THE struggle has been long and arduous. But gazing across the battered economies of the rich world it is time to declare that the fight against financial chaos and deflation is won. In 2015, the IMF says, for the first time since 2007 every advanced economy will expand. Rich-world growth should exceed 2% for the first time since 2010 and America’s central bank is likely to raise its rock-bottom interest rates.
However, the global economy still faces all manner of hazards, from the Greek debt saga to China’s shaky markets. Few economies have ever gone as long as a decade without tipping into recession—America’s started growing in 2009. Sod’s law decrees that, sooner or later, policymakers will face another downturn. The danger is that, having used up their arsenal, governments and central banks will not have the ammunition to fight the next recession. Paradoxically, reducing that risk requires a willingness to keep policy looser for longer today.
NEW YORK (AP) — Those record profits that companies are reporting may not be all they’re cracked up to be.
As the stock market climbs ever higher, professional investors are warning that companies are presenting misleading versions of their results that ignore a wide variety of normal costs of running a business to make it seem like they’re doing better than they really are.
What’s worse, the financial analysts who are supposed to fight corporate spin are often playing along. Instead of challenging the companies, they’re largely passing along the rosy numbers in reports recommending stocks to investors.
“Companies are tilting the results,” says fund manager Tom Brown of Second Curve Capital, “and the analysts are buying it.”
An analysis of results from 500 major companies by The Associated Press, based on data provided by S&P Capital IQ, a research firm, found that the gap between the “adjusted” profits that analysts cite and bottom-line earnings figures that companies are legally obliged to report, or net income, has widened dramatically over the past five years.
Fox Business Network correspondent Charles Gasparino claims a lot of his sources have been talking about Martin O’Malley since the former Maryland governor launched his White House bid on Saturday. And Gasparino says Wall Street is angry with the Democratic presidential candidate.
“Martin O’Malley is now like, I would say persona non grata — public enemy number one in in the halls of Goldman Sachs, in the halls of Black Rock, the big money management firm. All throughout Wall Street right now,” Gasparino said in an appearance on Fox Business on Tuesday.
According to Gasparino, O’Malley became Wall Street’s bête noire by taking a shot at the financial industry during his announcement. In that speech, O’Malley accused Wall Street of essentially trying to anoint Democratic frontrunner Hillary Clinton and former Florida Gov. Jeb Bush (R) as nominees in the 2016 race.
“Recently, the CEO of Goldman Sachs let his employees know that he’d be just fine with either [Jeb] Bush or [Hillary] Clinton. I bet he would,” O’Malley said, adding, “Well, I’ve got news for the bullies of Wall Street: The presidency is not a crown to be passed back and forth by you between two royal families. It is a sacred trust, to be earned from the American people, and exercised on behalf of the people of these United States.”
In a previous television appearance on Monday, Gasparino suggested O’Malley’s comments would make him the “last person” Wall Street would want to win the Democratic nomination.
Gasparino expanded on that analysis Tuesday. He claimed the financial industry “was not expecting” a presidential candidate to adopt the kind of aggressive approach towards Wall Street. Further, Gasparino suggested that even though O’Malley is polling far behind Clinton, there are fears his message could resonate and push Clinton “to the left” on Wall Street.
“Right now people on Wall Street are talking about Martin O’Malley. Now does he have a chance to win? I’m not a political guy, it would seem like odds are low based on everything that I know,” Gasparino said, later adding, “What they’re really worried about is not that he’s going to win. It’s that he’s going to force [Clinton] so far to the left with that resonating message.”
Gasparino said Wall Street fears this O’Malley effect could stop Clinton from doing “some of the things they want her to do like water down Dodd-Frank.”
“They really think that if she gets in there, that if Hillary Clinton gets in there, that Dodd-Frank will be watered down to the point where they can do proprietary trading using their own capital to trade which is outlawed right now. And various aspects of Dodd-Frank will be freed up so the banks can go back to making a lot of money,” Gasparino explained. “Not that they don’t make a lot of money now, but even more money, Clinton-era money.”
