.

‘TIM GEITHNER & LARRY SUMMERS NEED PAUL KRUGMAN TO REPLACE PETER ORSZAG, ‘ by Simon Johnson at baseline scenario.com.

In Uncategorized on June 25, 2010 at 03:57

Tim Geithner and Larry Summers Need Paul Krugman To Replace Peter Orszag

Posted: 24 Jun 2010 03:15 AM PDT

By Simon Johnson.  Tim Geithner and Larry Summers are talking a good game on fiscal policy to the G20.  But they are struggling with to establish traction for their “spend now, consolidate later” message.  Fortunately, there is an easy and obvious opportunity to establish credibility on this issue: Bring Paul Krugman into government.

Earlier this week, Peter Orszag resigned from his cabinet position as director of the Office of Management and Budget.  The Washington Post put out one of the first lists of candidates who could replacement him.  Senator Byron Dorgan would be a smart pick and some of the Post’s other suggestions could make sense.

But surely the front runner is Jason Furman.   The working assumption is that Treasury Secretary Tim Geithner and National Economic Council director Larry Summers are in positions of influence for the long haul – and they have a track record of preferring team players over people who could bring competing perspectives to the table.

The Hamilton Project, housed at the Brookings Institution, was designed as a government-in-waiting by Robert Rubin.  Then-Senator Obama attended its inaugural public meeting, with Peter Orszag as head of the project.  Appointing Furman, successor to Orszag at Hamilton and currently a deputy to Larry Summers at the NEC, or another person from the same wing of the Clinton administration would continue in this tradition.

This is unfortunate, because the brilliant choice would be Paul Krugman – completely taking the wind out of the Republicans’ sails on fiscal deficits.  Krugman has scolded them, in real-time and to great effect, consistently with regard to ruining the budget.  And he has an important point – the Bush administration inherited a fairly sound fiscal position from the Clinton administration but squandered it thoroughly over 8 years.

At the same time, the Republicans allowed unprecedented system risk to develop in the big banks.  To be sure, the Clinton administration shares responsibility for excessively deregulating financial institutions and derivatives – a point that even President Clinton now concedes.  But the rather more pointed partisan point is that the contingent fiscal liability posed by an out-of –control financial system became much larger during the Bush years.

The purely fiscal damage wrecked by big banks – apparent in 2008 but building for longer – will end up increasing our net government debt held by the private sector by around 40 percentage points of GDP.  That’s the likely final cost of the “automatic stabilizers” (i.e., tax revenue falls and we spend more on unemployment benefits during a recession) plus the discretionary fiscal stimulus that was undertaken with the – entirely reasonable – goal of preventing a Second Great Depression in early 2009.  Around half of our existing government debt burden and much of our continuing fiscal vulnerability is due to the dangers posed by unreformed big banks.

Vice President Dick Cheney is famously associated with the catch phrase, “deficits don’t matter.”  Yet “cut budget spending now” and “President Obama is fiscally irresponsible” are the slogans that come increasingly from Cheney’s part of the political spectrum.  It would be a great move to give Krugman (and his Nobel Prize) the OMB podium from which to respond.  Even the confirmation hearing would be fiery and memorable – and get the right points across.

Krugman embodies exactly the balance of messages required to be an effective budget director today.  He fully understands the need for budget consolidation eventually – after all, he wrote the original definitive work on balance of payments crises and how these are fueled by money creation (and implicitly by budget deficits).  No one has better anti-deficit credentials for the long haul.  And, as one of the world’s leading economists on international issues, he understands better than most both the advantages granted the United States because we issue one of the few “reserve currencies” (held by private investors and central banks alike as a safe haven).

He also knows that if we don’t put our public debt eventually on a stable path, we could lose our reserve currency status – in which case our problems would begin to resemble much more those of Greece.  Greece has substantially higher debt relative to GDP than we do (they are over 100 percent of GDP, on their way to 140 percent; we’re crossing 60 percent, on our way to 80 percent), and its budget deficit looks more intractable.  But the ultimate difference is that when the world’s financial markets look scary and investors want to duck for cover – they run into US government obligations, and away from paper issued by governments such as Greece.

