October 2008

The Fed's Easy Money: What Does $100 Billion Buy?


How should American taxpayers feel about the decision of the U.S. Treasury to send $100 billion of newly minted FED money to nine of Wall Street's biggest banks? Perhaps this new strategy is an improvement upon last week's Treasury brainstorms, but it is still $100 billion of inflation stimulating money that would not be needed if Wall Street had been a proper steward of its trust.

Wall Street's Retirement Savings Monopoly Should End


Wall Street has enjoyed astonishing success in convincing voters and the U.S. Congress that it is the best place for retirement savings. With its ‘wall-to-wall’ lobbing technique, the Street convinced federal legislators to provide remarkable incentives for Americans to send large chunks of their monthly earnings to New York City. No religion can match the enormity of this kind of tithe revenue. But, then, what is the religion of Wall Street if not the religion of money? And what is the ethos of Wall Street unless it is self-indulgence and unlimited pride?

The Obama Administration: Is it Bush III?


David Weidner says that J.P. Morgan’s Dimon will be the Obama camp’s first choice for the next Secretary of the U.S. Treasury. Does America really need another Wall Street C.E.O. as Treasury Secretary? What more does it take than the Paulson experience to help voters see the consequences of putting a Wall Street elite in charge of the nation’s money?

Americans Angered Over Paulson Bailout Plan


The Paulson bailout plan incensed millions of Americans. Financially responsible individuals were dismayed at the prospect of paying for the speculative improprieties of Wall Street. Some people decided to close stock accounts. Others sent redemption notices to mutual fund companies. As MarketWatch chief economist Irwin Kellner points out, a portion of the exodus reflects “capitulation” — the agony of Americans who cannot afford to lose more money if a market recovery is prolonged.

Is It Time To Buy Back Into Wall Street?

Wall Street has a problem. Its soiled leaders know they must act fast to convince the public to buy back in. Their argument is that money thrown into the market while share prices are depressed will produce greater returns than if people wait. After all, don’t bubbles always re-inflate once the government blows massive amounts of taxpayer money into them?

G7 Leaders Will Merely Patch System: Dow May Touch 6,500


The G7 leaders will not solve the current economic crisis. The system is irretrievably damaged and global leaders know it. The goal now is to patch the system sufficiently to keep it afloat while a long series of market adjustments and wealth redistributions are configured and applied. Plan on several years of evolving reforms. While this will create a difficult market environment for non-professional traders, it should result in most stock markets fluctuating in a broad trading range. Don’t expect a total crash or a robust recovery.

Bubble Blowing: A Response to Vanguard's Bogle


Vanguard’s Bogle is right: “We’re letting the nuts run the insane asylum.” But does the stock market have to be an insane asylum? Is a place that trades on irrationality the right place for our retirement savings? You be the judge. Wall Street says, “Yes!” But they get the commissions, fees, and proprietary trading platforms by which to shake down the public. Then, too, when elite traders (traitors) get bored with the rewards of mere pillage, they can use leveraged derivatives to risk the nation’s tranquility.

The Market's Upturn Awaits the Public's Capitulation


The essence of the contrarian position that Mark Hulbert advances is that elitist short players on Wall Street will not relinquish their short trades until the advisors for Mom & Pop investors advise them to capitulate and accept their losses. When millions of working class Americans sell their stocks in a desperate panic, that is when the markets will turn, says Hulbert. By design, Ponzi-style markets turn under these conditions because this is the moment where exploitation is maximized for elites.

Is California Truly Too Big to Fail?


If California is too big to let fail, then so is every other state in the Union, since state equality in the Senate is a constitutional construct. If the California governor deserves success in lobbying the U.S. Treasury, then the federal government might as well bail every state (and every state-dependent municipality). This trend — already underway in the financial sector — will lead to the anarchical destruction of justice. When people realize that any hope of economic justice is lost, the American experiment with “free democracy” will die.

Low Interest Rates Should Favor Meritorious Money Use


The globally coordinated interest rate cut today shows the desperation of central bankers in trying to calm market psychology. The rhetoric about inflationary prospects moderating is delusional. While commodity prices are coming down in the short term they will likely reverse in the mid-term, as fundamentals point higher. Furthermore, government bailouts and backstops will lead to higher inflation as will entitlement programs and the alleged need for large military expenditures.