U.S. Market: So Much Stupidity in Such Little Time

I've always paid attention to current events and politics, but I don't think I've ever witnessed so much blatant corruption, stupidity, and double talk in such a short period (apart from news out of the various banana republics around the world).

We've got Bernie Madoff (government regulators asleep at the switch), the Governor of Illinois, before that the former New York Governor, New Mexico's Governor, and Tim Geithner's taxes, among many others.

Then we have the wholesale fraud/idiocy on the part of the government and the financial industry that got this crisis started.

The government's supposed to be doing stuff to solve the crisis (more borrowing to solve a problem caused by too much borrowing!), but what's it doing with the bailout funds? It certainly appears that Hank Paulson's actions are influenced by his Wall Street ties, and so on.

Now it appears that Government Regulators Aided IndyMac Cover-Up, Maybe Others. No wonder IndyMac wasn't on the troubled banks list!

Citigroup (C), bailed out by the government, is now splitting itself in two and is selling whatever assets it can, including Smith Barney, which it said it wouldn't sell.

Bank of America (BAC), which said it didn't need money when the government forced it to take billions, was involved in back room talks to get more money.

Wells Fargo (WFC) also complained about not needing bailout funds, then it proceeded to sell shares.

General Electric (GE) said everything was great, then borrowed billions from Warren Buffett at 10% interest and sold billions worth of new shares.

Lehman Brothers, Bear Stearns, and WaMu all said they were fine before they went bust.

Now Barclays (BCS) says it doesn't know any reason for its stock being in free fall (i.e., "everything's fine"). Should we believe them? We'll see.

Amid all this, the worst financial crisis since the Great Depression, when the government is spending money it doesn't have, Barack Obama's inauguration is, by some accounts, the most expensive in history.

There's a lot more, and it keeps piling up each day. And that's just what's happening in America (BCS is a UK bank). The rest of the world isn't much better.

Disclosure: I owned WFC at the time of writing.

Comments

[jamookey:]

Seems the Bush administration has left us this wonderful legacy.Thank god his regime is over.As usual the country turns to the democrats to try to get them out of yet another hole the republicans have put us in.You would think we would learn.

Jan 20 09:05 AM

[Aaron Ashcraft:]

Couldn't agree more. The US financial system is sort of like the Somalia pirates. My guess is that capital formation in the USA is going to be in trouble for the next 25 years. Who in his right mind would want to do an IPO in the US market when there are safe alternatives like Hong Kong, IBEX and maybe even India.

Jan 20 09:08 AM

[stfree:]

"when there are safe alternatives like Hong Kong, IBEX and maybe even India."

I don't think so. But get back to us on how that works out for you.

Jan 20 09:20 AM

[candewish:]

My pessimism regarding current affairs is rooted in the obvious dumbing down of America which has produced the tiny minds that think all of our problems are due to Republicans. Would those pea brains please re-read this article?

Jan 20 10:11 AM

[User 340859:]

It's not fair to blame the entire mess on the Bush administration or republicans. Democrats share a lot of the responsibility for bringing us where we are now. Liberals pushed home loans for everyone, even those that could not pay them back. Now, as this article states, the proposed solution is to borrow much more money. You may consider Obama and democrats to be saviors, but from what I have seen so far, it just looks as though our government will become much more socialist. The governments are practically taking over the banking industry and auto manufacturers are not far behind. Republicans and democrats are equally responsible for our predicament
I fear that we are heading toward the kind of socialist dystopia reflected in the following works.

"1984" by George Orwell,
"This Perfect Day" by Ira Levin
"Anthem" by Ayn Rand
and "Metropolis" by Fritz Lang and Thea von Harbou

"If we don't change direction, we are bound to end up where we are headed" - Ancient Chinese Proverb

Jan 20 11:23 AM

[1/2 broke:]

I didn't think that this was a political site, but since some people are using it as such ; perhaps a little history lesson is in order. Wm Clinton said : every American should be " ENTITLED " to own a home and I will push congress to pass banking legislation to make this possible.
Once the snowball was rolling out of control, The Bush administration is guilty of not stopping it.
Here we sit today

Jan 20 11:25 AM

[VivaVegas:]