The economy got off to an even weaker start this year than first thought, the government reported Friday, as economic activity contracted amid a disappointing trade picture and continued caution on spending by businesses and consumers alike.
The 0.7 percent decline in economic output in the first quarter of 2015 was a reversal of the initial 0.2 percent advance for the periodreported last month by the Commerce Department.
While statistical quirks and one-time factors like wintry weather in some parts of the country played a role, as did a work slowdown at West Coast ports, the lackluster report for January, February and March underscores the American economy’s seeming inability to generate much momentum.
Much of the revision was spurred by fresh data showing businesses added to inventories at a slower pace than first estimated, while net exports fell slightly more than first thought. A sharp pullback in energy exploration in the wake of falling oil prices is also putting pressure on business investment.
Most experts had expected Friday’s data to show a contraction in the first quarter, and virtually no mainstream economists believe the country is on the verge of a recession. Still, the weakness is a reason the Federal Reserve is not expected to raise short-term interest rates until the second half of 2015, after speculation that a June increase was possible.
Full Committee Moves 13 Bills from Cap Markets Subcommittee
WASHINGTON, D.C. – Rep. Scott Garrett (NJ-05), Chairman of the Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, issued the following statement after the Financial Services Committee passed his bill, H.R. 1525, the Disclosure Modernization and Simplification Act of 2015 with unanimous support.
“The Financial Services Committee continued its important work to help eliminate burdensome red tape and make our government more efficient, effective, and accountable to the American people,” said Garrett. “As part of the JOBS Act, Congress directed the SEC to review its existing disclosure requirements and identify ways to make our current disclosure regime less burdensome for issuers and more useful for investors, but the agency has yet to act. The Disclosure Modernization and Simplification Act of 2015 will fix that by eliminating the unnecessary bloat of our current disclosure regime, while at the same time ensuring that investors receive all of the material information they need in order to make informed investment and voting decisions.”
The Disclosure Modernization and Simplification Act would require the SEC to take steps to modernize the current disclosure regime in three ways:
1) Require the SEC to eliminate any outdated or duplicative disclosure requirements that are immaterial to investors and to further scale disclosures for emerging growth companies and small issuers.
2) Allow issuers to file a summary page of their annual report that would include cross references to material information included in their 10-k.
3) Require the SEC to produce a broad study on how best to utilize technology in order to improve delivery and presentation systems for disclosures.
In addition to Rep. Garrett’s Disclosure Modernization and Simplification Act of 2015, the Committee also passed a number of bills previously passed by the Capital Markets and Government-Sponsored Enterprises Subcommittee.
H.R. 432, the “SBIC Advisers Relief Act of 2015”
H.R. 686, the “Small Business Mergers, Acquisitions, Sales, and Brokerage Simplification Act of 2015”
H.R. 1334, the “Holding Company Registration Threshold Equalization Act of 2015”
H.R. 1525, the “Disclosure Modernization and Simplification Act of 2015”
H.R. 1675, the “Encouraging Employee Ownership Act of 2015”
H.R. 1723, the “Small Company Simple Registration Act of 2015”
H.R. 1847, the “Swap Data Repository and Clearinghouse Indemnification Correction Act of 2015”
H.R. 1965, the “Small Company Disclosure Simplification Act”
H.R. 1975, the “Securities and Exchange Commission Overpayment Credit Act”
H.R. 2064, the “Improving Access to Capital for Emerging Growth Companies Act”
H.R. 2354, the “Streamlining Excessive and Costly Regulations Review Act”
H.R. 2356, the ‘‘Fair Access to Investment Research Act of 2015”
H.R. 2357, the ‘‘Accelerating Access to Capital Act of 2015”
“Verita$” was a best seller in Korea, author Shin Eun-jung’s native country, because she asks the question that’s hardly ever asked: Why Harvard?
