PIMCO - Bill Gross, and Bank Regulation

I hope if you are reading this blog you are a already a subscriber to the Financial Times - but if you are not, you should be. The features they have been doing on the "Future of Capitalism" have been generally exceptional and today's entry is no exception. Please read this piece on "Bank Regulation" - which outlines a roadmap for the G20 meeting. Bottom line - Holy Smokes. This is indeed a tall mandate for international cooperation the likes of which we have never seen. Another tidbit I found particularly interesting today was the deal struck between China and Argentina. "China, which is pushing to end the dominance of the dollar as a worldwide reserve, has agreed a RMB 70 bn currency swap with Argentina that will allow it to recieve renminbi instead of dollars for its exports to the Latin American Country." They have been doing a number of these deals in pursuit of their interest " to replace the dollar with an enhanced version of the IMF's unit of account, the special drawing right or SDR." Future of Us dollar as a reserve currency? Modified Bretton Woods says my hubby. Mindblowing....

There is a new commentary out from Bill Gross of PIMCO. These are always must reads.

AIG - I QUIT!!!

Sorry this is a few days behind, but it is never-the-less an important read. Finally I was able to read something from an AIG employee - thank you to the New York Times for publishing it. This took a lot of courage to make this public given the outrage directed at anyone working at AIG. Personally I know two people named as bonus recipients and they too, had nothing to do with the billions of losses and have been persecuted in the press. They are also wonderful, hardworking, upstanding people. I do understand that the public is upset and I agree that executive compensation is an issue that should be given appropriate attention, but what has happened to these AIG employees was just not right. Period, end of story. Here is the piece - DEAR AIG - I QUIT.

DAvid Rosenberg - A Farewell and his Views

David is one of my favorite economists and sad for us, will soon be leaving his role at Merrill Lynch to join the buy side firm of Gluskin, Sheff and Associates in Canada. (he is Canadian!) I am not sure how many reports we are yet to receive for him, so I thought I would give his latest special mention. Up front I want to say that David has been SPOT ON for years about what is going on in the economy and the markets, so his thoughts are worth paying attention to. His latest report came out on the 26th, and suggests that this is in fact a bear market rally, so be prepared. He opens saying - “Disappointment may ultimately set in to the equity market. There is an old saying that the stock market is ruled by optimists and the bond market is populated by pessimists. The winners are the realists.” As an ex-bond trader, married to an ex-bond trader, and friends with lots of bond and equity folks, I would absolutely agree with that statement and his conclusion. So what is realistic? When I met with David a while back he suggested that the S and P could trade in the 600s, and this was well before it actually did in March. I believe still thinks we will see those levels again, and perhaps even lower. The economy is just not on solid footing. What will be signs that it is? “We’ve said it one and we shall say it again that it all comes down to housing, the quintessential leading indicator. There is simply no sustainable recovery in the economy, the stock market of the financial backdrop until l we get some clarity on the outlook for residential real estate prices. And, in order to establish at least a tentative floor under home prices, we would have to see the new unsold housing inventory recede to at least eight months supply.” There you have it.

David I am really, really, really going to be missing having access to your thinking but I congratulate you on the move and wish you the very best!

An always must read is Alan Abelson's weekly opening commentary in BARRONs - "In Dante's Footsteps." This weeks is particularly funny, though not particulalry uplifting. He mention's David's departure as well.... not surprising that Alan is a big fan as well.

Stonehenge, The Markets, Dear Diary............

The equity markets move up again - up over 20% in a couple of weeks. The real question of course is this a bear market rally or are we on the road to solid ground? I hope the latter but I still think is the former. The banking crisis is far from solved and the economy is still in deep trouble. Unemployment is off the charts and that is what they are counting. Consumer spending is still nose diving and let's face it, even those with money to spend are saying what the heck am I doing spending it on stuff I do not need.Wall Street is a big mess with all the Washington hoopla and talented people are jumping ship to smaller boats left right and cente ASAP to try to get out from under the microscope, and that is a good thing.

