Juggling Dynamite

Michael Lewis, who authored “Moneyball,” “Liar’s Poker” and “The Blind Side” spoke to CNBC this morning about the two key themes that degraded our financial system over the past 30 years.

I agree with Lewis that the solutions are quite simple: financial firms must go back to choosing between being a dealer or being an advisor. We cannot afford them to be both. Cross-selling in this area is deadly for clients and the stability of the banking sector and we already learned this lesson in the 20’s and 30’s. The real economy is paying for our naivete on this point again today. Second, the firms that chose to be dealers and concerted risk takers must do so on their own dime. This means a migration back to the old model of partnerships where those making the bets can reap the rewards and fall on their own sword as needs must. As soon as the risk-takers are gambling with client capital, in a tax-payer-backed bank, the depths of greed and recklessness are literally bottomless.

Here is the direct link.

I will be speaking at the Saskatchewan Investment Conference this Friday and Saturday at the Radisson Hotel Saskatoon.  You can view the agenda here.  I will be doing a presentation on Friday at 3:30pm and a Keynote Sat at 9:00am.  Always fun to visit the prairies.

As the world’s largest potash producer, Canada’s second-largest oil producer, and 20% of global uranium deposits, Saskatchewan is one of the two provinces (so far) still booming in Canada.

Martin Feldstein, a professor of economics at Harvard University, talks about the impact of Federal Reserve monetary policy on the stock market. Feldstein, speaking on Bloomberg Television’s “InsideTrack,” also discusses the outlook for the U.S. economy.

“We are not doing very well. The economy is just coming along at a snail’s pace. The first quarter numbers that we just got last week were not very good at all. The GDP number was 2.2%. That was a disappointment, but you know, it was all automobiles. 1.6 out of the 2.2 was motor vehicle production. So, people were catching up after not being able to buy them the year before. So, this is a very weak economy. The payroll employment numbers, we are going to get some new ones in April. Let’s hope they are better than March where it fell by half. The stock market is, I think, responding to the Fed. I think the real danger is that this is a bubble in the stock market created by low long-term interest rates that the Fed has engineered.” Here is a direct link.