John Wasik

Gasoline prices can be curbed: Here’s how

Apr 29, 2011 14:58 UTC

The U.S. Government already has a steel truncheon to curb high oil and gasoline prices. It’s called Dodd-Frank.

Petrochemical companies, banks, Wall Street and hedge fund speculators, though, don’t want to see real policing of this financial reform law to go into effect. They make billions with the status quo — at your expense.

In a classic red-herring tactic, House Republicans blame the federal budget deficit, EPA regulations and President Obama for high gas pump prices. Who’s really to blame? Let’s follow the numbers.

You can make a minor argument that increased demand for crude oil — and to some extent reduced supply — has some bearing on gasoline prices. There is a modest economic recovery going on here, in Europe and in developing countries like China and India. Everyone’s continuing to demand more black gold.

Yet there’s a huge disconnect between actual rise in demand and prices. According the American Petroleum Institute, gasoline demand rose 6.1 percent (year over year) in March while the pump price rose 22 percent during that period.
The prices of all grades of gasoline rose 5.3 cents in one week (ending April 20), which was the highest level since August, 2008.

Madoff madness is our own

Apr 26, 2011 05:29 UTC

Bernie Madoff’s failings are not the mark of some isolated monster, although his crimes are heinous. He is so much like every one of us that failing to recognize this fact will imperil us at every financial turn.

This is one of many revelations in Diana Henriques’s stunning new book The Wizard of Lies: Bernie Madoff and the Death of Trust.

The man who bilked $65 billion from friends, family, institutional investors and charities knew what he was doing. As far as we know, he wasn’t incapacitated from bipolar disorder, substance abuse, schizophrenia or some gargantuan chip on his shoulder to prey upon the wealthy. He stole and lied consistently to all and told Henriques he was fully aware of his mammoth deceit every step of the way.

The best Earth Day investments

Apr 21, 2011 15:50 UTC

A visitor places her hands on a "Tangible Earth", a digital globe which real time global metrological data is fed through the Internet from about 300 places in the world, is displayed at an exhibition pavillion inside the media centre for G8 Hokkaido Toyako Summit in Rusustu town, on Japan's northern island of Hokkaido July 6, 2008.  REUTERS/Yuriko NakaoAll that’s green isn’t gold.

As we wring our hands over another Earth Week amidst the Gulf oil spill anniversary and the Japanese nuclear crisis, it’s hard to remember that we can’t buy or invest our way out of our current predicament.

We need to redefine how we can become better stewards of our planet. While I think we need a moon-program-sized clean energy and resource preservation plan, it won’t come by buying green products and investments.

Case in point: I was recently solicited by Green Alpha Advisors, LLC, which says it performs “money management for environmentally focused capital.” They manage funds in a separately managed account offered through brokers that invest in a host of environmentally friendly companies.

Do stocks make sense in the long run?

Apr 18, 2011 14:19 UTC

Jun Ogawa, a former employee at an electronics parts manufacturer who began actively investing after he retired, looks at stock prices at an investment club in Tokyo August 24, 2007. REUTERS/Yuriko Nakao With all of the negative economic news still haunting the market, do stocks still make sense for long-term investors?

An all-in, head-in-the-sand commitment to stocks makes little sense. No matter how long you hold onto them, the volatility will never go away. In fact, with mega-banks getting even bigger after 2008 and hyper-fast computer trading, the risk is probably higher than ever.

Still, there’s the allure of a decent year and the need to beat the awful returns on savings vehicles and bonds. How should you view this age-old question?

Consumer cops: Why we need Mary Schapiro and Elizabeth Warren now

Apr 15, 2011 14:29 UTC

U.S. Securities and Exchange Commission (SEC) Chairman Mary Schapiro answers a question at the Reuters Future Face of Finance Summit in Washington March 1, 2011. REUTERS/Kevin Lamarque Two women are fending off a vicious man-handling of investor protection.

As Congress pettily wrangles over the debt limit and the next budget, Mary Schapiro and Elizabeth Warren are fighting to protect you against the ravages of Wall Street.

Wall Street and its Republican allies would like to make the Dodd-Frank financial reforms disappear. The money trust has been pouring millions into lobbying to eviscerate the budget of the Securities and Exchange Commission and blocking the formation of the Consumer Financial Protection Bureau.

Mary Schapiro, who chairs the SEC, said she can’t kick start the myriad pro-investor rules of Dodd-Frank without adequate funding. Republicans, lead by Budget Committee Chairman Paul Ryan, want to “starve the beast” in their fiscal year 2012 proposal.

Why market-neutral funds may come up short

Apr 11, 2011 16:06 UTC

A trader works on the floor at the New York Stock Exchange, March 21, 2011.  REUTERS/Brendan McDermidDoes the prospect of inflation, higher oil prices and double-dip housing recession keep you up at night? Long-short or market-neutral funds seem ideal for nervous nellies. They attempt to blunt your downside risk by “shorting” stocks while giving you a piece of the upside.

Brokers are aggressively hawking these funds — sometimes referred to as “alternative investments” — to conservative investors as a way to blunt market risk.

Yet they don’t always work the way you hope they will. While these hedge-like funds are certainly a bulwark in awful markets, you’re almost always better off in a broad-based global stock index fund like the Vanguard Total World Stock ETF in bullish times.

Budget wars: The middle class loses big time

Apr 8, 2011 14:01 UTC

President Barack Obama talks about the budget in the White House press briefing room in Washington, April 5, 2011.   REUTERS/Larry Downing Now that federal government shutdown has been averted, it’s a good time to examine what’s at stake for most of America in the crucial next round of budget talks.

Not doing anything to reduce the size of government debt will be catastrophic. Not much quibble there. But acting hastily and cutting the wrong things can be even more costly to social and economic welfare.

Neither the Republican nor the Democrat’s budget plans for 2012 will meet the major challenge of sustaining social programs while cutting the most egregious waste.

Home sales: Get real

Apr 4, 2011 17:31 UTC

Newly finished development of homes for sale, built by home builder KB Homes, are pictured in Carlsbad, California January 4, 2011. REUTERS/Mike Blake   Two words of advice for the majority of U.S. home sellers: Get real. In most places, the market won’t come back for a long time, if ever. American housing in the worst markets is a damaged good that may remain so for a generation.

There are exceptions, of course. You can expect to see a sales and price bounceback in a handful of places that combine robust job growth with favorable supply-and-demand numbers.

According to the Local Market Monitor,which tracks real estate trends, there’s been strong job growth in Bethesda, Dallas, Raleigh, Washington, Milwaukee, San Jose and Houston. Most of these cities weren’t hit particularly hard by the bubble.

State tax increases: More are on the way

Apr 4, 2011 14:37 UTC

A man holds a sign at a tax day rally by Tea Party activists in the New York City suburb of New City, New York, April 15, 2010.  REUTERS/Mike Segar  More taxes are coming, more taxes are coming! During the American Revolution, we could have substituted “more taxes” with “the British.”

We can’t blame old King George for our fiscal misery anymore. There are more taxes on the way as most states grapple with huge budget and pension deficits.

Residents of the most budget-busted states shouldn’t be in denial anymore. Public services will be cut further and you can expect to see more taxes on every level. Taxes are still headed higher to offset shortfalls from property valuations and slack consumer spending, which may not return to normal for years.