Plunge Protection Team Attacks BofA: This Ends Now

Contrary to the claims of current Treasury Secretary Timothy Geithner, Federal Reserve Chairman Benjamin Bernanke, former Treasury Secretary Henry Paulson, and so many economists, the fundamental reason that our economy is falling apart is NOT subprime mortgages, or insolvent banks. The problems are far deeper than that, because such things are only symptoms of the underlying disease.

History teaches us that economic depression and/or hyperinflations are NOT caused by banks or the money supply. Such events, whether they occured in ancient Rome, or the modern United States of America, are caused by a perception, by the People, that their leaders are lying, cheating, stealing, and cannot be trusted. The Great Depression of the 1930s, is a modern case in point. Contrary to the claims of Benjamin Bernanke, and most mainstram economists, it was NOT caused by a “credit contraction” or a “contraction in the money supply”. These were merely symptoms. It was caused by broken promises and lies.

In the late 19th and early 20th century, the U.S. government was sworn to its people, and to the world, to be following a pure gold standard. That is, the dollar was supposed to be "good as gold", and interchangeable at any American bank at a rate of a little over $20 per ounce. The government was supposed to be keeping a stockpile sufficient to redeem all proffered dollars, but it lied.

In the late 1920s, at the urging of Wall Street interests, far more Federal Reserve Notes (dollars) were printed up than there was gold to back them. This resulted in a huge temporary boom, much like the one we saw between 1987 and 2000. But, finally, it resulted in a serious recession in 1930-31, when the irrational investment that the boom had stimulated began to unwind.

By the early 1930s, so many people were demanding to convert dollars to gold, that there was a likelihood that the United States Treasury would run out of gold. When that became clear, the People lost faith in sanctity of the dollar, and the nation fell from a recession, that began to improve in 1930, to the biggest depression the world had ever seen, in 1931-1934.

Eventually, in 1933, President Franklin Roosevelt felt compelled to violate the Constitution and issue an infamous gold confiscation order, wherein the government robbed the people of their personally held gold.

The current "Credit Crisis" is another perfect example of how loss of confidence in government, not the money supply, is the root cause of all economic dislocation, including both depressions and hyperinflations. The Federal Reserve is now in the process of tripling its balance sheet. It has already expanded from about $900 billion to $2.2 trillion in merely 7 months.

Yet, all that money will do little or no good. It will spur irrational and inefficient investments, causing an irrational rise in the stock market to dizzying heights, sometime in the medium term future, but, in the long term, the nation will suffer greatly either by way of a severe deflationary depression, or, much more likely, a hyperinflation the likes of which the world has never seen before.

So far, in spite of the huge injection of cash by the Federal Reserve, because the irrational investment mentality has not yet taken hold, instead of hyperinflation, we are falling, deeper and deeper into economic depression. In the 1^st quarter of 2009, the government reports that the nation’s gross domestic product (GDP) fell by 6.1%. Mortgage loan demand is deeply down. The Baltic Dry Index, which measures shipping prices, after a mild pop due to the increasing cost of avoiding the pirate infested horn of Africa, is falling again.

Yet, the Federal Reserve has made sure that bank loans are very available to anyone with a decent credit history. Even more, in their ill conceived fixation on increasing the money supply to increase demand, the Fed and U.S. Treasury have embarked on innovative new ways to inject cash into the system.Insolvent money center banks may be retreating a bit from making loans, but plenty of money is available, at some of the lowest rates in history, from a huge number of smaller banking institutions, including credit unions. Yet, our economy falling apart. Why?

The fundamental reason is that, just like in the 1930s, the People have lost respect for, and trust in the United States government. They have lost respect for the institutions that were previously icons of American prosperity. It is right and proper that this should be so. Neither this government nor those institutions have, so far, proven themselves worthy of any trust or respect.

Instead, our government has become increasingly corrupt. Our public servants can no longer be trusted. They act with a level of arbitrariness and capriciousness that is unparalleled in American history, with little understanding or, perhaps, concern for the profoundly negative effects of their misbehavior. They are lying to the People day by day. They think nothing of using the Fed's primary dealers to induce massive manipulations of both the stock and commodities markets. Indeed, as we will shortly discuss, in the process of coercing business leaders to their bidding, government officials have now gone so far as to promise market interventions that constitute high crimes under our sovereign laws, and define the nature of securities fraud. How can anyone respect people like that?