Eun-jung says the third word a Korean baby learns, after “Mom” and “Dad,” is “Harvard.” She argues that this is a tragedy, because Harvard isn’t the global intellectual powerhouse of reputation.
Now, there are plenty of criticisms of Harvard, though rarely the one Eun-jung levels: that Harvard swanned its way to dominance by maintaining a false front of liberalism when it is, in fact, an arm of the governing right.
“Verita$” recites a litany of bad acts: the Salem witch trials, eugenics, a so-called “collaboration” with Joseph Goebbels and Heinrich Himmler, architects of financial collapse such as Robert Rubin and Larry Summers, McCarthyism, racism, sexism, tyrannical labor practices and “a poison called elitism.”
Her list is long. I might add Harvard produces such venerable alumni as Henry Kissinger, Ted Kaczynski and Dr. Oz.
MAY 23, 2015, 4:48 PM LAST UPDATED: SATURDAY, MAY 23, 2015, 11:41 PM
BY KATHLEEN LYNN AND KIM LUEDDEKE
STAFF WRITERS |
THE RECORD
Despite a decidedly unsummer-like chill, visitors flocked to the Jersey Shore on Saturday, strolling along its boardwalks and filling restaurants and shops in celebration of the long Memorial Day weekend.
“Today’s been nice. Good crowd,” said Nicky Kaslov, owner of the Beach boyz clothing store on the Seaside Heights boardwalk. “I’m hoping to have a good year.”
As the Memorial Day weekend kicks off the traditional summer tourism season, business owners and analysts say that lower gas prices, an improving economy and a craving for sunshine after a tough winter are likely to bring more visitors to the Shore this year.
Experts at Stockton University in Galloway predict a 4 to 5 percent increase in tourism at most Jersey Shore communities this summer — assuming the weather’s bright.
MAY 24, 2015 LAST UPDATED: SUNDAY, MAY 24, 2015, 1:21 AM
BY ELI AMDUR
SPECIAL TO NORTH JERSEY JOBS |
NORTH JERSEY JOBS
Three weeks ago, this column’s headline read, “Congratulations, graduate. Now what?” The discussion was all about being proactive in your career and in your job search. Inherent in being proactive is networking, and much was made of it in the article.
MAY 20, 2015 LAST UPDATED: WEDNESDAY, MAY 20, 2015, 1:19 PM
BY HUGH R. MORLEY
STAFF WRITER |
THE RECORD
Eric Lipkin was five years old when he met Bernie Madoff at his financial services firm.
He was a student and a track star at Paramus High School when he started doing company clerical work for his father, Irwin, who worked for Madoff. And by the time Eric Lipkin joined the company himself, right out of high school in 1991, he had developed a “reverence” for Madoff.
So said Lipkin’s attorney in U.S. District Court in Manhattan Wednesday, where he sought to explain why his client, a Ridgewood resident, participated in Madoff’s massive Ponzi scheme, preparing documents that he knew were fraudulent.
“One of the things that made him attractive to Madoff was he was very dependable, and he follows orders,” attorney James Kieran Filan told the court.
Filan offered the explanation at a 90-minute hearing, before a federal judge sentenced Lipkin, 41, to nine months home detention and 200 hours of community service for is role in the $17 billion scheme, to which he pleaded guilty in 2011. Lipkin also agreed in court to forfeit $1.4 million.
Judge Laura Taylor Swain said she was swayed to give a much lighter sentence than federal guidelines suggested because of Lipkin’s role, as described by prosecutors, in helping the government build a case against others involved in the Madoff scheme, and the help he gave the trustee pursuing funds from Madoff’s firm, Bernard L, Madoff Securities, to compensate the scheme’s victims. Lipkin faced a maximum sentence of 70 years in prison.
On Tuesday, former Madoff controller Enrica Cotellessa-Pitz, who has also cooperated with prosecutors, received a similar sentence.
“There is no question that Mr. Lipkin engaged in serious, gravely wrongful conduct, and did so knowingly in material respects,” Swain said, adding that the scheme “shattered dreams and changed lives forever.”