The trick, therefore, is absolutely not to engage in overly rapid fiscal contraction.  This is what President Obama is warning the G20 against – although so far with little effect.  The new British government, for example, seems keen to engage in excessively precipitate spending cuts and tax increases.

We need instead to set achievable medium-term fiscal targets that will stabilize our debt levels.  If these are credible, this gives us the space and time we need to put our fiscal house in order without experiencing the kind of fiscal austerity that would only make our current high unemployment problems worse.

To give Peter Orszag and his colleagues – such as Tim Geithner – credit, they have tried to get this message across.  But unfortunately, they have not had the stature, the top-level political support, or the kind of voice needed to really pull off what is, after all, a delicate balance that must be explained far and wide with great credibility.

The danger is that the next budget director will too much lean towards the prevailing – and incorrect – Wall Street “wisdom” that we need Southern European style austerity and now.

If the president wants to actually make progress his broader agenda, and to experience anything other than austerity and prolonged high unemployment, Paul Krugman would be the best choice for budget director.

‘ONE BIG THING WE DON’T KNOW ABOUT STOCKS,’ by Carl Richards in the N. Y. Times.

In Uncategorized on June 22, 2010 at 09:36

One Big Thing We Don’t Know About Stocks

By CARL RICHARDS

Carl Richards is a certified financial planner and the founder of Prasada Capital.

The only reason we invest in stocks is to earn more than we would get from cash or bonds. The amount you are supposed to earn by taking the additional risk of owning stocks is called the risk premium. If you don’t get paid more for taking the risk, you should put your money in bonds.

Over the last 207 years you got paid 2.5 percentage points more each year (on average) to invest in stocks than you did in bonds.

But you know what they say about statistics, right? In the real world, we have to deal with the fact that, like all averages, this one has some serious problems. Sometimes the risk premium is higher than 2.5 percent, and sometimes it goes away or is hugely negative (say, in a bear market).

Until recently, most of us thought of bear markets as those three- to five-year periods where you grit you teeth and hang on. But recent experience is more painful than that.

In an article by Robert Arnott in The Journal of Indexes, he highlights multiple 20-, 30- and even 40-year periods where we would have been better off in bonds. In other words, the risk premium did not exist.

This starts to get ugly when we admit that we have no idea when these types of prolonged bear (or sideways) markets are coming. Where are we right now in the cycle? I have no idea, and I wouldn’t bet my life savings on anyone who claims to.

So earning this mythical risk premium of 2.5 percent is largely a function of timing, and it’s not the kind of timing we can control. This is the purely random luck kind of timing: when you were born, when you sell your business, when you retire or receive a large lump sum to invest. And if the risk premium is a function of timing, and timing is a function of luck, it doesn’t take much to realize that earning the mythical risk premium is a function of pure luck, too.

This is why so many of us who have been investing for 15 years feel as if we are about back where we started, even if we did everything right (assets allocated, properly diversified, didn’t bail out at the bottom and so on).

Let me be clear, I am not saying that the risk premium is dead, or that we should run out and sell everything. But I am suggesting that with the Dow bouncing around 10,000, it might be time to consider what you define as long term. Ask yourself if you can you live through a prolonged period where you earn no risk premium at all, and make adjustments accordingly.

‘DEAD ON ARRIVAL: FINANCIAL REFORMS FAILS, ‘ by Simon Johnson at baseline scenario.com.

In Uncategorized on June 22, 2010 at 04:07

Dead On Arrival: Financial Reform Fails

Posted: 21 Jun 2010 04:04 AM PDT

By Simon Johnson

The House-Senate reconciliation process is still underway and some details will still change. But the broad contours of “financial reform” are already completely clear; there are no last minute miracles at this level of politics.  The new consumer protection agency for financial products is a good idea and worth supporting – assuming someone sensible is appointed by the president to run it.  Yet, at the end of the day, essentially nothing in the entire legislation will reduce the potential for massive system risk as we head into the next credit cycle.

Go, for example, through the summary of “comprehensive financial regulatory reform bills” in President Obama’s letter to the G20 last week.