The Bank of America (BAC) scandal brings all these issues sharply into focus. Thankfully, there are still honest voices ringing out, amidst this sea of corruption. The ambitious, but relatively honest, Attorney General of New York State, Andrew Cuomo, recently released a shocking report, outlining the results of an investigation into the merger of Bank of America and Merrill Lynch. The report reads like a thriller, describing a power mad Treasury Secretary, Henry Paulson, intent on manipulating the markets, as well as rewarding old friends and punishing new enemies. He seems to have worked in tandem with a pawn at the Federal Reserve, known as Chairman Benjamin Bernanke.

According to Cuomo’s findings, in mid-September, during negotiations designed to save Lehman Brothers from collapsing, Bank of America CEO Ken Lewis saw and took what he believed was a great opportunity for Bank of America.

Unfortunately, however, he appears to have been given a set of fanciful loss numbers, prior to considering the deal. The deal was “signed, sealed, and delivered”, subject to the usual “material changes in condition” (MAC) caveat. In all such deals, the law provides an escape valve if the facts that were presented at the time of the agreement materially change later on. This MAC would normally allow Bank of America to withdraw, if, for example, Merrill Lynch’s financial condition changed significantly between the time the deal was struck and the time of acquisition.

Somewhat later, it became clear that Merrill Lynch had not fully and honestly disclosed the full extent of its losses from toxic debt paper. Billions of additional dollars worth of losses were revealed. There was serious risk to the financial stability of Bank of America, itself. Bank of America’s board of directors instructed Lewis to exercise the MAC caveat. This would kill the deal.

When former Treasury Secretary Henry Paulson heard about it, he became angry. How dare a bank, based in obscure Charlotte, North Carolina, challenge the closure of an important deal he had worked so hard to put together?! The deal was set to benefit a lot of his old friends in the New York financial community, and that trumped any consideration of the danger to America’s then-largest bank.

Paulson had been Chairman and CEO at the large politically connected New York investment house, Goldman Sachs (GS), from 1998 until 2006. He left only to take the job as George W. Bush’s Treasury Secretary. John Thain, who was now CEO of Merrill Lynch, had been a close political ally of Paulson, during their time, together, at Goldman Sachs. He had became Chief Operating Officer of the company in 1999, and had only left the company, to take the reins of power at the New York Stock Exchange, and, later, at Merrill Lynch, after being edged out in the competition to become CEO of Goldman Sachs, by Lloyd Blankfein. Mr. Thain’s business reputation, and by extension, the reputation within the New York financial community, of Henry Paulson, himself, may have been dependent upon avoiding the bankruptcy of Merrill Lynch by merging it with Bank of America.

One can also assume, with a reasonable amount of confidence that, Merrill Lynch was a key cog in Goldman Sachs’ intricate web of counter party obligations. If Merrill Lynch were to fall, Goldman Sachs would certainly incur big losses. The credit default swap books of the various companies involved are not open for inspection.

However, it is reasonable to assume that Goldman Sachs is probably the beneficiary of tens of billions of dollars worth of deals that depend on the financial solvency of Merrill Lynch. If Merrill topples, so do those deals.

In light of all this, Mr. Paulson appears to have sought out the aid of Fed Chairman Ben Bernanke, and both men decided to put the screws onto North Carolina based Bank of America. The Federal Reserve is a designated regulatory authority, with the power to dismiss bank executives and boards of directors for good cause shown. Working with Bernanke, Paulson threatened to take government action to dismiss Lewis and the entire Bank of America Board of Directors if they killed the Merrill Lynch deal.

In contrast, if Lewis would just play footsie, according to Mr. Bernanke, the Federal Reserve would “do something that when the public hears about it your stock goes up.”

Obviously, manipulating the stock market, and dismissing management in retaliation for protecting company shareholders, is not what Congress envisioned when it passed the Federal Reserve Act into law so many year ago. Threatening a private corporation, and/or making promises to influence the market if the head of that corporation does as he is told, is not only bad faith, but, also, a violation of all legal and ethical standards that must underlie official actions by America’s public servants. Such misbehavior shows contempt for the rule of law, and places the entire financial system, and, yes, our Republic, itself, into jeopardy.

Frightened, and promised special favors if he kept to the deal, Ken Lewis and his Board backed down. Merrill Lynch was acquired, in spite of serious implications to the solvency of Bank of America, and the investments of millions of its shareholders.

According to Lewis’ testimony, not only did Paulson and Bernanke threaten him and promise special favors, but they also sent a secondary message. The whole affair should be kept “hush hush”. Shareholders and the public were to be kept in the dark. The matter should be kept confidential. There shouldn’t be any publicity about the probability of huge losses at Merrill Lynch.

