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May 2010

WOW!! Now That’s A Lot of Debt!

The markets are in turmoil because of the worry about the so-called PIIGS’ nations’ debts (Portugal, Ireland, Italy, Greece, and Spain).  In earlier writings (Fiscal Crises: The Next Shoe, March 14, 2010), I opined that Greece is just the canary in the coal mine and that when we look homeward, we have our own huge debt issues which are not significantly different from those of the PIIGS countries.  I believe …Read More

A New Paradigm for Community Banks

The banking landscape is rapidly changing. We had 126 bank failures in 2009, and, through May 7, 2010, there have been 68 additional closures. Sheila Bair, FDIC Chairwoman, has indicated that we can expect a significant number of additional failures for the next few years. The system that America got used to from 1990 through 2007 where credit was easy to get and consumption and investment grew as a result, …Read More

Europe’s TARP

Part of the gloom sitting over the U.S. markets has to do with the uncertainty surrounding the fate of the world’s banking system should any of the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) default on their sovereign debt.  The European Central Bank’s (ECB) recent action to “save” Greece really wasn’t undertaken for the sake of Greece.  Rather, like the saving of AIG in 2008 by the Treasury via TARP, …Read More

Cash Flow – The Ultimate Margin of Safety

Cash is King The intrinsic value of a stock is considered to be the discounted value of future cash flows.  But, it is free cash flow (defined as cash from operations less capital expenditures) that is used for paying dividends, paying down debt, and buying back shares, actions that create value for shareholders.  The more robust and secure the cash flows, the safer the investment.  As an added bonus, the …Read More

Precious Metals for the Long Run

The potential, and, perhaps, inevitable meltdown of the European Union due to the overpromising of entitlements and habitual deficit spending speaks directly to the reasons that our advisory firm has remained so cautious, keeping client assets in defensive positions with lower than normal equity levels and higher allocations to precious metals.  During the Greek debt crisis, precious metals have moved to the upside toward historic high prices.  Our view is, …Read More