It is interesting being in London and reading the local paper. Europe is a mess. I am sure you read that the Czech government was unseated, and their is much unrest going in to the G20 meeting next week. Much of France is on strike and Germany seems the only country that is talking about fiscal discipline. Over to CHINA I was struck by the call by the Finance dude to create an international reserve currency. It does make a lot of sense but can it happen quickly? There was an ad in the FT by some think tank saying that should be an outcome of the meetings next week. I think it is a very good idea but can it happen??? So much uncertainty. So much change. So much up in the air. So many wildcards. I am praying for a good outcome. Praying hard.

Speaking of prayer, just a few hours ago I was standing in the chilly wind looking at Stonehenge. One cannot imagine how these massive stones, originating from Whales, could possibly end up there, in that form. This all happened 5000 years ago. I stood there, with my 11 year old sitting on the ground sketching what he saw from 3 different perspectives, and I prayed. I prayed for the leaders of our nations to have solutions. I prayed for people to band together, help eachother, and support GOOD decision making and appropriately protest bad ones. I prayed for people that I know are hurting. I prayed for the world.

a quick PS....

Geithner appeared before the House Financial Services Committee today - here is a good summary of what he said.

Also my fav thinker from ML, David Rosenberg, is leaving ML and moving to the buy side. I will greatly miss his thinking but I wish him and his family the best.

Market Moves Up and 'Women Better Fund Managers Than Men"

While I was spending the day riding a bus around London the market exploded on the news that the FED was doing even more to bring capital to troubled assets. I have not read the details but on the face of it it looks like they are helping a lot of folks to make some easy money. Given the outrage about bonuses I am a little worried that if the public truly understands what is going on, they might not like it very much. There are so many mixed messages coming from Washington and the FED that it truly has me worried. They realize they need the private sector but while they are reaching with one hand, they are slapping, punching, beating with the other. The firms that got 'bail-out capital' seem doomed and those that did not, are getting offered free money, lots of leverage and limited downside risk. Am I missing something? Regardless we have had a healthy bounce off the lows in the equity market but i continue to believe we are still in deep, deep do do. The problems in the housing market, in consumer spending, in manufacturing, in employment ... are not going away any time soon. Sorry. ( iIwas going to put a sad face too.. but the happy one looks, well, happy)

On another note...............

"Women better fund managers then men" - That was the name of an article in today's FT by Heather Dale. I wonder if someone gave her a heads up as to the soon to be released paper from the National Council for Research on Women! This is a project I have been working on with them and we are so close to the finish line I am beside myself. We are looking for sponsors so if you have any suggestions please send them my way. As soon as I get back from London I am hitting the pavement with this important piece of work. It is a comprehensive look at all the research we could find on the topic with a lot of added insight and of course, a solution set! Very exciting....

The Future Of Capitalism

Greetings from London! All week the FT has had feature stories on this topic and Friday's was another must read entitled "Do Not Let The Cure Destroy Capitalism." The authors suggest that much of the reponse to the problems have been midguided. They identify "three basic flaws in the current approach to the crisis. They are an overly broad diagnosis of the problem, a misconception that market failures are readily overcome by government solutions and a failure to focus on the long-run costs of current actions." They urge the powers that be - 'do not deviate far from a market-oriented global economic system that has served us well for 30 years." Although I do not agree that the system has in fact served everyone well, it has not, I do still fundamentally believe in capitalism as an economic system. Or should I say capitalim with appropriate controls and oversight.

