Is Apple a Buy Hold or Sell?
Is Apple Computer a Buy, Hold or Sell? – Applied Finance Group
Add comment June 22nd, 2009
Archive for June 22nd, 2009
It’s not the collar or the color that matters
SANTA MONICA, Calif. (MarketWatch) — There’s a lot of talk about creating millions of new jobs via the “green” economy, one that weans reliance from fossil fuels and invests in alterative energies and technology.
But such a massive shift in labor — figures are for some 5 million new “green-collar” jobs to be created — isn’t likely to happy anytime soon, or anytime at all.
In short, we shouldn’t be betting on job growth from the clean and renewable energy sector, even if it is the fastest-growing segment of the economy right now. That would be a mistake in planning that could stay current policy and keep things relatively inert.
As new jobs are created in alternative energy openings, old jobs in traditional energy companies will be lost. This creates a break-even job scenario. Simply put, a new solar plant creates several hundred new jobs. That energy replaces a coal-fired power plant. The coal plant shutters and hundreds of jobs are lost. Result: no gain.
Moreover, the jobs in the alternative energy sector — beyond construction workers hired temporarily to build or retrofit — need a different set of skills than those who have been working in the traditional energy sector. An oil-rig operator can’t become a wind operator overnight.
This brings me to the real issue at hand: The skill of the U.S. labor force.
A recent study of college graduates shows that for every U.S. student who earns an engineering degree, China graduates five. Never mind those engineers coming out of India, South Korea, and Japan.
The West is losing out on the skilled labor needed for future growth not because we aren’t investing in alternative energy — we are — because we aren’t investing in education.
Sam Newell, a job recruiter for RenewableEnergyJobs.com, writing on the Climate Change Corp. website, says: “Unless the number of students taking science, engineering, technology and math base qualifications in the Western world increases dramatically, this skills shortage will become even more apparent and constraining for businesses.
“It is beginning to look untenable that the new green-collar jobs can be made available only to domestic applicants — in line with [President Barack] Obama’s plans of creating jobs that cannot be outsourced — due to the engineering skills shortage. If we fail to address the lack of available, qualified and appropriately skilled workers, talk of millions of new jobs being filled within the renewable energy sector is likely to remain just talk,” Newell went on to say.
To be sure, I am all for growth in the alternative energy sector. I am all for a clean and green economy. But if this is to be America’s big bet on the future, we have to play our best hand at the world table. And that hand isn’t the green-collar worker.
That’s increasingly looking like a bluff. Our strongest hand is with the graduating student. Yet they don’t seem to be much interested in playing. We have to change that.
Setting our sights on the blue-collar, green-collar or plain old worker is setting them too low. It’s not the collar or the color that matters; it’s the prospect. We should be prospecting for engineers with incentives and investments. Meanwhile, we must get sober about our future.
Otherwise the green economy will pass us by, and the much touted job growth will become more job shrinkage.
Thomas M. Kostigen is the author of “You Are Here; Exposing the Vital Link Between What We Do and What That Does to Our Planet.”
The ‘Green-Collar’ Job Creation Myth – Thomas Kostigen, MarketWatch
Add comment June 22nd, 2009
The best way for Obama to avoid the next crisis is to appoint tough and independent regulators
What does it tell you when banks, investment houses, insurance companies and derivatives traders are so pleased with their regulators that they are prepared to pull out all the stops to keep them?
What it tells me is that the current system of financial regulation has been thoroughly captured by the companies it was meant to restrain — and that the only way to put things right is to bring in new rules, a new structure and tough new regulators. Anything short of that, and you can almost guarantee that the inmates will be back in charge of the asylum by the time the next bubble starts to develop.
Judged by that standard, the proposals the Obama administration put forward this week to reform the regulatory apparatus were a bit of a disappointment.
If you have to set up a council of regulators just to harmonize the rules used by different bank regulators, why not bite the bullet and consolidate them into a single agency?
How are safety and soundness of the financial system furthered by allowing regulated banks to run “proprietary trading desks” that are nothing more than in-house hedge funds?
Should oversight of giant markets in financial futures and derivatives continue to be regulated by an agency set up to regulate hog prices and corn futures just because members of the congressional agriculture committees can raise political funds from Wall Street fat cats?
