September 2008

Wall Street Misrepresents Capitalism

Today’s 777 point sell-off in the Dow signals Americans that our capitalism is not properly serving our interests. American capitalism is now an asymmetrical game that benefits elite traders while undermining the common good. People’s retirement savings should not be exposed to the capital destruction that occurs when prices in the “float” fail to provide fair market discovery of real corporate value.

What Warren Buffett Could Have Done

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Warren Buffett missed a great legacy opportunity yesterday when he placed a five billion dollar bet on Goldman Sachs. Buffett said he was betting on brains. He said his move was conditioned on his confidence that the 700 billion dollar government bailout would occur. Buffett put more than money on Goldman Sach’s table. He left a cryptic message that Wall Street brains will get the better of the U.S. Congress and the American taxpayer. In less than code language he conveyed his intention to capitalize on any resultant surge in the valuation of investment banks.

A Bailout Alternative: Create New Banks on Main Street

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It is time to formulate alternatives to the flawed Paulson plan. Unless superior alternatives take shape soon, the Paulson plan will pass in modified form — the modifications sufficient to preserve Wall Street’s dominance of America’s capital markets. Paulson’s plan will prolong high inflation and lead to a weaker dollar. A weak dollar will produce higher oil prices, which in turn will undercut the economy while debasing the standard of living for most Americans.

Mr. Smith: We Need You!

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It is imperative that Americans organize to block the Paulson plan, for it carries a terrible price tag and lasting harm to the public interest. This is our moment to show some "Mr. Smith Goes to Washington" initiative. As Henry Paulson and Ben Bernanke testify before the U.S. Senate today, Americans must rise up to organize protests, marches, and public opinion campaigns against this plan that strikes at America's economic autonomy.

Further Description of Mark-To-Market Alternative Plan

I would like to explain why I recommend the temporary suspension of ‘mark-to-market,' as stated in my previous commentary. Notice that my recommendation for mark-to-market suspension is predicated on three associated regulatory changes: Full disclosure and transparency, proper money supply management, and a new mandate for the FED. Remember, the FED blames voters for the bubbles since it was our U.S. Congress three decades ago that directed the FED to leverage growth (through Wall Street).

The Mark-To-Market Alternative Plan

The Henry Paulson $700 billion bailout plan is a disaster, an outright robbery of America. Paulson is little more than the front man for Wall Street bandits. Some of the NYC firms that are in trouble were paying out 40% or more of total revenues in salary and bonuses. Their business model was unsustainable, immoral and corrupt. It leveraged bad debt and repackaged it into investment securities. This business model allowed massive amounts of illegitimate revenue to be converted into privately held wealth — through salaries and bonuses.

Does Joseph's Life Have Anything To Teach Us?

Do you want a darn good money story on this historic Wall Street day? I’ve got one. But first, a disclaimer. I’m no fan of mindless religion. The church world is sick, like Wall Street. And the Bible gets twisted regularly by Church Street moguls. Nevertheless, whether one thinks the Bible is God-inspired, silly myth or a thing of mystery, there are a few capitalism stories in the book that say a lot by analogy. So, let's see what we can do with the story of Joseph. Remember, the smart guy in the upscale suit?

The FED's Role: Growth, or Sustainability?

Just over 30 years ago the U.S. Congress gave to the Federal Reserve a mandate to manage the economy so as to get economic growth. This mandate gave the FED an excuse to structure the economy so as to favor those with the most capital. What we need at this juncture in our history is a new and equitable mandate for the FED from a Congress that represents the common good, not an elitist interest.

A Benevolent Solution to Resolve the Credit Crisis

Here is the essence of what U.S. Treasury Secretary Henry Paulson SHOULD have said about the bailout today, if he were morally credible: ‘Integral to the financial restructuring will be an improved version of presidential hopeful Donald Trump’s 1999 proposal for a one-time asset tax of 14.25% on estates in excess of ten million dollars. (Trump intended to pay off the national debt which was $5.7 trillion.

McCain Could Have Helped Economy Decades Ago

Since when did Senator John McCain get religion on regulating the American financial industry? Oh, I forgot: He had a ‘born again regulatory experience’ when his handlers showed him polling data on how he could help his Oval Office ambitions.

Does Senator McCain think he can top Ronald Reagan's legacy as the ‘Great Communicator’ by recasting himself as the ‘Great Regulator’? Does he think that the free market fleece of a sheep can be dyed to make him look like the Big Bad Wolf of Wall Street regulation?