The president argues for more capital in banking – and this is a fine goal, particularly as the Europeans continue to drag their feet on this issue.  But how much capital does his Treasury team think is “enough”?  Most indications are that they will seek tier one capital requirements in the range of 10-12 percent – which is what Lehman had right before it failed.  How would that help?

“Stronger oversight of derivatives” is also on the president’s international agenda but this cannot be taken seriously, given how little Treasury and the White House have pushed for tighter control of derivatives in the US legislation.  If Senator Lincoln has made any progress at all – and we shall see where her initiative ends up – it has been without the full cooperation of the administration.  (The WSJ today has a more positive interpretation, but even in this narrative you have to ask – where was the administration on this issue in the nine months of intense debate and hard work prior to April?  Have they really woken up so recently to the dangers here?)

“More transparency and disclosure” sounds fine but this is just empty rhetoric.  Where is the application – or strengthening if necessary – of anti-trust tools so that concentrated market share in over-the-counter derivatives can be confronted.  The White House is making something of a show from Jamie Dimon falling out of favor, but all the points of substance that matter, Dimon’s JP Morgan Chase has won.  The Securities and Exchange Commission is beginning to push in the right direction, but the reconciliation conference looks likely to deny them the self-funding – CFTC and FDIC, for example, collect fees from the industry – that could help build as a regulator.  At the same time, the conference legislation would send a large number of important questions to the SEC “for further study”.  None of this makes any sense – unless the goal is to block real reform.

The president also asks for a “more effective framework for winding down large global firms” but his experts know this is politically impossible.  The G20 (and other) countries will not agree to such a cross-border resolution mechanism – and this was an important reason why Senators Sherrod Brown and Ted Kaufman argued so strongly that big banks had to become smaller (and be limited in how much they could borrow).  Now administration officials brag to the press, on the record, about how they killed the Brown-Kaufman amendment.  These people – in the White House and around the Treasury – simply cannot be taken seriously.

And as for “principles for the financial sector to make a fair and substantial contribution towards paying for any burdens”, this is a sad joke.  This is not an oil spill, Mr. President.  This is the worst recession since World War II, a 40 percentage points increase in government debt (attempting to prevent a Second Great Depression), loss of at least 8 million jobs in the United States, and a painfully slow recovery (in terms of unemployment) – not to mention all the collateral damage in so many parts of the world, including Europe.  Could someone in the White House at least come to terms with this issue and provide the president with a sensible and clear text?  Honestly, as staff work, this is embarrassing.

There is great deference to power in the United States, and perhaps that is appropriate.  But those now calling the shots should remember that they will not be in power for ever and – at some point in the not too distant future – there will be a more balanced assessment of their legacies.

Simply claiming that the president is “tough” on big banks simply will not wash.  There are too many facts, too much accumulated evidence, pointing exactly the other way.  The president signed off on the most generous and least conditional bailout in world financial history.  This is now widely understood.  The administration has scrambled to create some political cover in terms of “reform” – but the lack of substance here is already clear to people who follow it closely and public perceptions will shift quickly.

The financial crisis of fall 2008 revealed serious dangers have developed in the heart of the world’s financial system.  The Bush-Obama bailouts of 2008-09 confirmed that our biggest banks are “too big to fail” and the left, center, and right can agree with Gene Fama when he says: “too big to fail” is perverting activities and incentives.

This is not a leftist message, although you hear people on the left make the point.  But people on the right also increasingly understand what is going on – there is excessive and abusive power at the heart of our financial system that completely distorts markets (and really amounts to a hidden, unfair and dangerous taxpayer subsidy).

This administration and this Congress had ample opportunity to confront this problem and at least wrestle hard with it.  Some senators and representatives worked long and hard on precisely this issue.  But the White House punted, repeatedly, and elected instead for a veneer of superficial tweaking.   Welcome to the next global credit cycle – with too big to fail banks at center stage.

‘NOW, DAD FEELS AS STRESSED AS MOM,’ by Tara Parker-Pope in the N. Y. Times.

In Uncategorized on June 21, 2010 at 13:50

Now, Dad Feels as Stressed as Mom

By TARA PARKER-POPE

Published: June 18, 2010

Father’s Day brings this offering of a dubious milestone: Husbands are now just as stressed out as their harried wives.