While spokesmen for the Federal Reserve deny that Bernanke pressured Lewis to stay silent, according to Cuomo’s office, when they interviewed him, separately, former Treasury Secretary Henry Paulson confirmed the facts as they were described. Apparently, Paulson, and his sidekick, Bernanke, had very specific ideas about where and how high the stock market would be manipulated, and they didn’t want the market to fall at the time these events were occurring.

We could speculate that, perhaps, any negative information was to be kept from public investors until AFTER traders at Goldman Sachs had been given an opportunity to establish extensive short positions. Later, when the Fed did that special “something” to raise the share price of Bank of America, things would be very different. That would help pump up the market. Given Paulson’s close connections to Goldman Sachs, common sense tells us that their trading, during this time period, should be carefully investigated.

At any rate, once the acquisition was finalized, and the truth came out, Bank of America’s stock sank like a stone, under the weight of heavy losses. A short time later, the government announced unprecedented measures to stabilize the now tottering BAC, which had previously been one of the more stable of America’s banking institutions. In the end, tens of billions of dollars of additional taxpayer money were injected into the company, in order to bail it out from the burden of the acquisition.

Bank of America President Ken Lewis and his Board of Directors should have stood up against the illegal threats of Paulson and Bernanke. The fact that they didn’t proves that they are weaklings. They are all unfit to run one of the most important banking institutions in our nation. They violated their fiduciary duty to the company, and looked after their personal interests, rather than those of the shareholders. All must now be dismissed.

But, more important is what to do about the corrupt men who created the scandal, Henry Paulson and Benjamin Bernanke? Shall we allow such men to retain high positions of authority in our society, and/or to retain their assets, while Bank of America shareholders, and other market investors, lost so much money at their hands? Shall we empower men like this, who act irresponsibly to destroy our institutions and our way of life? Under 18 USC § 241:

If two or more persons conspire to injure, oppress, threaten, or intimidate any person in any State, Territory, Commonwealth, Possession, or District in the free exercise or enjoyment of any right or privilege secured to him by the Constitution or laws of the United States… They shall be fined under this title or imprisoned not more than ten years, or both…

The Fourth Amendment of the U.S. Constitution created rights that are supposed to protect Americans against unreasonable seizure of their property. By forcing Bank of America to acquire Merrill Lynch, using unfair threat and coercion, Paulson and Bernanke acted under “color of law”, and used their positions in the Federal government, to illegally seize property belonging to Bank of America shareholders. They both took actions that are far beyond the scope of permissible conduct under the responsibilities of their respective offices. It is axiomatic that, in America, private corporations must be administered according to the free determinations of a freely elected Board of Directors and executive officers, responsible to their shareholders.

In the absence of a Congressional declaration of War, and a specific delegation of power from Congress for the purpose of raising armies or other means of defending the nation, neither man had any right to make such threats against a private corporation. As a result of the misconduct of Paulson and Bernanke, severe financial loss has been suffered by millions of Bank of America shareholders.

Aside from Constitutional issues, securities fraud, itself, can result either civil or criminal prosecution, or both. To state a cause for action, under section 10(b) of the Securities & Exchange Act, and Rule 10b-5 of the Regulations, one must show that

the defendant (i) made a misstatement or an omission of a material fact; (ii) with knowledge that they were doing so; (iii) in connection with the purchase or the sale of a security; (iv) the plaintiff must have reasonably relied on the representation; and (v) the plaintiff's reliance was the proximate cause of the loss.

Omission and nondisclosure of material information is, in fact, what gives rise to most securities fraud cases. Persons who make “a material misstatement (or omission)…

can be potentially prosecuted criminally under Rule 10b-5, and money damages can also be obtained. A misrepresentation is any act or omission that conveys a false impression of the facts or is misleading.[i] This is determined by inquiring "into the meaning of the statement to the reasonable investor and its relationship to the truth.

Threatening and coercing a corporation’s management and directors into withholding material information, concerning an acquisition that is reasonably likely to devastate the company’s balance sheets, permanently or transiently, fulfill these legal requirements. There are numerous other potential causes of action, including RICO liability, and state blue sky acts.

Members of the executive branch of government, below the Presidential level, are entitled to “qualified immunity”, meaning that they are not immune to all prosecutions for criminal and/or civil damages arising out of illegal actions taken while in office. The level of liability depends “upon the scope of discretion and responsibilities of the office and all the circumstances as they reasonably appeared at the time of the action on which liability is sought to be based.”[ii] The question must be determined on a case by case basis.