AIG bonus craziness. I understand why people are upset. I understand why many feel that money should be paid back, but it is completely unacceptable what is going on. It is completely unacceptable that some dude in Washington should be allowed to keep his job after saying that the people who received bonuses should go committ suicide. I don't care if he did not mean it. He should be gone. Period. End of story. As for taxing people 90% on their bonuses. That is the most ridiculous thing I have ever heard and likely unconstitutional. Perhaps, perhaps for companies where the government is the majority shareholder, but they are NOT for almost all of these companies. Yes have oversight but these companies have to be able to run their businesses and the upset caused by this will be devastating and besides, it is just not right. All people who work in financial services are not responsible for the mess we are in. If we MUST finger point then let's point it right back to Washington. It is the responsibility of government to look after the rights and needs of the people and the failure of proper oversight of the sector was mindblowing. Now, NOW, they want to pass the blame and publically flog every wall streeter they can get their hands on. This language, this behavior, has to stop or their will be riots in the streets. It has gone way too far and risks going even further if the leadership of this country does not say... ENOUGH.

Pictured is the London Eye... very cool I must say.

CNN American Morning Segment - Invest In Women

CNN American Morning Segment - Invest In Women

Ok..I am very technically challenged. Please click here to see the segment... Oh there was so much more I wanted to say! YES I was wearing my Wonder Woman Girl Power T-shirt! Why? Because Gloria inspired me.... Off to London.

CNN plus Investing in Women

I am so grateful to be back on CNN American Morning tomorrow to talk about Women and the Financial Crisis. (aprox 730 am) Though I am not sure exactly how the conversation will be framed, I am praying that I will have the opportunity to state that the time is NOW to Invest in Women and Women led solutions. An example of what that means will be the story of a woman from DC whose life was changed because of a program she went through that helped her transition from being a waitress earning $11,000 a year to her first office job and now one that earns her $50,000 a year. Investing in Women means supporting initiatives, programs, solutions that enable and allow women to fully participate in our society. Investing in Women means helping women to overcome the barriers that are keeping them and their families in poverty. Investing in Women means being asking why are women so underrepresented in positions of power and influence and working to have them there in critical pass so we will know, one day, what women's leadership truly looks and feels like. Investing in Women is saying ENOUGH to the status quo and using our economic clout for positive change. Investing in Women is acknowledging that the world will in fact be a better place if men and women worked in partnership to make it that way.

Theme Parks, The FED's latest move, CNN and London

I am on the plane home from 5 days in Orlando with the family. (posting now in the am) Judging only by the lines at the Theme Parks, you would never know there is a recession going on. By 11 am at Hollywood Disney the wait for the new Toy Story ride was 90 minutes long and the fast passes were all gone. Though it was a wonderful way to celebrate my daughters 9th birthday can I say, I am way OVER theme parks. From now on I will look forward to real vacations, though the American Idol Experience was totally righteous.

The FED – what a move today. They formally told the world what Chairman Ben has been telling us forever, that he will do everything in his power to pull us out of the recession. He will use every tool in the chest and the chest is deep indeed. Bet on Ben has to be the new trading and investment mantra. The announcement caused a huge rally in treasuries and in gold, and a falling US dollar. Quantatative easing is the new 'must know' financial term. What are the downsides of this strategy? Click here...

CNN. I am very excited to have been asked back again on Friday for another segment on American Morning. (show time as of yet unknown) What is ridiculously cool is that I proposed a segment featuring a success story from a Woman’s Fund, and with the help of the team from the Women’s Funding Network they are producing the segment! Tune in and better yet, send them an email of support after the piece. This story is about what happens when you INVEST IN WOMEN!!! Given the opportunity I am going to be calling on the administration to join thousands of donors who understand the power of this type of investment. Women’s Funds around the country have vetted solutions to our economic crisis and are ready, willing and able to deliver. If you want to learn more about what investing in women is all about please join us at the WFN Annual Conference in Atlanta April 30th. Click here for more information. It is going to be an incredible gathering, please join.

London. Friday I am off again, this time to London with my son to spend some time with family and friends and tour the sites. I should be blogging from overseas but just in case…. All the best and keep your seat belts fastened.

Gloria Steinem and Outrageous Acts!