For decades, the debate about balancing work and family life has been framed as an issue for women. Many studies have shown that motherhood is more taxing than fatherhood; mothers typically reported higher levels of unhappiness than women without children or men in general. Over the years, this disparity has helped fuel the gender wars, in policy debates and at home, often over a pile of dirty laundry.

Men, the truism went, did not do their share of the grocery shopping or diaper changing. They let women pull the double shift.

But several studies show that fathers are now struggling just as much — and sometimes even more — than mothers in trying to fulfill their responsibilities at home and in the office. Just last week, Boston College released a study called “The New Dad” suggesting that new fathers face a subtle bias in the workplace, which fails to recognize their stepped-up family responsibilities and presumes that they will be largely unaffected by children.

Fathers also seem more unhappy than mothers with the juggling act: In dual-earner couples, 59 percent of fathers report some level of “work-life conflict,” compared with about 45 percent of women, according to a 2008 report from the Families and Work Institute in New York.

The research highlights the singular challenges of fathers. Men are typically the primary breadwinner, but they also increasingly report a desire to spend more time with their children. To do so, they must first navigate a workplace that is often reluctant to give them time off for family reasons. And they must negotiate with a wife who may not always recognize their contributions at home.

“Men are facing the same clash of social ideals that women have faced since the 1970s — how do you be a good parent and a good worker?” said Joan C. Williams, the director of the Center for WorkLife Law at the Hastings College of the Law at the University of California. “This is a pretty sensitive indicator of the rise of the new ideal of the good father as a nurturing father, not just a provider father.”

When it comes to taking time off for children, men seem to be second-class citizens. Several studies show that men, compared with their female colleagues, are less likely to take advantage of benefits like flexible schedules and family leave. The Boston College study found that when men needed to take their offspring to the doctor or pick them up from child care, they tended to do so in a “stealth” fashion rather than ask for a formal flexible work arrangement.

The reluctance to ask for help may not stem from a bias in the office. Instead, men may just be wandering into strange, frightening territory.

“The conflict is newer to men, and it feels bigger than the same amount of conflict might feel to a woman,” notes Ellen Galinsky, president of the Families and Work Institute. “Women have been doing it for a longer time, and they have more role models.”

It doesn’t help that work eats up more time. In 1970, about two-thirds of married couples had a spouse at home (usually the wife). But today, only 40 percent of families have a stay-at-home spouse to handle domestic demands during the workday. Couples now work a combined average of 63 hours a week, up from just 52.5 in 1970, according to a 2009 report on workplace flexibility from the Georgetown University Law Center.

Men may be stressed out, but try telling that to their wives. Although men do more vacuuming and dishwashing than their fathers did, they still lag behind women when it comes to housework. When both husband and wife work outside the home, the woman spends about 28 hours a week on housework. Her husband can claim only about 16 hours, according to the National Survey of Families and Households from the University of Wisconsin. And men and women themselves paint very different pictures of their domestic duties. In the 2008 Families and Work report, 49 percent of men said they provided most or an equal amount of child care. But only 31 percent of women gave their husbands that much credit. The perception gap continued for cooking and housecleaning — more than 50 percent of men say they do most or half the work; 70 percent of wives say they do all of it.

If women are right, how bad could men’s work-life conflict be? “You will get complaints about men exaggerating their conflict,” Dr. Galinsky conceded.

Then again, some contributions may be unrecognized by the other partner. For instance, a father may prepare school lunches half the time, so he thinks he’s sharing that chore. But he doesn’t factor in the time his wife spent shopping for the ingredients, planning healthy, appetizing menus and emptying and cleaning the lunchboxes every day.

“Women remain psychologically responsible, and that’s a burden,” said Dr. Galinsky. “That psychological responsibility adds to the sense of feeling like you’re doing more, even though it may be somewhat invisible.”

For his part, a father may spend time fixing a tricycle, playing video games or putting away outdoor toys — time that his wife doesn’t count when she’s mentally keeping tabs.

