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Yesterday’s News

Written by Brad McMillan, CFA®, CFP® | Jul 16, 2012 10:41:29 AM

For both the weekend and this morning, the headlines are uniformly anti-financial. Let’s take a look at the front pages:

Financial Times

Saturday: “J.P. Morgan Trade Loss Hits $5.8 Billion”
Monday: “Europe’s Banks Face Tougher Demands”

Wall Street Journal

Saturday: “Card Giants to Pay $6 Billion” and “Peregrine CEO’s Dramatic Confession”
Monday: “Missteps Doomed Barclays’ Leaders”

New York Times

Monday: “Surveys Give Big Investors Early View”

We have massive proprietary trading losses, higher bank capital ratios, legal settlements by the credit card companies and banks, another massive futures fraud, LIBOR again, and what amount to allegations of insider trading among major institutions.

Not bad for a slow summer weekend.

The details on all of these stories vary, but the uniform theme is that many existing financial institutions are poorly managed and possibly corrupt. The sheer number and variety of the allegations, across so many of the largest institutions, suggests that, regardless of whether the allegations are true, there is tremendous play in putting them out there. This gets back to looking at what the editors of these papers think is important, and even in the business and financial papers, there is a clear need to give these stories the front page. This is also consistent with my view that there is a sea change going on in the societal business environment, with a shift away from financial and economic interests and toward populism.

Another story that says out loud that things are changing is Monday’s front-page story in the Wall Street Journal, “Tax Break Nears End for Online Shoppers.” The title explains most of the story, but the interesting point, contained in the subtitle, is that the pending end of the tax break is due to Republican governors dropping opposition because they need the revenue. Remember, I have said multiple times that taxes are going up. This is a first wave, supported by the Republicans because they need the money. It won’t be the last.

Happy Monday!