The Sunshine Report

Veritas Financial Partners
Information about finance, the economy and business. Entertaining and informative. Seeking Alpha Certified Mark Sunshine Chairman & CEO

Archive: Sep 2009

  1. New York Business Is Threatened By The Worst Law Of The Decade

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    On Sep­tem­ber 1st a new power of attor­ney law became effec­tive in New York State and I think it may win the prize for “The Worst Law of the Decade”. With­out mean­ing to effect com­mer­cial trans­ac­tions, sev­eral months ago this eso­teric and extremely tech­ni­cal law was amended by the leg­is­la­ture and signed by the Gov­er­nor. While New York law­mak­ers had good inten­tions, they wanted to pro­tect senior cit­i­zens from being abused in con­nec­tion with the grant­ing of pow­ers of attor­ney, the actual law goes far beyond what was intended and is a dis­as­ter. Because of a series of draft­ing errors and omis­sions, the law inad­ver­tently expands the new power of attor­ney rules to include rou­tine com­mer­cial and busi­ness trans­ac­tions. Accord­ing to the TriBar Opin­ion Com­mit­tee (a well respected non-partisan legal panel) the new power of attor­ney law threat­ens to bring New York com­merce and bank­ing to a halt. [read full story]

    Posted in: Law, Politics, Power of Attorney Law, Public Policy

  2. Bank Compensation Limits – The Federal Reserve Follows Through

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    Last week’s late break­ing news that the Fed­eral Reserve was fol­low­ing through on its plan to change how it reg­u­lates bank com­pen­sa­tion is being fol­low up by this week’s G-20 meet­ing on how bank com­pen­sa­tion curbs can be inter­na­tion­ally coor­di­nated among the large economies. Sur­pris­ingly, how­ever, the media is act­ing as if reg­u­lat­ing bank com­pen­sa­tion is a new issue. It isn’t new at all but rather a prob­lem that they chose to for­get about for the sum­mer. [read full story]

    Posted in: Bank Compensation, BANKS, Credit Crisis, economy, Federal Reserve, Finance, Politics, Public Policy, REGULATION, Regulatory Reform

  3. Consumer Credit Needs Common Sense Reform

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    Pres­i­dent Obama’s effort to reform the bank­ing sys­tem doesn’t address the system’s biggest prob­lem which is how con­sumer credit is under­writ­ten in the United States. With­out excep­tion, no mate­r­ial con­sumer loan is made in Amer­ica with­out the borrower’s credit bureau first being pulled by prospec­tive lenders and a credit score used to clas­sify the bor­rower as good, bad or mid­dle risk. Credit scores are sup­posed to accu­rately pre­dict the prob­a­bil­ity of default by con­sumers, but in prac­tice credit scores don’t pre­dict much of any­thing. Banks blindly rely upon the junk put out by con­sumer credit rat­ing agen­cies and are get­ting burnt by ignor­ing the most basic rule of under­writ­ing which is to know their cus­tomer. While banks know borrower’s credit scores and infor­ma­tion on the credit bureau that isn’t the same thing as know­ing their cus­tomer or things like their customer’s assets, lia­bil­i­ties and earn­ing power. [read full story]

    Posted in: BANKS, Credit Crisis, economy, Finance, Obama, Politics, Public Policy, REGULATION, Regulatory Reform

  4. How Did Economists Blow It? Part 3 – The Assumed Markets Theory

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    Two week­ends ago Paul Krug­man explained in a New York Times Mag­a­zine arti­cle that many econ­o­mists can’t fore­cast the econ­omy because they have a cultish belief in the nearly always wrong effi­cient mar­ket the­ory. Mr. Krugman’s solu­tion, an aca­d­e­mic exor­cism where econ­o­mists renounce their loy­alty to the effi­cient mar­ket the­ory and swear alle­giance to neo-Keynesianism, has cre­ated quite a stir in the pro­fes­sion and prompted a num­ber of per­sonal and pro­fes­sional attacks on Mr. Krug­man. Unfor­tu­nately, both Mr. Krug­man and the effi­cient mar­kets believ­ers are both wrong. The the­ory is cor­rect but the con­di­tions nec­es­sary for the effi­cient mar­kets the­ory to work don’t exist. [read full story]