Last night was amazing. I had the opportunity to celebrate Gloria Steinem's 75th birthday party in a private home in NYC with a small group of close friends and supporters. I have always been awed by Gloria, and last night was no different. Her activism inspires me and it just does not stop. The Ms. Foundation in celebration of her birthday created a new iniative called "Outrageous Acts for Simple Justice." I love it. I am already planning my outrageous acts. A friend who was there suggested we added this .... "outrageous acts and subtle interruptions." I love that too. Click here to hear more and plan your own kick-off party. It is time we all do more more MORE to make this world a better place.

More on the amazing work of the Ms. Foundation - click here.

I am signing off for a few days to spend some time with the family in celebration of my daughter's 9th birthday. All the best!

Alan Greenspan on the Defense in the WSJ

Yesterday in the journal Alan Greenspan pleaded his case for why we should not blame federal reserve policy for the big fat mess we are in. He argues that the fed does not control long term rates, and therefore mortgage rates, so really it was not in his zone to stop all this craziness. He states that the "Federal Reserve became acutely aware of the disconnect between monetary policy and mortgage rates ......." And???? And??? How about "and so we went on the offensive talking about the potential issues because of our important role as leaders and major players in the financial system who are suppose to have the public interest as our core mission." I am not solely blaming them but they did not take appropriate action to make sure that massive and inappropriate leverage did not build up in the system causing what we are now experiencing. Just because it was not their sole and whole job does not mean it was not their job to do more. It is this siloed thinking that is responsbile for this financial, economic and now social global crisis. Leadership. Good leadership is both seeing the potential problems and taking responsibility for solutions, even if it might not be entirely your job to do so. Expanding on that it is about seeing the interconnectedness of it all, and then acting upon it. I do like how this piece ends and I agree with the solutions he is now offering. He warns of overregulation but does believe that "our challenge in the months ahead will be to install a regulatory regime that will ensure responsible risk management on the part of financial institutions, while encourageing them to continue taking the risks necessary and inherent in any successful market economy." I would add another call - let's expect more of all our leaders and hold them more accountable for the bigger picture. Also, for the record Mr. Greenspan, you did keep rates too low for too long.

A Gift for PAWS - Guest Post ( Allie Zehner)

For my birthday party I asked my friends to spend 1/2 the money (or no more than $10) on a gift for me and the rest I asked them to donate to a charity called PAWS. I chose PAWS because I care alot about animals and I want them to have nice homes. Today we went there to deliver the money - $150. They were excited to have the gift. Inside the building there was a big bulletin board that had the names of some of the dogs that were up for adoption. Through a window we could also see some cats that were just relaxing in the room. The lady that worked there showed us around. They take care of up to 30 dogs at a time and up to 100 cats at a time that are all up for adoption. There is a waiting list for animals to get in to PAWS. We really liked a puppy named Ernie who is a pit bull terrier. ( pictured here) I felt very happy that I did this because it felt really good to give. I encourage every child to raise some money for charities. You can donate online to PAWS and/or you can give stuff like dog and cat food. Allie Zehner ( age 9)

Nationalisation and the Future of Capitalism ... I keep on adding to this one

How does one do these topics justice? I will not try, but I will suggest you pick up the Financial Times all week as they are doing a series on it. The opening article today was a piece from Martin Wolf called "Seeds of its own destruction" and he says the 'era of financial liberalisation has ended." The system has FAILED us he says, and to that I would agree. I have written more then a couple of entries on what has FAILED and I am getting close to letting it rip once again... a long blog entry is coming. On the topic of Nationalisation I offer you a couple of articles worth reading. The first is a another piece by Martin Wolfe that was in the FT on the 3/4 called "To nationalise or not to nationalise is the question." The second piece is one that was in the Times over the weekend by Alan Binder, former Vice Chair of the Federal Reserve. Alan's piece, called "Nationalize? Hey, Not so FAST", is where I end up and does a good job describing the key issues. At the end of the day we have effectively nationalised many of our largest financial institutions, and I do not agree with Senator McCain who said today on the news to just let some big banks fail. We cannot. Period. We can wipe our shareholder equity, perhaps even make the bond holders take some pain, but fail? NO. I am not sure if the 'stress-testing' will be enough to sort the good from the bad but it is a process and it will allow for some insight/transparency in to the state of these financial institutions. I like the solution that is being followed giving preferred equity to banks that need it that can be converted in to common. I am also in the camp that some good-bank, bad-bank structure is where we will end up.