“Women consistently underestimate how much their husbands do,” said Stephanie Coontz, a marriage historian and author of “A Strange Stirring: The Feminine Mystique and American Women at the Dawn of the 1960s,” to be published next year.

“Women don’t necessarily give his contribution the same value as theirs,” she added. “They don’t always recognize that what he does with the kids is a form of care, too.”

Tara Parker-Pope writes the Well column for The Times and is author of “For Better: The Science of a Good Marriage,” published by Dutton.

‘GENERATIONS IN THE BALANCE,’ by Daniel Judt & Tony Judt in the N. Y. Times Op-ED section .

In Uncategorized on June 21, 2010 at 02:19

OP-ED CONTRIBUTORS

Generations in the Balance

By DANIEL JUDT and TONY JUDT

Published: June 18, 2010

DANIEL Had I been 18 in November 2008, I would have voted for Barack Obama. However, being 14, I settled for voicing my support for him and expressing joy at his election. I believed, innocently, that his administration would put its foot down, stamping out the environmental crisis that his predecessors had allowed to fester unnoticed. I felt Mr. Obama knew how to do the right thing morally, even if it meant going against the “right thing” politically.

Less than two years later, I have become hugely pessimistic about the moral resolve of our government and corporate world. Deepwater Horizon has been the tipping point. I was already skeptical: an increase in offshore drilling, our government’s passive stance at Copenhagen and the absence of any environmental legislation saw to that.

But BP made me realize that the generation in office just doesn’t get it. They see the environmental crisis in the same light as they see political debacles and economic woes. Politics pass and economies rebound, but the environment doesn’t. It’s that sense of “We’ll get that done right after we have dealt with everything else” that makes me so angry. The world is not an expendable resource; fixing the damage you have inflicted will be the issue for my generation. It is that simple.

TONY Well, I am 62 and I did vote for Barack Obama. I held out no great hopes. It was clear from the outset that this was someone who would concede rather than confront — and that’s a shortcoming in a politician, if not in a man. We have seen the consequences: not in the Middle East, nor in economic regulation, nor over detainees, nor in immigration reform has Mr. Obama followed through. The audacity of hope?

As for the corporations, we baby boomers were right to be cynical. Like Goldman Sachs, oil companies are not benign economic agents, serving a need and taking a cut. They are, in Theodore Roosevelt’s words, “malefactors of great wealth.” But our cynicism dulled our response to truly criminal behavior: “They would do that, wouldn’t they?” It is one thing to watch while Goldman Sachs pillages the economy, quite another to be invited to stand aside while BP violates the Gulf Coast. Yes, we should be a lot angrier than we are.

We are staring into our future and it does not work. The gush of filth is a reminder that we have surrendered our independence to a technology we cannot master. Our energies are misdirected to expensive foreign wars whose purposes grow ever more obscure. We rail at one another in “cultural” clashes irrelevant to our real problems.

Meanwhile, the clockwork precision of our classical constitution has ground to a halt — depending as it does on a consensus that no longer exists. Taking the long view, this is how republics die. “Someone” clearly has to do “something.” What do you propose?

DANIEL Just as you are too forgiving of unacceptable corporate behavior, maybe you are too resigned politically. To actually effect change, you need to come in thinking that real change is possible. My generation saw things that way; that is why so many young people supported Mr. Obama. Perhaps more than any other constituency in the United States, we believed that engagement would make things happen. But the more we are told that crises are to be expected and cannot be prevented by those in power — that we must put our faith in God, as the president advised on Tuesday — the more our faith in government slips away.

Politicians depend on the public: given a strong enough consensus, they will act. That’s what I would have had you do — and that’s what we have to do now: build a consensus and act. Your generation talked a lot about engagement. So engage. Use the lever of public opinion to force strong environmental legislation.

In reconciling ourselves after BP to “getting back to normal,” we will have missed a vital opportunity. We need a new “normal.” And we need to ask ourselves new questions: not whether we can afford to invest in a different way of life — solar energy, mass transportation, the phasing out of our dependency on oil — but how long we can afford not to. You owe us this.

