Manage your finances in style with moneyStrands

For the last 6 months or so I have been working on launching the newest Strands service -- it is called moneyStrands. In plain English, moneyStrands is a money management tool that helps you set a budget, track and control your spending and start saving up at your own pace.

At recessionary times like these people have a tendency to put their finances under the magnifier with more of a "do-it-myself" attitude. I personally hope this behavior will subsist even after this economic dip is over with simply because it is a healthy habit in general. The financial industry has a number of conflict of interests and agency issues when dealing with their retail clients and that is exactly why the consumer of the 21st century has a duty to become more self-aware and less an avoider or delegator if he/she has any chance to "keep the dream alive" so to speak. You see major brands like eTrade and TDAmeritrade play on that instinct quite successfully these days many times at the expense of traditional brick and mortar banks experiencing immense turmoil behind their granite facades.



So please go ahead and give moneyStrands a shot and see if it can help add more color to your financial life ;)

Nassim Taleb Tells the Truth!

I love Nassim because I believe instilling real change requires a gutsier approach than what the Fed, the Treasury and the Congress have so far shown. Frankly speaking, (as an Obama supporter during his campaign) I am disappointed with the stimulus package as is. This is not even half of what the economy needed to have a real shot at recovery in the 2nd half of 2009.

More and more I am thinking the insolvent banks should be practically nationalized. Obama has the political credit to end this hostage situation and hopefully Tim Geithner will stop playing hide and seek before it is too late.

Nassim Taleb's point in saying "Banks ultimately are utilities." is right on. They surely are at the conclusion of an amnesiac era in their history where they developed a Dr. Jekyll of sorts in the form of Structured Investment Vehicles. They continued on to bet the whole farm on it only to be saluted off to million dollar bonuses -- in many cases undeservedly so.

Things that I like... - Magazines that make me THINK!

At challenging times like these I believe it is essential for everyone to find strength in their lives...some sort of re-discovery of things that make life more interesting, special or worth trucking along. In the spirit of eating my own dog food, I decided to do mini-posts here of things that I appreciate. The list will naturally keep growing which may have the welcome side effect of making me feel richer over time :)



For today, I'd like to recognize some of the print publications I have come to appreciate over time:
- THE ATLANTIC
Great critical thinking of our times as the dominant species on the planet ranging from literature and pop culture to economics and politics.
- NATIONAL GEOGRAPHIC
This one's always a gem full of insightful articles telling the real story of an increasingly coalescing world mixed in with awe-inspiring visuals. I am simply unable to throw any of the issues away hoping that I'll catch up on the reading if I get a life extension :)
- BUSINESSWEEK
A great summary of goings on any business professional should know. To me it is a 30 minuted slide presentation - an executive summary of the business world last week. Like the international coverage but could use more of it. They should try doing special reports like The Economist.
- WALL STREET JOURNAL
Required reading for people trading the markets. Very high quality editorial sometimes sabotaged by their political biases.
- WIRED
This one's not been a statue of consistency but most often it produces enough thought provoking hits during the year to be noteworthy of readership. Lately I have been paying less attention though.
- WORLD POLICY JOURNAL
I find the outtake on the world policy issues very balanced. The authors are very well respected foreign policy intellectuals.

So here goes...these are some of my favorite things!

TIME to ACT! Contact your elected public servicemen and women.

To all that are concerned with the state of the economy and the imminent need for a bail out:
Please take the time to contact your representatives and make your opinion known so that they do not steer the country into an irreversible course that damages the incentive structure of the nation further in a unrepairable way. So there is an "American Dream" to speak of. Protest the current Treasury plan.

For San Franciscans, here are some links to district's most powerful representatives' contact forms:
- Nancy Pelosi, Congresswoman
- Barbara Boxer, Senator
- Diane Feinstein, Senator (As of this post the site seems down...)