More on what has failed in this white paper - "Too Big has Failed" by Thomas Hoenig - President of Federal Reserve Bank of Kansas.

If you have not yet subscribed to Naked Capitalism - do... great reads sent right to your inbox.

7 pm - I quick add to my earlier entry as this is just in from BASELINE SCENERIO - if you don't already subscribe to them, you must. Their take on all the talk on what to do about the banking problems and Nationalisation - click here and here.

Asteroids, The Markets and PEACE

The good news from this week is that Asteroid 2009 DD45 did not hit planet earth! Now for the bad news. Really, where does one start? Citigroup? AIG? Fannie Mae announcing a $58 billion loss, which is more then all their profits since 1992? GE’s woes? The ridiculously bad unemployment numbers? The market plunging to new lows with the S & P down 7% for the week and 24% for the year? Sorry… the news is just all bad at the moment. All bad.

Bill Dudley the new NY FED Chief gave his first public address this week and I say “Welcome” to Bill in his new role. I had the pleasure of working with Bill at Goldman and I think very highly of him. Unfortunately he wasn’t exactly a perky puppy this week either saying that the “deleveraging process is still far from complete.” I know the FED is all out doing as much as they can to stimulate the economy but as we all know, we are in uncharted territory. Personally I have a lot of questions as it relates to ‘quantitative easing' as it seems that is all we are reading about these days. I wasn't particularly encouraged when I went to wikipedia and it described it as "creating money out of thin air." The UK engaged in aggressive QE this week resulting in a 53 bp rally in gilts. Read this piece in the FT for details. So can the US government just 'print' as much money as they want to? We know the downside of this, a plunging US dollar and inflation, but they are clearly not worrying about that at the moment. Eeeekkkk.... my brain hurts.

PEACE. Readers of my blog know that I had a PEACE party a while back and last week my daughter Allie decided she wanted to have one to celebrate her 9th birthday. In honor of trying to make the world a better place she asked that people spend only 1/2 the amount they would normally spend on a gift and give the rest in cash so she could donate it to her favorite cause - animal protection. Thanks to her extremely generous friends she is going to deliver a check for $150 to the Norwalk Animal Shelter. Now that is "doing what you can, with what you have, where you are." The Zehner Family is trying to start something here - have your own PEACE party to raise awareness and raise money for your fav cause. Once you do, please share the results. If you would like to donate too - Click here for PAWS Norwalk.

Soap Box, Money, and Bethany.....

Thanks for all the lovely emails and posts (Facebook) about my latest CNN appearance this morning. Some of you have been sending me your list of the various uses of BRILLO pads, which are very funny. When I was looking for a soapbox this morning before I jumped in the car that was all I could find to fit in my handbag. They are soappads! I brought them because what I thought we were going to talk about this morning was a broader conversation about leadership and money. I was going to get on my soapbox that the President and his sidekicks have to be much more thoughtful of how he (they) talk about money: how we use it, invest it, spend it, give it and save it AND who has it. The conversation was to be a response to this piece in the WashingtonPost - "A Week of Revelation" by Michael Gerson. The CNN producers had wanted to bring up the topic of 'class warfare' to the panel of 'experts.' Personally, I was particular miffed with this line in the NYTimes earlier in the week saying "the Affluent are top on the President's list of Losers." I can hope to understand why people are upset at the 'rich' but last time I checked 'rich' was something most people wanted to be. Yes the rich spend their money sometimes unwisely and many have made it in ways that have caused other people harm, BUT just as many, and I think more, employ people, run and built businesses, make sound investments, give away big dollars, and together pay the lion's share of personal income taxes. There is no one 'rich' and 'rich is bad/money is bad' is a message that we could do with out. Period. Most I know that are of means are accepting of paying higher taxes but they don't want rotten tomatoes thrown at them at the same time. One would hope that the President sees 'the rich' as part of the solution and not only the 'cause' of the problems. He needs to encourage those that can most afford to do it to spend, invest and give to help get our economy out of this mess. I have not heard that in a speech lately..... I vaguely remember the President Elect saying we are all in this together or was he only talking to the 98% of the population that make less then $250,000 a year.