TONY I am a little queasy about all this generation talk. After all, I am the same age as Bill Clinton and George W. Bush, but I take no responsibility for them. Actually, while I agree that we need to build a national consensus, I don’t think the challenge is to convince Americans about pollution or even climate change. Nor is it just a matter of getting them to make sacrifices for the future. The challenge is to convince them once again of how much they could do if they came together.

But that requires leadership — and I can’t help noticing that you rather let the president off the hook. After all, if you and your contemporaries have lost faith in the man and “the system,” that’s partly his fault. But you, too, have a responsibility.

~~~~ GO TO NYTIMES.COM FOR BALANCE OF ARTICLE ON THE OP-ED PAGE~~~~~~~

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Daniel Judt is in the ninth grade at the Dalton School. Tony Judt is the author of “Ill Fares the Land” (and his father).

‘BEST ANIMAL DADS, ‘ from Care 2 Causes.com.

In Uncategorized on June 20, 2010 at 16:45

Father’s Day: Best Animal Dads

posted by: Sharon Seltzer 20 hours ago.

Fatherís Day is a wonderful time to celebrate and honor devoted dads of every species.† Just like their human counterparts males in the animal world play a vital role in raising and teaching their offspring.† Here is a list of some of the best animal dads.

Seahorse

The males of this species make it to the top of the list every Fatherís Day and they deserve the kudos.† The seahorse is a monogamous animal that actually carries the eggs of his mate in his belly.† He woos his love with an integral dance until she sends the eggs through a tube into his body.† These dads can carry as many as 1,000 eggs. The male seahorses proudly display their growing stomachs to each other until they give birth.

Marmosets

Adorable male marmosets are the primary caregivers for their newborn offspring while their tiny female mates recuperate for several weeks after giving birth.† These primate babies are can weigh up to 25 percent of their motherís body weight, making the birthing process difficult and taxing.† So itís up to dad to feed, clean and care for the needs of the babies.

Quail and Grouse

These wonderful birds mate for life and are dedicated dads who take an active role in child-rearing.† As their fuzzy kids start to wander away from the nest, these fathers are great at playing follow the leader.† Their offspring line up in long rows and waddle behind dad as they get know their home turf.† Mom helps by staying at the back of the line, keeping any strays from getting lost.

Red Fox

While mother red foxes stay with the kids in the den, it is up to these dads to bring back food every 4-6 hours for their demanding families.† Male red foxes are also fun-filled fathers as their young get older.† They are known to call the pups away from their mothers just to rough-house and play with them.† And as the pups get bigger, it is the fathers that teach them how to hunt and sniff out food.

Lions

While these big dads are known for being a bit lazy, they are also tolerant fathers.† One male lion can have as many as 7 female lionesses in his pride (household) and that can mean up to 20 lion cubs running around the place.

Rhea

Like the lions, these large birds can have anywhere from 2-12 females in a family with one male.† But unlike the lions, these fathers are completely hands-on kind of guys.† They incubate 10-60 eggs over a forty day period and once the kids are born it is up to dad to raise them on his own.

Emperor Penguin

This magnificent father makes the list every year as king of – Animal Fatherís Day.† Although the females lay the eggs, it is up to the fathers to keep them warm for a full two months.† These dads donít even wander off for food.† They huddle together in temperatures that can reach 70 degrees below zero and keep their eggs warm by resting them on top of their feet.† When the chicks are hatched itís dad who feeds them their first meal of a milky substance made from his body.† Then mom returns from hunting for fish and brings everyone in the family a real meal.†

Happy Fatherís Day to all of the great dadís who have inspired and enriched the children in their lives.†

‘MY FATHER’S GIFT TO ME, ‘ by Nicholas Kristof in the N. Y. Times. PRICELESS!

In Uncategorized on June 20, 2010 at 13:06

OP-ED COLUMNIST

My Father’s Gift to Me

By NICHOLAS D. KRISTOF

Published: June 18, 2010

When I was 12, my father came and spoke to my seventh-grade class. I remember feeling proud, for my rural school was impressed by a visit from a university professor. But I also recall being embarrassed — at my dad’s strong Slavic accent, at his refugee origins, at his “differentness.”

I’m back at my childhood home and reflecting on all this because abruptly I find myself fatherless on Father’s Day. My dad died a few days ago at age 91, after a storybook life — devoted above all to his only child.