Still, she added, “he has been humbled by what has happened and the court is convinced that his remorse is genuine.”
This may come as bad news for parents who have spent tens of thousands of dollars sending their kids to expensive universities, but one path for young people getting a good job requires just a two-year degree or, in some cases, no college degree at all.
Telecom giant Verizon announced Tuesday it will be buying AOL for $50 per share, or about $4.4 billion. (Tweet This)
AOL’s stock was up more than 17 percent after the announcement. Verizon’s stock was down slightly.
AOL co-founder Steve Case tweeted his approval.
The transaction will be completed this summer and will take the form of a tender offer followed by a merger, after which AOL will become a wholly owned subsidiary of Verizon, the announcement said.
“Verizon’s vision is to provide customers with a premium digital experience based on a global multiscreen network platform. This acquisition supports our strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience,” said Lowell McAdam, Verizon’s chief executive.
Tim Armstrong, AOL’s chairman and CEO, will remain at his position once the deal is finalized.
“Verizon is a leader in mobile and OTT (over-the-top video) connected platforms, and the combination of Verizon and AOL creates a unique and scaled mobile and OTT media platform for creators, consumers and advertisers,” Armstrong said in the announcement.
Hackensack Medical Center has deal to merge with Meridian Health
MAY 12, 2015, 2:24 PM LAST UPDATED: TUESDAY, MAY 12, 2015, 5:07 PM
BY MARY JO LAYTON
STAFF WRITER |
THE RECORD
Hackensack University Medical Center and its parent company have signed a definitive agreement with Meridian Health to merge the two systems to merge, a deal that will create the state’s largest hospital network.
The new organization, to be called Hackensack Meridian Health, will employ more than 23,000 people and have more than $3.4 billion in revenues, eclipsing Barnabas Health, currently the state’s largest health care system.
The deal, which is undergoing regulatory review, will create a system with 11 hospitals and two children’s hospitals from Bergen to Ocean counties and a large network of outpatient services, including surgery centers, rehab facilities and cancer care.
“This will be a game changer in health care,” said Robert C. Garrett, president and CEO of Hackensack University Health Network.
The Federal Reserve’s ability to give emergency loans to distressed institutions in a crisis would be restricted under legislation being prepared by lawmakers who want to stop “backdoor bailouts”.
The proposed legislation — a striking challenge to the Fed from a bipartisan pair of senators — will reignite debate over whether the US succeeded in ending banks’ “too big to fail” status with its response to the financial crisis.
The Fed contained panic during the crisis by offering emergency loans to institutions facing liquidity crunches. But, after the meltdown, Congress introduced restrictions to prevent the bailout of single struggling entities, while preserving Fed powers to provide liquidity to groups of firms.
The Social Security Administration projects that its trust funds will be depleted by 2033—not an optimistic forecast. But it may be even bleaker than that.
New studies from Harvard and Dartmouth researchers find that the SSA’s actuarial forecasts have been consistently overstating the financial health of the program’s trust funds since 2000.
“These biases are getting bigger and they are substantial,” said Gary King, co-author of the studies and director of Harvard’s Institute for Quantitative Social Science. “[Social Security] is going to be insolvent before everyone thinks.”
The Social Security and Medicare Trustees’ 2014 report to Congress last year found trust fund reserves for both its combined retirement and disability programs will grow until 2019. Program costs are projected to exceed income in 2020 and the trust funds will be depleted by 2033 if Congress doesn’t act. Once the trust funds are drained, annual revenues from payroll tax would be projected to cover only three-quarters of scheduled Social Security benefits through 2088.
Researchers examined forecasts published in the annual trustees’ reports from 1978, when the reports began to consistently disclose projected financial indicators, until 2013. Then, they compared the forecasts the agency made on such variables as mortality and labor force participation rates to the actual observed data. Forecasts from trustees reports from 1978 to 2000 were roughly unbiased, researchers found. In that time, the administration made overestimates and underestimates, but the forecast errors appeared to be random in their direction.
