This must be a first. Citigroup (NYSE:C) CEO Vikram Pandit abandoned the attitude of entitlement that has characterized so many bailed out banks and simply said “Citi owes a debt of gratitude to American taxpayers…We look forward to helping them realize value on that investment.”  

 

Let’s not forget, too, that it was Pandit who volunteered to work for a $1 salary while Citi dug itself out of the hole. Meanwhile, other bank CEOs were fighting to keep their multi-million dollar compensation packages coming.   

 

It seems like Pandit is the only one who realizes he’d be out of a job were it not for government bailouts. 

 

Of course, it should be noted that several banks didn’t want to accept TARP money. They felt they would be fine and didn’t want to be restricted by TARP requirements. (That means they didn’t want to have to curb compensation.)  

 

Personally, I don’t believe all these banks were fine, especially Bank of America (NYSE:BAC). If BAC was fine, why has it chosen to sell stock and warrants to pay TARP money back? Shouldn’t that TARP cash just be sitting in an account somewhere?  

 

But rather than harp on Bank of America and others, the focus should be on getting new regulations in place to keep banks from taking on excess risks. The Obama administration is sending the “Volcker Rules” to the Senate today.   

 

Volcker’s proposed restrictions include bans on “proprietary trading” and investing in hedge funds for commercial banks. The new rules would also seek to prevent any bank from achieving 10% market share through an acquisition.   

 

The Volcker Rules are controversial. Banks have hired literally thousands of lobbyists to keep Congress from backing the new rules. That alone tells me the Volcker Rules are probably a good idea.   

 

Some believe that these rules will stifle growth for banks. To them I say, yes, that’s the point. We can all do without the type of growth that propelled Bear Stearns and Lehman Brothers.   

 

Besides, it doesn’t mean the end of proprietary trading and hedge funds. It means that the risk of these activities will be contained to the entities and investors that engage in them. That’s how it should be, in my opinion.   

 

Productivity hit 6.9% in the 4th quarter. That was the biggest annual gain since 2002. And as you might expect, wage inflation fell 5.9%.  

 

It’s clear companies did a good job of cutting workforces to meet lowered demand. It also should be clear that this level of productivity is unsustainable. Either depleted inventories must be rebuilt to meet rising demand (which means hiring), or the demand growth we’ve seen is illusory, supported by government spending.   

 

The reality probably lies somewhere in the middle. And that’s why most economists are expecting companies to start adding jobs this year, though not enough to impact the unemployment rate much.  

 

The drop in wage inflation is an important indicator for interest rates. Wage inflation is the Fed’s primary measure of inflation. Today’s low reading reinforces the notion that interest rates will remain low. That’s because deflation is still an issue. I know, nobody wants to hear the “D” word. But prices won’t rise until consumers have more money to spend.  

 

And right on cue, the Labor Department reports that unemployment claims fell by 29,000 last week. Still a concern is how the snowstorms on the East Coast will affect the overall unemployment number.  Economists say the storms may inflate the unemployment number by 100,000 workers.   

 

Economists are also forecasting 1st Quarter GDP of 3%.  

 

Without any outrageously bad economic data, I expect we will continue to see a somewhat volatile stock market, with an upside bias.   

 

In Saudi Arabia, they have a National ID Card that is tamper-proof and virtually impossible to counterfeit. The smart-ard carries biometric information on the holder, including fingerprints and demographic information.  

 

India has 4 million Vehicle Registration smart-Cards in use. With one swipe, transportation officials can verify that registration fees and insurance are current, and even if get information about the vehicle itself. 

 

Italy now uses smart cards for Citizen, Foreign Resident and National Police ID Cards. In France, all of your medical records can be contained on ID smart-Card.   

 

The technology is slowly moving into the world’s biggest market – the U.S…  

 

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Published by Wyatt Investment Research at