Reporting on poverty and absentee fathers has taught me what a gift fatherhood is: I know I won the lottery of life by having loving, caring parents. There’s another reason I feel indebted to my father, and it has to do with those embarrassing foreign ways: his willingness to leave everything familiar behind in the quest for a new world that would provide opportunity even for a refugee’s children.

My father, an Armenian, was born in a country that no longer exists, Austria-Hungary, in a way of life that no longer exists. The family was in the nobility, living on an estate of thousands of acres — and then came World War II.

My father was imprisoned by the Nazis for helping spy on their military presence in Poland. He bribed his way out of prison, but other relatives died at Auschwitz for spying. Then the Soviet Union grabbed the region and absorbed it into Ukraine, and other relatives died in Siberian labor camps.

Penniless, my father fled on horseback to Romania but saw that a Communist country would afford a future neither for him nor his offspring. So he headed toward the West, swimming across the Danube River on a moonless night. On the Yugoslav side of the river, he was captured and sent to a concentration camp and then an asbestos mine and a logging camp. After two years, he was able to flee to Italy and then to France.

My father found that despite his fluent French and university education, France did not embrace refugees. Even children of refugees were regarded as less than fully French.

So he boarded a ship in 1952 to the United States, the land of opportunity — even though English was not among the seven languages that he spoke. His first purchase was a copy of the Sunday New York Times, with which he began to teach himself an eighth language.

He arrived as Vladislav Krzysztofowicz, but no American could pronounce that. So he shortened it to Ladis Kristof.

After working in an Oregon logging camp to earn money and learn English, he started university all over again at the age of 34, at Reed College. He earned his doctorate at the University of Chicago, where he met my mother, Jane, and in his 40s he began a career as a political science professor, eventually winding up at Portland State University.

Because he never forgot what it is to be needy, my dad was attentive to other people’s needs. Infuriatingly so. He picked up every hitchhiker and drove them miles out of his way; if they needed a place to sleep, he offered our couch.

Seeking an echo of his old estate, my dad settled us on a farm, which he equipped with tractors and an extraordinary 30,000-volume library: From chain saws to the complete works of Hegel (in German), our farm has it all.

At the age of 80, my father still chopped firewood as fast as I did. In his late 80s, he climbed the highest tree on our farm each spring to photograph our cherry orchard in bloom. At 90, he still hunted.

I know that such a long and rich life is to be celebrated, not mourned. I know that his values and outlook survive because they are woven into my fabric. But my heart still aches terribly.

As I grew up, I came to admire my father’s foreign manners as emblems of any immigrant’s gift to his children. When I was in college, I copied out a statement of his:

“War, want and concentration camps, exile from home and homeland, these have made me hate strife among men, but they have not made me lose faith in the future of mankind. … If man has been able to create the arts, the sciences and the material civilization we know in America, why should he be judged powerless to create justice, fraternity and peace?”

I taped it to my dorm room wall, but I didn’t tell him. It felt too awkward. And now it’s too late. Even this column comes a few days too late.

So my message for Father’s Day is simple: Celebrate the bequest of fatherhood with something simpler, deeper and truer than an artificial verse on a store-bought card. Speak and hug from your heart and soul — while there is still time.

I invite you to comment on this column on my blog, On the Ground. Please also join me on Facebook, watch my YouTube videos and follow me on Twitter.

‘CREDIT UNIONS ARE BECKONING WITH OPEN ARMS, ‘ by Ron Leiber in the “Your Money” column in the N. Y. Times.

In Uncategorized on June 19, 2010 at 14:45

YOUR MONEY

Credit Unions Are Beckoning With Open Arms

By RON LIEBER

Published: June 18, 2010

This turns out to be a source of much confusion for consumers looking for a better checking account, a more generous credit card or a cheaper auto or home loan. By their very name, credit unions suggest exclusivity. After all, unions are something you have to join, and it isn’t always clear from walking by a credit union or running across one on the Web whether everyone is welcome.

But over the years, some of the biggest credit unions with some of the best deals have quietly opened up membership to everybody. This infuriates bankers, who must compete with them while also paying income taxes that the nonprofit credit unions do not owe. Consumers, however, ought to rejoice and take a closer look at some of the more aggressive credit unions, since there may be big savings for the taking once you realize you are eligible.

