The news from the inspector general of the Securities and Exchange Commission is nothing short of shocking. And grizzled journalists aren’t supposed to shock easily.
SEC Inspector General David Kotz reported on how the SEC failed to expose the fraud perpetrated by Bernard Madoff, despite getting six warnings over 16 years.
The inspector general found no influence by Madoff or his family, but it is a tale of astonishing incompetence that makes one worry and wonder about the capabilities of the U.S. markets watchdog.
Here’s just one paragraph from the article on the report by The Wall Street Journal’s Kara Scannell. The whole article and the whole IG report are worth reading.
“The report described how the SEC staff at times didn’t follow through on leads, failing to seek information from a third party because reviewing such information could be too time cinsuming. In another instance, an SEC examiner looked into an institution that Mr. Madoff had said he used to clear his trades. The examiner learned from the institution there was no trading activity by Mr. Madoff during the period under review. The SEC associate director in examinations never followed up or informed the rest of the staff, according to the report.”
The Federal Reserve has the same mixed, uncertain and slowly becoming more positive view of the U.S. economy as the rough consensus of private economists and similar types.
That’s reassuring on one hand. The central bank is not in some ivory tower unconnected to the perceptions of investors. If the policymakers’ view was markedly different than the consensus of professional investors, it could only lead to trouble as monetary policy presumably at some point would diverge from market expectations.
But the Fed-market consensus is disconcerting in another way. There’s nobody here but us. The central bank and its staff seem to have no special insights (at least none they are sharing), no special way of looking at the inflowing data that give them a unique lens on the future.
In minutes released today of the Aug. 11-12 meeting of the rate-setting Federal Open Market Committee, the Fed policymakers expressed the same some good, some bad views that are prevalent everywhere.
Nearly a month ago the Fed policymakers had strengthened confidence that the “downturn in economic activity was ending and that growth was likely to resume in the second half of the year.”
But they saw a likely slow recovery, one susceptible to “adverse shocks.” When it comes to 2010, “they expressed a range of views, and considerable uncertainty, about the likely strength of the upturn …”
Several seemed particularly worried about bank exposure to commercial real estate loans and the weak labor market was of “particular concern” to all. Just like the rest of us.
Paul Vigna and Madeleine Lim discuss the ADP jobs report as well as productivity data for the U.S. Also, they look at what’s driving Australia’s GDP higher.
Rumors are pernicious things, especially in financial markets.
They can cause investors to dump a stock because they wrongly believe something has gone wrong or buy a stock on an expectation of a merger that’s just the figment of a trader’s imagination.
Rumors are also by definition murky. Where do they spring from? How are they spread? Who played what role and when? It’s always hard to know.
Purposely originating or spreading misleading information for a market advantage can be a crime, but nitty gritty regulation is still difficult.
This tells you how hard this recession has been – even the booze makers have had to worry about customers trading down the value proposition. Brown-Forman, the maker of such brands as Jack Daniel’s whiskey and Southern Comfort, reported today that sales in the first quarter that just ended fell 7%. In part, it’s because fewer people are order drinks at bars and restaurants. But it is also, as the company said, because consumers are looking for less expensive spirits.
So you must be wondering how it is that Joseph A. Bank Clothiers, with that stuffy old name and clothing aimed at the business person (remember high unemployment), continues to report strong financials – quarter after quarter after quarter.
They saw the meaning of “value” to the consumer a long time ago. They know that people who need to buy new suits or casual business clothes want to spend less to do it. So, ads like the one above on its website, appeal to the value-conscious consumer. It’s all about promotions. And it’s worked. The company has reported earnings growth in 31 of the past 32 quarters and for the last 13 quarters in a row.
David Oreck, founder of a well-known maker of vacuums and air purifiers, says he’s upset his namesake company is in bankruptcy. He says Nashville, Tenn.-based Oreck Corp. was a perfectly profitable company when he sold his stake in it to a private equity firm in 2004. He blames the firm, New York-based American Securities Capital […]
This tells you how hard this recession has been – even the booze makers have had to worry about customers trading down the value proposition. Brown-Forman, the maker of such brands as Jack Daniel’s whiskey and Southern Comfort, reported today that sales in the first quarter that just ended fell 7%. In part, it’s because fewer people are order drinks at bars and restaurants. But it is also, as the company said, because consumers are looking for less expensive spirits.
So you must be wondering how it is that Joseph A. Bank Clothiers, with that stuffy old name and clothing aimed at the business person (remember high unemployment), continues to report strong financials – quarter after quarter after quarter.