Although the Federal Reserve is a private bank, it is chartered by the Federal government to set interest rates, and electronically “print” money by buying and selling Treasury debt paper, and its Chairman inherits some level of partial immunity from that charter. In any event, the question of whether or not Paulson and/or Bernanke are liable is one for a jury to decide, not for us. If Lewis' allegations prove correct, however, there is no question, whatsoever, that both men must be permanently barred from any involvement with government decision making.

This incident is a wake-up call for Americans. If we are to provide a future for our children and our children's children, we must stand firm, now, for we are now at the brink of a dangerous precipice. A deep chasm lies ahead. At the bottom there is only tyranny and the death of our Republic. We are unbalanced, and in danger of falling. Yet, we must hold fast. We must not falter. We must move forward, not backward, and we must away from the cliff. We cannot afford to stumble, for to stumble, will be to fall, and to fall, will be to die.

We did not arrive at this precipice alone, or of our own accord. Chasing us there were the dark forces of greed and materialistic desire. From these forces, up until now, we have always run. And, the corruption of our society has increased with time. Now, we can no longer escape from those unscrupulous men who have seized the reins of power. These are men who hate liberty, truth and justice. For their deeds imperil our livelihood, the level of our honor in world affairs, and, most importantly, our liberties and the future of our children.

What shall we do? Shall we continue to flee, though one more step will mean certain death of all we hold dear? As Americans of good conscience, we cannot accept the death of our precious Republic, as the citizens of Rome once did. Ours is a unique experiment in human liberty and was, until recently, a shining beacon of light to the rest of the world. It is worth preserving. It is worth fighting for.

Pummeled we may be. On the precipice, we may stand. Yet, in spite of it all, we can still stand proud, for we are still a great nation. We have our forefathers to thank for that. Our body politic has been strong enough to keep the cancer constrained, at least so far. Not all our institutions have been completely corrupted, at least not yet. A few avaricious men are destroying our ideals, our hopes and our dreams for a better America. They are a festering cancer, a force which has brought us to this precipice -- to the brink of disaster. We cannot hesitate. Cancer of the body politic grows quickly. It must be cut out, forthwith, lest it turn so malignant and widespread that no amount of surgery can possibly cure it, without killing the patient. Those who abuse power must be removed from office and punished.

Rather than expecting state prosecutors, and/or private parties, to take on powerful federal officials, it would be better for Congress to supplement their abilities, with a Special Prosecutor, invested with such powers as are needed to bring this important matter to a close. The Special Prosecutor should be a person who has no connections to the securities industry and, therefore, no conflicts of interest. Strong legislation must also be passed to insure that all the activities, especially all funds transfers, undertaken by the U.S. Treasury and Federal Reserve, are completely opened to public inspection. Evil can only grow in the darkness, and we must begin to shed a lot of light on this subject. The Special Prosecutor should also make a full inquiry into the trading practices of Goldman Sachs.

Disclosure: No positions in Bank of America or Goldman Sachs.

---

[i] SEC v. Texas Gulf Sulphur Co., 401 F.2d 833, 859 (2d Cir. 1968) (en banc).

[ii] Scheuer v. Rhodes, 416 U.S. 232 (1974)

Comments

[Whitslack:]

"Strong legislation must also be passed to insure that all the activities, especially all funds transfers, undertaken by the U.S. Treasury and Federal Reserve, are completely opened to public inspection."

Instruct your congressperson to cosponsor H.R. 1207, the Federal Reserve Board Transparency Act. The non-partisan bill has huge momentum right now, having recently surpassed 100 cosponsors.

Apr 30 07:42 AM

[Dave Wrixon:]

The real lie is:

Gold = Money

It doesn't, it isn't used as the means of exchange and it never will be.

At best it is a valuable commodity.

Apr 30 07:42 AM

[wobatus:]

And valuable, but why? What's it used for. Some industrial uses and jewelry. And because people trust it. It's archaic. And if society breaks down, what good will it do you?

When people are going to gold, circulation slows, transactions slow...


On Apr 30 07:42 AM Dave Wrixon wrote:

> The real lie is:
>
> Gold = Money
>
> It doesn't, it isn't used as the means of exchange and it never will
> be.
>
> At best it is a valuable commodity.

Apr 30 08:11 AM

[yellowhoard:]

Wake up folks. This is fascism in all its glory.

Lewis was bullied into doing something that was not in the best interest of the shareholders.

We'll be seeing a lot more of this. Get used to it.

