The Media’s Investment Strategies

                    

Whenever the financial media discusses investment strategies, it’s about a favorite of someone being interviewed or reviewed. Perhaps the strategy is a public relations release, disguised as financial news.

                       

Investigations I have done of literally thousands of independent strategy studies and investing techniques, have helped me delve into the investment strategy phenomenon.

                       

My conclusions often differ with that of the media, which tend to overlook strict techniques. So efficient strategies get short shrift. Yet, proper strategy use increases odds of investing success.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Commerce Credit Agencies

                     

The past change in the AAA rating of U.S. credit should make us consider the question of ratings on non-governments as well.

                       

The bulk of commercial credit ratings are done by Moody’s, McGraw- Hill’s S&P, and Fitch Ratings, the three largest of a handful of government-approved services.

                       

Critics say they did poor evaluations of credit-default swaps and subprime debt issues. And in this way contributed, to a great extent, to the 2008 financial downturn. There were also charges of conflicts of interest.

                                           

Payments for ratings are made by firms who sponsor the evaluations.That is, those who issue the debt obligations.

                       

What is needed is more competition. That means more credit evaluation services being recognized by our regulators. And more diligence by borrowers. That would be the ideal way to prevent serious credit rating problems from developing again.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Derivatives for Government Funding

                                                 

A government can hide its long-term, poor fiscal position with short swap, or credit default derivatives. This paper manipulation made things look what they were not with Greek’s financial deficit spending over recent years.

                       

Using derivatives for deception was wrong.

                       

However, derivatives have a legitimate function in government financing, as they do in normal business and financial transactions.

                       

Eliminating derivatives or making them tougher to write, will dry up the supply of conventional debt financing, That will simply make it tougher for governments such as Greece to get credit. They will then sell their bonds only at much higher interest cost.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Natural, Self-Correcting Business Cycles

      

Experience has taught that natural business cycles very quickly correct themselves. And that the deeper the downturn, the sharper the economy will bounce back.

                       

Except when government meddled in the 1930’s as it has in recent years. Along with multi-trillion dollar budget deficits that are confusing and scaring large and smaller, job-creating business owners  (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Bankruptcy Instead of Corporate Bailouts

                     

Corporations, such as those in the automobile industry and banks in financial trouble, can always use the bankruptcy courts for an orderly means to reorganize debts.

                       

This has unfortunately been forgotten in the past by the administration, at enormous cost to our national budget and our constitutional framework.

                                                   

Bailouts were done, in effect, to salvage union contracts, which bankruptcy courts would have dissolved. Agreements which make it impossible for U.S. corporation to compete domestically or internationally without taxpayer assistance.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

The Media: Misunderstanding Financial Problems

                    

I commented recently how the financial media does a poor job of commenting on financial matters, scapegoating big business and Wall Street, repeating populist political comments.

                       

Another good example would be the subject of repos. The elimination of repos sales off the books of Lehman

Brothers had relatively little to do with the use of bank guarantees by the government. Imposed bank accounting, and not repos, were the villains in the financial meltdown of 2008/2009.

                       

Some in the financial media, as well as the administration have ignorantly treated each financial institution problem as part of a group, to be treated alike, by similar regulatory treatment.

                       

Thus, every entity that has been in trouble in the past is tossed in the same basket; AIG, Lehman Brothers, Merrill Lynch, Fannie Mae, Freddie Mac, Bear Stearns, and so on. Each had its own peculiar problems and could have been rescued in its own way, without heavy-handed government assistance.

                       

The media has done a poor job of sorting this out for the average citizen to understand. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Media Explanations of Finance

                                     

The media usually has no idea whom to blame for financial problems. They usually blame big business or Wall Street, as popular scapegoats.

                       

All problems regarding financial troubles are treated as if they have had a similar cause, though each may have had their own. Prevention techniques would have varied for each, but are treated with universal panaceas by the media.

                       

Populist politician demagogy will usually be picked up because it’s handy and it’s what many in the media have learned as truth in school. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)