Former high-flying lobbyist Jack Abramoff explains why members of Congress consistently beat the market. “They have information that other people don’t have,” he tells CNBC’s Eamon Javers. Abramoff was convicted of mail fraud and conspiracy in 2006. If your browser does not display, you can watch the clip here. (Congress trading on inside secrets? Say it isn’t so!)
With the more sober bond markets closed for Remembrance Day, the stock market is today partying again like drunken teenagers unchaperoned for the night. Hangovers to follow.
Keeping an eye on reality, we note that Jefferson County, Alabama filed the largest municipal bankruptcy in U.S. history on Wednesday. The most-populous county – home of Birmingham – defaulted on more than $3 billion of debt related to a sewer system project after negotiations with creditors broke down. See: Was Meredith Whitney right along?
“The biggest loser – besides the locals – is JP Morgan Chase, the largest Jefferson County creditor who may lose hundreds of millions. It’s not the first time the largest U.S. bank by assets, has had problems with this deal. In 2009, JP Morgan paid a $722 million settlement with the SEC over corruption charges related to the project.” (JP Morgan corrupt? say it isn’t so!)
This article is also worth reading on the topic of debt and the error of optimism: How a financial pro lost his house.
It is good that this financial sales person is honestly sharing the story of his financial mishaps. It is also important to understand that calling most financial advisors a “financial pro” is the first mistake. They are trained to sell products and collect commissions, very few have any skill at risk management or fiscal prudence. I have seen many examples of this over the years, hence my warning that financial advisors frequently amount to the blind leading the blind with harmful advice. Yes, yes they may be very nice. But nice is no reasonable standard of care in any other profession, it certainly isn’t in financial advice.
Danielle spoke to Phil Mackesy of Talk Digital Network today discussing recent developments in the global economy and world markets. You can listen to the audio clip here. (warning from Danielle: “When I said 750m was paid per CDO deal to the rating agencies, I meant 750K, sorry for the extra zero misspeak. The point is there was huge financial incentive on the raters to give out favourable ratings, and this was a problem we are all now paying for.”
