Jeffchristie wrote:
Bob Brinker began today's show by wishing all of the mothers a happy Mother's Day. Then he talked about the CEO of JP Morgan Chase being raked over the coals for reporting a $2 billion loss. Jamie Dimon was the Wall Street banking golden boy but is no more. Bob thought there could be another billion dollars in losses that haven't been reported yet. Mr. Dimon has said egregious mistakes were made and they were self-inflicted.
Bob was particularly upset that Jamie Dimon was on the board of directors for the New York Federal Reserve. Brinker said he should resign because it was a conflict of interest. This made me wonder how many other bank presidents were Directors of Federal Reserve Banks and Branches. Here is what I found:
http://www.federalreserve.gov/generalinfo/listdirectors/
The first caller was Frank from Virginia. He wanted to start a savings account for his grandson. Bob ask how old is the young sprout. Frank said 14. Bob suggested he open a uniform gifts to minors account and put the money into a low cost total stock market index fund.
Doug called from Jackson. He wanted to know if the insurance provided for credit unions was as sound as FDIC insurance. Bob said it was and Doug noted that some credit unions offered CD rates 1/4 to 1/2 a percentage point higher than his local banks.
Bob talked about one of the founders of Facebook renouncing his US citizenship thus avoiding capital gains taxes. He has been under criticism for doing so. Here is an article from a WSJ Blog on the subject.
http://blogs.wsj.com/washwire/2012/05/13/facebook-co-founder-america-is-ok-its-the-rules-that-are-a-pain/
Charles called from Buffalo. He wanted to know if there was any risk in continuing to do business with JP Morgan Chase. Bob said a way to tell if a Bank was in real trouble is to look at the price of its common stock. Since JP Morgan Chase was trading in the 30's he does not see a major problem today.
Todd called from Chicago. He was upset that the Facebook founder would be paying zero taxes on his stock. Bob set him straight by pointing out that he would still have to pay taxes on the cost of his stock as of 30 April based on the value on that date. Todd made some further comments but there was some beeps where you couldn't hear what he was saying. Bob made it clear that he had nothing to do with the beeps.
Telephone problems continued with the next caller Jeff in San Francisco. Bob determined that the problem was with Jeff's cell phone.
Bob discussed the current fiscal crisis in California. The new estimate is for a budget deficit of $16 billion. The previous estimate for this year was $9 billion. The governor is attributing the problem to the slow pace of the recovery. Bob noted that the sales tax in California was the highest in the nation and there will be a proposition on the ballot to increase it even more as well as increases to state income tax for high earners. If this doesn't pass there will be cuts to education.
Bob's guest in the third hour was Daniel Franklin. His book is: Megachange: The World in 2050 (The Economist)
On the lighter side here is today's Moneytalk final exam question.
Bob Brinker refers to children as:
A) Ankle Biters
B) Rug Rats
C) Young Sprouts
D) Crib Lizards
Honey here: Thank you so much for the great summary, Jeff! And I really enjoyed this week's Final Exam Question too. It's difficult though -- I'll just have to guess that the answer is "young sprouts." :)
9 comments:
Brinker is right when he says Dimon should resign his Fed directorship. That $2 billion loss proves Dimon doesn't know what's going on while he makes public demands for LESS regulation of banks.
We need MORE regulation of banks...obviously.
Hedgeless
We need MORE regulation of banks...obviously.
I though Obama promised to do that when the Democrats controlled the Senate, the House, and the White House.
I guess they lied.
Obamacare must have been more important.
Frankj --
Thanks for the summary, JeffChrisite.
A tie in to the part of the show about California's budget problems, and also to the Facebook guy who is renouncing US citizenship.
Article on page A2, today's WSJ, mentions that (paraphrasing) state officials are hoping initial public offerings of Facebook and other tech outfits could generate new tax revenue...
Meanwhile, back at the ranch, Facebook big wigs have taken steps to avoid or reduce future federal taxes: "How Facebook's Elite Skirt Estate Tax," article by Laura Saunders. Also in the Wall Street Journal.
For those in California facing disaster by the beginning of next year and those not in California who object to bailing out California, some interesting facts:
TOLD YOU SO!! Brown “Admits” CA Deficit now $16 Billion—Forgot the Other $20 Billion of the Deficit
by Stephen Frank
"Just two weeks ago Gov. Brown announced the budget deficit “could” reach $10.2 billion, instead of the January deficit of $9.2%. In two weeks the deficit grew by $6 billion. Why did they lie to us. In four months the deficit grew by an admitted $7 billion.
Yet readers of the California Political News and Views already know the real deficit is $35 billion, when every bill is included, but not paid—like the $10 billion we owe the Feds for the $10 billion “loaned” to us to continue paying unemployment checks.
What do they drink in the Governors office. The amateur Arnold lied about tens of billions of deficit, and now the Professional Jerry is lying as well.
California is in a Depression and our Governors refuse to honor us with the truth. In private industry, they would go to jail for such lies about the balance sheet."
So another week and no stock talk on the Moneytalk Starship?
1:27pm, May 14th, Jim Rogers stated on CNBC to Maria Bartiromo that JP Morgan is the bank that he has been shorting.
You are right,, the budget is higher than Brown says,, there is no cash flow in retail,, I know I manufacture and supply the stores,, we even sell the kardashians and they left their store in calabasas ,, since they had other commitments ,, and business was slow there,, there is no way out but bankrupsy and start over ,, and start the glass stiegle act again to regulate the banks and all the crooks with the big salaries should go to jail
"We need MORE regulation of banks...obviously."
Hedgeless
Let me see if I understand this. You want the government, the people who invested $500 million in Solyndra, to regulate where the banks invest their money. Is that your position?
"You want the government, the people who invested $500 million in Solyndra, to regulate where the banks invest their money. Is that your position?"
To equate one bad loan guarantee with the need for bank regulation is ridiculous.
The fact is Jamie Dimon had no idea what was happening at JPM and lost billions on a supposed hedge that should not have been allowed.
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