Bankers’ irritation is rooted in part in history and their contention that many of today’s credit unions barely resemble the institutions of old.

Credit unions got that tax break early on, when they formed to serve customers the banks wouldn’t touch (the “small people” in BP speak).

Today, credit unions often (but not always) offer lower interest rates on credit cards and better deals on auto and other loans than most banks, though online banks often (but not always) offer checking accounts that earn more interest and charge fewer fees than many credit unions do.

Eligibility for credit union membership has evolved , though in every case members are supposed to have what is known as a “common bond.”

One way to become a member is through occupational classification, where credit union members work for the same employer or perform the same job. The second is a community credit union, where members must live in the same “well-defined” region.

Things get murky with the third type, what is known as the “multiple common bond” credit union, which can pull in many different groups of eligible members as long as they are within reasonable proximity of the credit union. In the early 1980s, members of associations were allowed to join credit unions as part of an effort to include populations the banks were not reaching. “The idea was to get credit union service to people who wanted it from people who wanted to give it to them,” said Wendell A. Sebastian, who worked for the federal credit union industry regulatory body at the time.

In practice, this ended up opening credit union membership to anyone in the United States. About 10 years ago, the Pentagon Federal Credit Union approached the National Military Family Association and offered to let its members join the credit union. What PenFed really got out of the deal, however, was the ability to say on its Web site that if prospective members didn’t meet other eligibility requirements (like working for the Defense Department), they could join the military family association for $20 and become eligible that way.

In the years since, membership in the association has risen to 45,000, from under 10,000. How many of them joined just to slip through the side door into the credit union? “Probably most of them,” said Joyce Raezer, the association’s executive director. “It was a win-win for both of us, and it’s enabled us to do a lot more for military families.” The new members won, too, because they got access to products like PenFed’s excellent Visa Platinum Cashback Rewards credit card.

This is perfectly legal, though members’ common bond may only be a shared lust for credit card rebates.

What representatives of the American Bankers Association find particularly objectionable, though, are the big credit unions that have their own associations for what appears to be the express purpose of signing up people and then making them eligible for credit union membership.

Take USA Fed in San Diego, for instance, which adopted that name in 2008 to show, according to its Web site, that “membership is easy and anyone can join.” People who don’t meet the normal eligibility requirements can join something called the Prime Meridian Association.

The association offers financial seminars and discounts to members, and just so happens to be based at USA Fed’s headquarters. “It appears that all they’ve done is create a phantom association for the purpose of allowing people to join their credit union,” said Keith Leggett, vice president and senior economist at the American Bankers Association.

Mary Cunningham, president and chief executive of USA Fed, said Prime Meridian was a legitimate nonprofit organization and noted that with under 700 members it hardly contributed the bulk of USA Fed’s new members each year. “It’s not a phantom organization by any stretch,” she said.

If the bankers’ association is so exercised about this, why not sic the credit union regulator, the National Credit Union Administration, on USA Fed? Because the association doesn’t think the regulator does a very good job. “The bottom line is that the N.C.U.A. doesn’t enforce the common bond rules,” said Ed Yingling, the association president and chief executive.

John J. McKechnie III, a spokesman for the regulator, defended its work. “We cannot determine intent as to why a particular association or group exists but do monitor compliance with the statutory and regulatory requirements to be granted an associational field of membership,” he said in an e-mail message. He added that he was not aware of any information that would make USA Fed’s inclusion of Prime Meridian members invalid.

This jockeying for members is an amusing spectator sport — until a credit union blows up, that is. In 2008, the credit union regulator liquidated Norlarco Credit Union, based in Fort Collins, Colo., after it had helped to organize and underwrite a Florida real estate lending binge. In an autopsy performed by the credit union administration’s Office of Inspector General, auditors noted that about 43 percent of the borrowers lived in the Miami-Dade County area of Florida.

((( MORE AT NYTIMES.COM)))