“Bank bill legislation promises the most significant overhaul in regulation of U.S. banks since the Depression”
CBS Marketwatch (5-21-10)

“Sound and fury signifying nothing”
Bill Tatro (5-21-10)

On the surface, it would appear both the House and Senate are jumping on populist opinion and attempting to overhaul Wall Street. However, most individuals in the financial community recognize that the first step toward cleaning-up Wall Street is to reinstate the Glass-Steagall Act. Established in 1933, Glass-Steagall essentially separated commercial banking and investment banking when Congress recognized that banks being involved in day-to-day trading with investors and depositors money was the surest way for both chaos and failure.

Unfortunately in 1999, Bill Clinton, with prodding from former Treasury Secretary Robert Rubin and current Director of the White House’s National Economic Council Larry Summers, signed into legislation the repeal of Glass-Steagall. Since that time, we have experienced the dot-com crash, the housing collapse, the credit fiasco, and now the sovereign debt crisis. The genie is out of the bottle, and chaos reigns supreme. Here’s the rub. Congressmen and senators receive significant financial support from Wall Street, and as we’re learning from our relationship with China, you don’t bite the hand that feeds you. You might even say, “It’s All About Money.”

Is the current bank bill significant legislation or simply a smoke screen to make the populous feel happy? In my opinion, until we restore the Glass-Steagall Act, it will be one crisis after another.

Keep your seatbelt fastened tight.

Till next time,

Bill

>>>>>>>>>>>>>>>>>>>>

A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.

Re-evaluation

It took less than twenty-four hours for the analysts (yours truly excluded), to ask the following questions: Exactly how does the nearly one-trillion dollar European bailout package work? Who is paying the money, and at what interest rate? How are they paying it back? How does that help growth for the European countries, and since when do you get out of debt by going deeper into debt? The lemming media does not see things as they are, only as they want them to be. There may be a bailout, but only at the risk of inflaming an entire continent.

Meanwhile, gathering few headlines, the Chinese stock market is down 20% from its November 2009 peak. Now in bear territory, and with spiking real estate prices and ever increasing inflation, China could be on the verge of implosion. Just another little tidbit for the market to chew on.

Have you fastened your seatbelt yet?

Till next time,

Bill


>>>>>>>>>>>>>>>>>>>>>

A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.

Apocalypse How?

Glitch in the system? Bad trade? A finger typed “B” instead of “M”? Or, did somebody scream “Fire!” in a crowded theater and everyone ran to the exits at the same time? How else to explain yesterday’s nearly one-thousand point intraday decline on the Dow Jones Industrial Average. Welcome to the 21st century of electronic trading.

The Wall Street of today is no different than the Wall Street of yesteryear. In the old days, after work, traders from the various brokerage firms would congregate at Harry’s Bar & Grill, located in the basement of the American Stock Exchange. They would talk about what they did for the day, but more important, they would talk about what they were going to do for the next day. They would compare notes, discuss, argue, and like lemmings, would be swayed by the person with the strongest argument. Fast forward to the present. The traders may congregate once in a while at a bar, but more importantly their computers are congregating every single day. High frequency trading, the centerpiece of Wall Street today, is the current example of what yesteryear was all about. If one proprietary trading desk is moving in a certain direction, every other computer knows it, and will adjust their positions accordingly. Yesterday, for whatever reason, one computer moved in a massive negative direction, and like lemmings, the rest of the computers followed along.

For us to believe this was a one-time event, that this is not symptomatic of what will happen in the future, might be a monumental mistake. This could happen again, again, and again. The reality is that economics usually catch-up and dictate the directions of markets. Whether its employment, foreclosures, or a Greek tragedy, economic data will eventually be reflected in the marketplace. With high frequency trading it will be reflected in the blink of an eye.

As I’ve continually been saying, get ready. The rollercoaster ride has just begun.

Till next time,

Bill


>>>>>>>>>>>>>>>>>>>>>

A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.

Ode to Greece

“It has been a year since the world was jolted by the September 11th incident (2001 World Trade Center terrorist attack.) The international community, especially the superpowers, has declared an all-out war against terrorism. To them, terrorism is confined merely to physical attacks on countries and their people. In fact, their economic onslaught on developing countries which have brought unrest, miseries, and the downfall of governments, is equally violent. In fact, the remedies which they prescribed destroyed these nations. The high interest rates, withdrawal of subsidies, and floating the exchange rate further worsened the economy, and resulted in instability. Those who benefited were the currency speculators. Indeed, economic terrorist do not differ from other terrorists.”

- Malaysian Prime Minister Mahathir Mohamad (2003 budget speech-September 20th 2002)

Till next time,

Bill


>>>>>>>>>>>>>>>>>>>>>

A disclaimer: None of the content published on billtatro.com constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers or their affiliates will advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the content published as part of BillTatro.com may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.