The reality is that nearly everyone in America made money from easy credit, Republican and Democrat alike. Car dealers/manufacturers sold record numbers of cars, retail was hot, the service sector was booming, never mind real estate, construction, etc. One way or another most of America benefitted from this whether in the form of bonuses, higher salaries or even jobs people would never have had but for the easy credit and the spending spree that went along with it. Lets admit it, we all (i.e. we the people) had a very good time. Unfortunately, many of us failed to hold on to the gains and now its come time to pay the piper. For those that did save their money instead of spending it, a $6,000 per head tax burden shouldn't really be that big of a deal since you do get to keep the rest. I'm one of the people who saved their money and quite frankly I'm OK with the $6,000 if that means keeping this country from going into a depression.

Jan 20 12:55 PM

[Ishortyou:]

I aggree, the major nations deficits come from budget, savings, trade and leadership. In budget alone we have the big poops MEDICARE, MEDICAID, SOCIAL SECURITY, those are the major liabilities created by guess who...yeah you guessed it, by the socialist communist democrats, on top to spicy up a little bit they created the GSE's to preach the affordable housing motto, that was the final shot to our economy that trigger the financial mess that we are dipped in. Republicans are guilty for not stopping it or modifying it and all of us for not waking up to a reality check.

Jan 20 02:22 PM

[James Wilson:]

Have any of you looked to see who are the major holders in the banks like MS, GS, BK and C ?

IT IS BARCLAYS !!!!!!!!!

IF YOU OWN BCS YOU OWN AN INTEREST IN ALMOST EVERY BANK IN THE WORLD !!!!!!!!

Jan 20 02:46 PM

[James Wilson:]

NO MATTER WHERE YOU GO THERE YOU ARE !


On Jan 20 11:23 AM User 340859 wrote:

> It's not fair to blame the entire mess on the Bush administration
> or republicans. Democrats share a lot of the responsibility for bringing
> us where we are now. Liberals pushed home loans for everyone, even
> those that could not pay them back. Now, as this article states,
> the proposed solution is to borrow much more money. You may consider
> Obama and democrats to be saviors, but from what I have seen so far,
> it just looks as though our government will become much more socialist.
> The governments are practically taking over the banking industry
> and auto manufacturers are not far behind. Republicans and democrats
> are equally responsible for our predicament
> I fear that we are heading toward the kind of socialist dystopia
> reflected in the following works.
>
> "1984" by George Orwell,
> "This Perfect Day" by Ira Levin
> "Anthem" by Ayn Rand
> and "Metropolis" by Fritz Lang and Thea von Harbou
>
> "If we don't change direction, we are bound to end up where we are
> headed" - Ancient Chinese Proverb

Jan 20 02:48 PM

[jamookey:]

Gee,I hate to point this out,but the republicans have held the house from '96 to '06 and the senate for most of that time.They chaired every finance commitee,they held all the key positions in banking,the SEC,etc.To say they are no responsible is to say Clinton never cheated on his wife.Every time Greenspan tried to warn of excesses in lending practices,the Bush administration(includi... the president himself)kept touting the wonders of home ownership.Whether you can afford it or not.Yeah,the Dems should have made more noise before the bubble burst,but I'm sure they were more than happy to have George jr. hang himself.When Jr. took office Clinton left him a surplus of 1 trillion bucks.Within two years,we had deficits.Democrats to blame?maybe...

Jan 20 03:16 PM

[Al-USA:]

It doesn't look good folks. I'm ready to take to the streets as soon as the demonstrations start.

However, history tells us that once the ruling classes, or capitalist elites, have become parasitic, the civilization is on its decline and eventual destruction. The best and greatest example is the Roman Empire in the classic book, "The Rise and Fall of the Roman Empire".

History also has numerous examples of how one particular civilization, for example The Ottoman Empire, has rein its corruption among its elites, relative to other comparable powers, and elbows its way to a position of dominance on the world stage.

The lesson is clear, great civilizations tend to collapse from within. That is the danger now facing the USA. It can be revived, as once the Western Roman Empire collapsed the remaining Easter Roman Empire rejuvenated itself and did manage to hold onto the Balkans and Asia Minor (Turkey) as the Byzantines for another 1,000 years. But, maybe Americans are not good enough or deserve to continue to have the greatest civilization in the history of the planet.