BAIL OUT: The Public Deserves a Better Deal

Today's WSJ contains an opinion piece by John Paulson who happens to be #165 on the Forbes 400 wealthiest Americans list. Mr. Paulson is the foremost hedge fund manager that capitalized on the sub-prime market collapse by shorting the troubled stocks with near perfect timing so he knows a thing or two about the situation to say the least. His proposed solution to the imminent bail out situation to me is the best I have heard so far. In it, he proposes:
"There is a better alternative to stabilize the markets: Invest the $700 billion of taxpayer money in senior preferred stock of the troubled financial institutions that pose systemic risks. Let's call this the "Preferred plan." In fact, it is the Fannie Mae and Freddie Mac model -- which the Treasury Department has already endorsed and used in practice. It is also the approach Warren Buffett used for his investment in Goldman Sachs."

He then goes on to elaborate that the current rescue plan is nothing more than a WEALTH TRANSFER from taxpayers to "shareholders and executives of the very institutions that brought on the financial crisis".

I agree that instead of trusting the Treasury department assigning values to the toxic securities that nobody will probably ever buy, his solution effectively puts taxpayers AHEAD of all other shareholders and creditors where they really belong. It is great to see that there are still some cool heads out there rising above the deafening noise of bankers, lobbyists and compromised politicians and telling how it should be. And thanks to WSJ for providing space for such insightful denizens of the increasingly neurotic finance world.

2004 SEC Rule Change and The Wall St. Meltdown (Part II)

Continuing on the link trail for the SEC rule change I came across remarks referring to investment bank insider accounts attesting to leverage ratios of 1 o 45!!! Apparently it was customary during those heady times to lever back to the maximum allowed levels (a mere 1 to 30) during short regular reporting windows only.

What would you call this?
- Opportunism
- Greed
- Business Savvy
- All of the Above

Also reportedly, the SEC chairman active at the time had made a name as a "heavy-handed" regulator.

What would you call that?
- Plain Old Dumb
- Wishful Thinking
- The usual "This time its different" Laissez Faire Naevity
- All of the Above

No matter which way you slice and dice...it surely STINKS. Yes, in more than one way this is a systemic failure but let's not forget every social system is composed of organizations, which in turn are composed of living walking homo sapiens. Since when Merriam-Webster stopped printing the word "Accountability" in the dictionary? And by way of bailing out this, that and the other are we leaving the door ajar for more rescues and "get-out-of-jail free" cards down the road? Bail out or not, this time I really hope as the dust settles the landscape will be altered in a more stable way. If not, I guess the bright minds on Wall St. can always come up with an "off-balance sheet" country called United Structured Investment Vehicle of America and throw all the shoddy stuff over there conveniently claiming to have cleaned off their hands of all the dirt.

2004 SEC Rule Change and The Wall St. Meltdown

It seems that a 2004 rule change authorized by SEC, (Securities and Exchange Commission) which is tasked to regulate U.S. financial markets may have provided the highly flammable fuel that eventually led to the massive fire at Wall St. brokerage headquarters. The rule change granted permission to Bear Sterns, Lehman, Merrill, Morgan Stanley and Goldman Sachs AND NONE OTHER to assume a new designation that would let them lever their portfolios by a ratio of up to 1 to THIRTY(30)!!



It effectively replaced the old rule put in place in 1970s limiting the same ratio to 1 to 12. Especially interesting quote in the press release is that of then SEC Commissioner Harvey Goldschmid who said, "If anything goes wrong, it's going to be an awfully big mess."

1- Why did the SEC feel the need to grant such a permission in 2004, a year that U.S. economy had already recovered from a mild recession?
2- Why did the rule change apply to 5 financial firms only?
3- How could the SEC justify letting go of the "leash" while without a well-defined mechanism to investigate and confirm that the portfolios of these institutions did actually conform to the new set of rules?

These are only some of many key questions that come to mind with no satisfying answers. One would find it hard to resist labeling this decision as the flapping of the wings of the butterfly that may have ultimately caused the current devastating hurricane hitting the shores of Manhattan.

The American public deserves a good look into the annals of this mystery.