Juggling Dynamite

Speaking in a 2013 interview, “No One Would Listen” Author and Madoff whistleblower, Harry Markopolos explained that looking at fund performance, he could immediately tell that Madoff was running a Ponzi-like scam and not a savvy strategy as most believed:

“Bernie’s returns were going up at a 45 degree angle in a straight line and we don’t have straight lines in finance; and in options everything is a curve—there is nothing straight in an option. So, I knew it had to be fraudulent right off the bat in the first five minutes.”

As we consider this quote, behold the S&P 500’s straight line advance over the past 24 months since Q’Ever was announced by the US Fed. In the process, the low volume ramp has attracted more bullish believers than at any time since just before the crash of 1987. And the conventional ‘wisdom’ in the financial business remains: buy more, buy always, never sell.

The sun produces enough energy in one hour to power the world for a year. Let that settle in for a moment.

The race to harness and store the sun is the race to free, clean energy for generations to come. Imagine how much cash flow globally will be freed up for other needs and productive investment.   Yes we can.

“Solar energy could be the top source of electricity by 2050, aided by plummeting costs of the equipment to generate it, a report from the International Energy Agency (IEA), the West’s energy watchdog, said on Monday.

IEA Reports said solar photovoltaic (PV) systems could generate up to 16% of the world’s electricity by 2050, while solar thermal electricity (STE) – from “concentrating” solar power plants – could provide a further 11%.”

See: Solar power could be world’s top electricity source

It is impossible for regulators or anyone else to control mammoth financial conglomerates that are designed to maximize risk-taking without personal consequences to the actors involved. The answer is not more regulation, but smaller institutions that separate deposit taking utilities from investment banking/speculating. See: UBS Restructuring shows need for banking’s simpler future.

Breaking up the conglomerates and demanding they build up self-insuring capital buffers within their risk-seeking arms is critical and will increase their cost of capital, reduce free cash flow and lower earnings for shareholders and executives. And that is as it should be.

Andrew Huszar, senior fellow at Rutgers Business School, discusses revelations of the Federal Reserve Bank of New York’s handling of Goldman Sachs in secret recordings and how the role of regulation has changed in the banking industry since the financial crisis. Here is a direct video link.