PS I recommend the article below as the latest example of parisitic behavior of the ruling classes.

" Preventing The Greatest Heist In History"
clusterstock.alleyinsi...

Jan 20 08:13 PM

[Free Market:]

The problem we have is not that an elite ruling class is parasitic. The problem of parasitic behavior has gone mainstream. We are an impossibly selfish and spoiled society. What is coined lower middle class in the USA is ridiculous wealth by global standards. Impossibly overpriced union wages. A ridiculous and mathematically impossible to sustain fractional reserve banking system. Schoolteachers who retire on 100% of their salary. Plumbers that charge $500 to install a kitchen sink. Consumer products intentionally engineered and built to fail without legitimate repair options shortly after the warranty periods expire. Business decisions constantly made without regard to what is right, only with a view of short term gains. We have all done it to ourselves. Keep going quite easily with your own examples.

So if you are willing to concede that this "elite class" of which you speak is far larger than most would consider, you are probably correct. But there are overly fat cats on every street corner, not just in the mansions and estates.

Think about it.

If EVERYONE agrees to adjust their standard of living there could be a quicker recovery. Denial will only prolong the pain, and increase suffering. Pointing the finger isn't going to solve the problem. You don't even have to look far to to find blame, a mirror would be a good place to start.


On Jan 20 08:13 PM User 270430 wrote:

> It doesn't look good folks. I'm ready to take to the streets as
> soon as the demonstrations start.
>
> However, history tells us that once the ruling classes, or capitalist
> elites, have become parasitic, the civilization is on its decline
> and eventual destruction. The best and greatest example is the Roman
> Empire in the classic book, "The Rise and Fall of the Roman Empire".
>
>
> History also has numerous examples of how one particular civilization,
> for example The Ottoman Empire, has rein its corruption among its
> elites, relative to other comparable powers, and elbows its way to
> a position of dominance on the world stage.
>
> The lesson is clear, great civilizations tend to collapse from within.
> That is the danger now facing the USA. It can be revived, as once
> the Western Roman Empire collapsed the remaining Easter Roman Empire
> rejuvenated itself and did manage to hold onto the Balkans and Asia
> Minor (Turkey) as the Byzantines for another 1,000 years. But, maybe
> Americans are not good enough or deserve to continue to have the
> greatest civilization in the history of the planet.
>
> PS I recommend the article below as the latest example of parisitic
> behavior of the ruling classes.
>
> " Preventing The Greatest Heist In History"
> clusterstock.alleyinsi...

Jan 20 08:42 PM

[Ferdinand E...:]

Americans are good enough. They were good enough to join with the Soviets to win WW2, and that should be good enough for anybody. But they became careless, by which I mean putting people like Reagan, Clinton and George W. in position to run the country. And incidentally, this business of allowing teachers to retire with 100% of their salary is wonderful, assuming that those teachers deliver while in front of their classes, and if they can deliver then the big boss sees to it that any 'obstacles' that keep them from delivering are removed.

Jan 21 10:17 AM

[HBWOW:]

Does "JAMOOKEY" and others really believe this "bailput" economic disaster just happened and was caused by the Bush administration.
This is the result of the bankers' greed and stupidity all "overlooked" by the Senate and House finance committee chairmen. It is another example of government without governing due primarily to the liberals and the lobbyists' influence.


On Jan 20 09:05 AM jamookey wrote:

> Seems the Bush administration has left us this wonderful legacy.Thank
> god his regime is over.As usual the country turns to the democrats
> to try to get them out of yet another hole the republicans have put
> us in.You would think we would learn.

Jan 21 10:54 AM

[Moose Rockne:]

Absolutely right! Good to hear that someone else out ther sees this too! Ironically, Republicans - the party of free markets and business/economic wisdom - have screwed up the economy and left us in recession & debt each time they've had control for the last 28 years (Reagan)!! Democrats are the party of fiscal responsibility (Pay as you Go) and more efficient (less expensive) government ... although the only way to dig us out of our current mess is to spend, spend, spend!


On Jan 20 09:05 AM jamookey wrote:

> Seems the Bush administration has left us this wonderful legacy.Thank
> god his regime is over.As usual the country turns to the democrats
> to try to get them out of yet another hole the republicans have put
> us in.You would think we would learn.