By David Boaz
This article appeared in TownHall.com on May 8, 2015.
Today is the 116th anniversary of the birth of F. A. Hayek, one of the greatest scholars of the 20th century.
Back in 2010, as the tea party movement was on the verge of delivering an electoral rebuke to President Obama’s big-government policies, the New York Times derided the movement for reviving “long-dormant ideas [found in] once-obscure texts by dead writers.” They meant Hayek especially. But a more astute journalist might not have regarded Hayek as obscure.
Who was Hayek? He was an economist born and educated in Vienna. After the Nazi conquest of Austria, he became a British citizen and taught there and at the University of Chicago for most of his career. He was awarded the Nobel Prize in Economics in 1974. President Ronald Reagan called him one of the two or three people who had most influenced him, and so did some of the dissidents behind the Iron Curtain. President George H. W. Bush awarded him the Medal of Freedom. Margaret Thatcher banged his great book “The Constitution of Liberty” on the table at Conservative Party headquarters and declared “This is what we believe.” Milton Friedman described him as “the most important social thinker of the 20th century.”
“Today is the 116th anniversary of the birth of F. A. Hayek, one of the greatest scholars of the 20th century.”
But respect for Hayek extended far beyond libertarians and conservatives. Lawrence H. Summers, former president of Harvard and a top economic adviser to Presidents Clinton and Obama, called him the author of “the single most important thing to learn from an economics course today” — that markets mostly work without plans or direction. He is the hero of “The Commanding Heights,” the book and PBS series on the battle of economic ideas in the 20th century. His most popular book, “The Road to Serfdom,” has never gone out of print and saw its sales explode during the financial crisis and Wall Street bailouts. John Cassidy wrote in the New Yorker that “on the biggest issue of all, the vitality of capitalism, he was vindicated to such an extent that it is hardly an exaggeration to refer to the 20th century as the Hayek century.”
In much of his work Hayek explored how society can best make use of “the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess.”
When we see an orderly process, we naturally assume that someone has designed or planned it. Hayek says that we fail to distinguish between two kinds of orders: the “made” or planned order, such as a business firm or other limited organization, and the “grown” or spontaneous order, such as the whole society or market process. It is crucial to make this distinction, however, because the two kinds of orders are very different. Notably, the made order is designed for a specific purpose, while the grown order reflects the different and often competing purposes of many individuals and enterprises.
Hayek’s last book, The Fatal Conceit, published in 1988 when he was approaching ninety, returned to the topic of the spontaneous order, which is “of human action but not of human design.” The fatal conceit of intellectuals, he said, is to think that smart people can design an economy or a society better than the apparently chaotic interactions of millions of people. Such intellectuals fail to realize how much they don’t know or how a market makes use of all the localized knowledge each of us possesses.
The failure to absorb that lesson leads to many of our modern policy problems, from the financial crisis to the inner-city chaos wrought by the war on drugs to the failed attempt to use the U.S. military to “build nations” overseas.
Reagan and Thatcher admired Hayek, but he always insisted that he was a liberal in the classical sense, not a conservative. The last chapter of “The Constitution of Liberty” was titled “Why I Am Not a Conservative.” He pointed out that the conservative “has no political principles which enable him to work with people whose moral values differ from his own for a political order in which both can obey their convictions. It is the recognition of such principles that permits the coexistence of different sets of values that makes it possible to build a peaceful society with a minimum of force. The acceptance of such principles means that we agree to tolerate much that we dislike.” He wanted to be part of “the party of life, the party that favors free growth and spontaneous evolution.” I recall an interview in a French magazine in the 1980s in which he was asked if he was part of the “new right,” and he quipped, “Je suis agnostique et divorcé.” (“I am agnostic and divorced.”)
Hayek was more than just an economist. He also published impressive works on political theory, psychology, and the methodology of the social sciences.