A friend who I asked to read the OPED sent me these comments - "It is true that income inequality has increased over the recent past. But it is also true that the wealthy have paid a larger share of total Federal personal income tax revenues. Higher tax rates on the wealthy will reduce after tax income inequality. The important question is whether higher tax rates and perceived hostility to success will also reduce absolute tax revenues. If that happens, Obama's budget is unsustainable. Even if we don't reach the point of diminishing returns immediately, it seems clear that we will get there relatively soon as the social security and Medicare liabilities mushroom with the aging of the baby boom.

There are no responsible budget projections that suggest that this nation can pay the amounts of social security and Medicare entitlements created under current law. Yet, rather than address this directly, and reduce the entitlements as it is clear we must, the politicians rail against the wealthy and suggest that higher taxes on them will solve the problem, knowing full well that it won't. We demonize mortgage bankers who put homeowners into mortgages that would be a challenge to repay. How should we view politicians who lie and encourage us to rely on benefits that they know can't be paid."

On another note I have to highlight my friend Bethany's latest article. She just published a great piece on the private equity shop Fortress called "Over The Hedge". After making the move from FORTUNE where she was forever she is making her mark at Vanity Fair. You go girl... Click here for the article.

CNN Again plus brief market comments

CNN - American Morning. I am so blessed to be called back again tomorrow - 4th time in a week! (pictured right with John and Kirin on Monday) I am suppose to be going on around 8 am to talk about the latest mortgage plan. This has been such an amazing experience and the many opportunities are related to the economy being front and center at the moment. Thanks again to the Womens Media Center for making it happen!

The market got a bit of a bump today. Why? Relief rally perhaps after reaching new lows. China announced a new stimulus package which is much needed, but I would be stretched to say how much good it is going to us here in America. The economic news continues to be horrible. As for the mortgage plan I think it is certainly a step in the right direction. What is very clear is that the Government is trying more innovative programs to get help to struggling homeowners in an attempt to slow the downward momentum in housing prices. This is good but man or man... the cost of all this???? We don't want to know.

In my continued interest in linking to the best I read during the day I would suggest this piece by Thomas L. Friedman - "Obama's Ball and Chain." We are facing some really complex problems (as if you all didn't know this)... with no easy and obvious solutions.

"How Does Securitization work?" and "How to Value Stocks"

SNOW DAY! There is something quite lovely about waking up to a blanket of white, though I rather it not be in March. I woke up early with the intention of finishing two articles that I need to write but I got stuck in my inbox reading and watching. Here are my favs.......

The first is a video that explains the mortgage mess including how securitization works. Though clearly VERY oversimplified it does offer a great sketch of how securization and leverage works. I am going to watch it again with my kids. HERE IT IS.

If you do not already subscribe to BASELINE SCENERIO you need to. I have been for months now and I find the writing incredibly insightful and right on. Read his latest.

A thoughtful piece from an economist on the latest round of horrible economic data combined with some insights on what the administration could and should be doing.

Last - a piece from Econbrowser on what to expect from the stock market. I am not an expert here, and appreciate expert thinking. Again I am not saying I agree with it all but it is worth the read. Warning... somewhat advanced.

Have a great day. A few hours of work and I am going to play in the snow with my kids and my dog. It does not get any better then that..........