Jan 21 11:16 AM

[Moose Rockne:]

This current mess isn't just the fault of Bush-43. It's also the fault of Reagan, Bush-41 and Clinton (who appeased Republicans with tax cuts for the rich and deregulation)! You have the story completely upside down!! Gullible suckers like you need to turn off the Fox News and am radio. REPUBLICANS are the party that has sold our govenment to big business and undid all the common sense regulation that could have prevented this mess! They rail AGAINST oversight and preach that markets should be free to do whatever they will (even if it means turning a blind eye to bad mortgages, executive compensation and closing all our factories to send our jobs to China). This mess is the result of Republican ideology come to fruition!!


On Jan 21 10:54 AM HBWOW wrote:

> Does "JAMOOKEY" and others really believe this "bailput" economic
> disaster just happened and was caused by the Bush administration.
>
> This is the result of the bankers' greed and stupidity all "overlooked"
> by the Senate and House finance committee chairmen. It is another
> example of government without governing due primarily to the liberals
> and the lobbyists' influence.

Jan 21 11:50 AM

[milkchaser:]

User 27733 is wrong to suggest that Reagan left office with a recession. This is not the case. Republicans do not distinguish themselves from Democrats by taking money from big business. That is a bipartisan activity. Dems are no better than Republicans.

In fact, it was Dems who, far and away, have taken the most money from Fannie Mae and Freddie Mac. None of the credit problems would have happened had those two companies not created a market for questionable securities. Mostly Dems protected those companies (few exceptions like Senator Bennett from Utah) -- Dems such as Dodd and Frank.

In contrast, the Bush administration attempted 17 times to strengthen regulation of Fannie Mae and Freddie Mac. This regulation was sponsored by Republicans and shut down in the Senate by the Democratic minority (prior to 2006, after which regulation had no chance).

True, the crisis occurred during the Bush administration, but point to specific causes (as just have) to explain how Bush screwed up. Bragging about home ownership is not a very likely cause of the crisis.

Bush tried to prevent this, but failed because of Democratic opposition, yet Bush gets the blame. I suspect that Democrats knew that Bush would take the blame and that their obstruction would not redound to harm their political prospects. Politics is like that. It ain't beanbag.

Will Republicans jump to help Obama whose over the top vilification of Bush and Republicans he now dismisses as so much "campaign rhetoric"? As if to say, "I only said that to get elected. Nobody really believes it, do they?" Yeah, the Republicans are going to forgive and forget.

And why bash big business. Big businesses create jobs and profits. When they do, politicians take the credit, "I created X million jobs". No they didn't. Even when politicians create gov't jobs, they pay for them with taxes that they take from corporations and people who otherwise would also create jobs.

I expect that Obama and the Dems will tank the economy, which is not yet as bad as the 1982-83 recession. If it gets worse, blame Obama and his Democratic majority.

Jan 21 06:32 PM

[Hmm?!:]

You are missing a very key point. It was Democrats specifically that stopped oversight of Fannie Mae and Freddie Mac in 2003. The damage could have been limited significantly.

The key difference is those Democrats are are still in power. I do not blame Democrats in the least. It is a compliant media that has deliberately ignored the issue.


On Jan 20 03:16 PM jamookey wrote:

> Gee,I hate to point this out,but the republicans have held the house
> from '96 to '06 and the senate for most of that time.They chaired
> every finance commitee,they held all the key positions in banking,the
> SEC,etc.To say they are no responsible is to say Clinton never cheated
> on his wife.Every time Greenspan tried to warn of excesses in lending
> practices,the Bush administration(includi... the president himself)kept
> touting the wonders of home ownership.Whether you can afford it or
> not.Yeah,the Dems should have made more noise before the bubble burst,but
> I'm sure they were more than happy to have George jr. hang himself.When
> Jr. took office Clinton left him a surplus of 1 trillion bucks.Within
> two years,we had deficits.Democrats to blame?maybe...

Jan 22 12:48 AM

[applesauce:]

Forget Orwell, let's concider Wells and build a time machinbe with the trillions we are spending and go back to 1988 with a list of all the stupid things our government has done with our blind acceptence. When the words free or entitled to comes up run and hide.

Feb 09 11:52 AM