Regulatory Reform That Falls Short – Steven Pearlstein, Washington Post
Also:
Wall Street Fights New Regulations – Editorial, Investor’s Business Daily
Obama’s Regulatory Reform: Our Money In Danger – Peter Morici, NPR
We Need Greater Global Governance – Peter Mandelson, Wall Street Journal
Add comment June 22nd, 2009
Kool-Aid Drinkers Survive Financial Overhaul
June 19 (Bloomberg) — President Barack Obama doesn’t need to just overhaul financial regulation. He needs to exorcise the ghost of Alan Greenspan.
For far too long, regulators weren’t willing to regulate, inspired by the view of the former Federal Reserve chairman that too much oversight is a greater threat to markets than too little. That turned out to be a bigger cause of the credit crisis than the particular structure of the agencies overseeing the financial system.
Donald Kohn, the Fed’s vice chairman, summed up the prevailing regulatory attitude in 2005, saying, “The actions of private parties to protect themselves — what chairman Greenspan has called private regulation — are generally quite effective,” while government regulation risks undermining “financial stability itself.”
Unless Obama can change that mindset, which is entrenched in many of the institutions overseeing banks and markets, the details of his 88-page reform plan won’t matter much.
And while there appears to be a newfound appreciation for government oversight, we can’t be certain yet about the intentions of those shaping the Obama plan. Some of them, after all, were one-time advocates of Greenspan’s views, or at least failed to challenge them.
Greenspan’s Disciples
Treasury Secretary Timothy Geithner, one of the architects of the Obama overhaul, was a big promoter of the kind of so- called financial innovation that ultimately helped bring about the crisis.
During a speech in early 2007, Geithner argued that innovative products such as credit default swaps and collateralized debt obligations “should help make markets both more efficient and more resilient.”
And Geithner, at least back then, echoed Greenspan’s belief that regulators shouldn’t try to stop bubbles from forming. In the same speech, the then-chief executive of the Federal Reserve Bank of New York also said, “We cannot identify the likely sources of future stress to the system and act preemptively to diffuse them.”
Geithner wasn’t alone in espousing Greenspan’s hands-off approach. His co-pilot on the new Obama plan, National Economic Council Director Lawrence Summers, held similar views.
Summers aligned with Greenspan to kill off attempts to regulate derivatives markets when he worked in Bill Clinton’s administration. That deprived regulators of influence over a key and fast-growing market, an area in which risks to financial institutions would fester.
Regulatory Tension
In unveiling his regulatory plan Wednesday, Obama noted that there is always tension between those who favor the market’s “invisible hand” and those who favor “the guiding hand of government.”
He rightly added that such tension isn’t always a bad thing. Yet in recent years, the invisible hand ruled.
Under Greenspan’s laissez-faire approach, markets would police themselves and risk would be spread far and wide. The theory was that losses would be more easily absorbed if a broad base of investors, rather than a few banks, held risk.
Even as cracks began to gape in the financial system in early 2007, Geithner continued to hew to this view. While acknowledging in his speech at the time that problems with subprime mortgages may signal a gathering storm, he said that credit-market innovations should help ease any pain: “If risk is spread more broadly, shocks should be absorbed with less trauma.”
Hidden Risks
It didn’t work out that way. Rather than dispersing risk, many of the policies espoused during the Greenspan era simply caused risks to regroup out of investors’ and regulators’ sight.
This meant that investors couldn’t know who was holding what types of assets, which ultimately led them to stop trading with one another. Credit markets began to freeze.
Greenspan and his followers also trumpeted financial engineering, hailing the creation of exotic securities that would supposedly help to disperse risk. In the end, much of the innovation — like structured investment vehicles or CDOs — proved ephemeral.
Even those who weren’t Greenspan disciples, such as Fed Chairman Ben Bernanke, failed to challenge the prevailing orthodoxy. Bernanke has been reluctant to abandon the financial- innovation theme promoted by his predecessor.
In a speech this April, Bernanke acknowledged that financial innovation is currently “perceived as the problem.” That said, the Fed chairman rose to its defense, saying that, “Innovation, at its best, has been and will continue to be a tool for making our financial system more efficient and more inclusive.”
Given that so many regulators and political leaders sipped from the Greenspan Kool-Aid cup, it will take time to see if the financial crisis has sobered them up.
If not, Obama can play with regulatory organizational charts all he wants, and it won’t make much difference.
(David Reilly is a Bloomberg News columnist. The opinions expressed are his own.)
Greenspan’s Ghouls Stalk Obama’s Finance Plan – David Reilly, Bloomberg
Add comment June 22nd, 2009