    Posted in: Credit Crisis, economy, New York Times, Paul Krugman, Public Policy, REGULATION

  5. Playing The Patterns — A Guest Article By Phil Davis

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    The below is a guest arti­cle from Phil Davis of Philstockworld.com, one of the fastest-growing stock and option trad­ing newslet­ters on the Web.  Phil will be my spe­cial guest on Saturday’s Sun­shine Report, my weekly radio show which runs from 12 PM to 2 PM on Boston WWZN 1510 and is simul­cast on http://lightningstream.surfernetwork.com/Media/player/view/wwzn3.asp?call=wwzn&skin=WWZN. I know you […] [read full story]

    Posted in: economy, Finance, Guest Blog, Phil Davis, Stock Trading

  6. How Did Economists Blow It (Part 2)? – They Missed The Negative Externalities of America’s Limited Liability Society

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    Paul Krugman’s New York Times Mag­a­zine arti­cle of Sep­tem­ber 6th main­tains that exter­nal­i­ties are the most impor­tant fac­tor in mar­ket fail­ures, but then never con­sid­ers whether or not large “exter­nal­i­ties” caused the fail­ures of 2007. By ignor­ing exter­nal­i­ties, the usu­ally bril­liant Mr. Krug­man illus­trates why econ­o­mists didn’t see the mar­ket crash and Great Reces­sion. The unin­tended and unrec­og­nized effects of neg­a­tive exter­nal­i­ties were prob­a­bly the largest fac­tor that con­tributed to the sum­mer of 2007crash, yet econ­o­mists vir­tu­ally ignore these cul­tural and soci­o­log­i­cal phe­nom­ena that almost resulted in eco­nomic sep­puku. [read full story]

    Posted in: economy, Finance, New York Times, Paul Krugman, Politics, Public Policy

  7. $11 Trillion In Debt — Who Cares? – A Guest Post By James Sunshine

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    OK…I confess…James Sun­shine is my son. He is a fresh­man at Emory Uni­ver­sity and wrote the below op/ed for the Emory Wheel. Of course I am very proud of his work. He says that he writes bet­ter than his Dad and that he is smarter. What do you think? He may be right!! As the national […] [read full story]

    Posted in: China, Economic Statistics, economy, Finance, Guest Blog, James Sunshine

  8. Paul Krugman Gets It Really Wrong In His Analysis Of The Economics Profession

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    Paul Krugman’s New York Times Mag­a­zine arti­cle explain­ing the dis­mal state of the eco­nom­ics pro­fes­sion is itself an object les­son in what is wrong with the eco­nom­ics pro­fes­sion.  While Mr. Krug­man is one of the most tal­ented econ­o­mists alive, this arti­cle isn’t an exam­ple of Mr. Krug­man at his best.  Instead of try­ing to fig­ure […] [read full story]

    Posted in: Credit Crisis, economy, Finance, New York Times, Paul Krugman, Politics, Public Policy

  9. W, V, U, L or Z: What Direction Is The Economy Going?

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    Almost every day I am asked about the eco­nomic recov­ery and whether or not it is sus­tain­able.  Peo­ple ask because there is a con­stant bar­rage of eco­nomic pre­dic­tions by econ­o­mists that pre­tend that they know what will hap­pen in the future even thought they still can’t fig­ure out what hap­pened in the past.  Lis­ten­ing to econ­o­mists […] [read full story]

    Posted in: Economic Statistics, economy, Public Policy

  10. The Hyper-Inflation Myth

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    Con­ven­tional wis­dom is that the Fed’s print­ing presses are run­ning over­time and the econ­omy is awash with liq­uid­ity.  Just yes­ter­day the National Asso­ci­a­tion for Busi­ness Eco­nom­ics reported that almost half the econ­o­mists they sur­veyed believed that Fed­eral Reserve Pol­icy is infla­tion­ary.  Too bad the NABE sur­veyed econ­o­mists and con­ven­tional wis­dom are wrong. Econ­o­mists, pun­dits and jour­nal­ists […] [read full story]

    Posted in: BANKS, Economic Statistics, economy, Federal Reserve, Finance, Inflation, monetary policy, Money Supply