Apr 30 08:41 AM

[User 157977:]

Congress is the real problem. Lifetime politicians have corrupted the government. The executive branch is limited to two 4 year terms after which they are replaced. The same should hold true for Congress, why should they be allowed to serve a lifetime? Look back over 40 years, with many of the same individuals still in Congress today, many of which have been corrupted by lobbyists, mainly environmental lobbyists. These are the same people who have thwarted the ability of the USA to establish an energy plan/policy that would make us self sufficient in our energy needs.

The lack of a self sufficient energy policy is slowly killing "capitalism". We need to surgically remove the "cancer" in Congress by immediately establishing term limits, without any grandfather clauses, two terms and go out and give a speech.

Apr 30 09:08 AM

[biodummy:]

If one begins with the lie (like the author does here claiming the dilution of the gold standard had been taking place in the late 1920s) it is sort of hard to believe in everything else he says. If anything, major recessions/depressions were happening more frequently and with greater severity before the fractional reserve banking had been put in place - essentially, about half of the time between the Civil War and WW1 the economy had been in recession. Gold standard (while being a dream of goldbugs - if it is instituted, the price of gold should be jacked up to ~$10K/oz to match the existing global gold reserves and the amount of money needed for the economy to run) is quite dead and is not coming back.

Apr 30 09:46 AM

[doubleguns:]

I got beat up just mentioning that a special prosecuter would be needed next administration. I still believe its true because this administration still has the same demicans and republicrats. There can be no prosecution with them still in office, they will block it.

Maybe a bunch of lawsuits by pension plans would be a good start to gettting this out in the open and allow the public to realize how badly they have been duped. It is thier pensions at stake!!! Then and only then with the public outcry will something in congress happen.

The sheeple MUST be converted to people again.

Apr 30 10:30 AM

[HBWOW:]

Reading your indepth article confirms the bases of the bulk of our present economy disaster. Does my memory serve me correctly that both Paulson and Bernanke requested waiver of any civil or criminal actions against them when they originally presented their "Bailout request"? Frankly it appears the United States' economy situation is similar to that of Germany prior to the rise of Hitler, only on a much larger scale. The Mark tumbled -- the Dollar will follow.
The public will only regain confidence in the government, banks, brokers, and the stock market when some of the many culprits are heavily punished for their greed and crimes. SEC (under Cox and I don't see the current group any better) did very little but set back and watch. When a couple of insiders were caught on the "option
scaming", their hands were slapped and the corporation was fined.
The guilty go free and again the stockholders get screwed.

Apr 30 10:33 AM

[hwood007:]

GSEs, the fred and fannie twins, were making donations to government workers, some charged with oversight of said GSEs. Both the politicians and managers of GSEs wanted to keep their jobs. I can not understand how those actions are legal. Our only hope is to alter our laws to prevent anyone other than judges, from servining in office more than 18 yiears. Look at Specter, he is willing to do anything to stay in office instead of going out of office with some pride. Just because he switches to my party does not mean he has a chance of getting my vote. I fear we are all in deep dodo.

Apr 30 10:41 AM

[Carlos Lam:]

On Apr 30 09:46 AM biodummy wrote:

> If one begins with the lie (like the author does here claiming the
> dilution of the gold standard had been taking place in the late 1920s)
> it is sort of hard to believe in everything else he says. If anything,
> major recessions/depressions were happening more frequently and with
> greater severity before the fractional reserve banking had been put
> in place - essentially, about half of the time between the Civil
> War and WW1 the economy had been in recession. Gold standard (while
> being a dream of goldbugs - if it is instituted, the price of gold
> should be jacked up to ~$10K/oz to match the existing global gold
> reserves and the amount of money needed for the economy to run) is
> quite dead and is not coming back.

I don't know what America you are studying! The period between the Civil War and WWI was one of excellent economic growth and growth and growth in the ranks of the middle class. Sure, there were bubbles and depressions in certain places, but they did not last as long as did the Great Depression or the current depression.

Your last statement is quite laughable. History has shown that NO fiat currency has survived as long as gold, which has a 5000-year track record. Gold is accepted many places overseas as a means of exchange even if it is not widely accepted here in America (though I would note that outfits like GoldMoney and e-Gold do exist and transact here). Meanwhile, the Chinese are upping their gold reserves, so they certainly see something valuable in holding the commodity.

The very existence of fiat currency goes back to the idea of regime uncertainty popularized by Robert Higgs. With a fiat currency, there is no "sure thing" as to what the currency will be worth in the future, so entrepreneurs can't plan as well for the future. You and I may not live to see gold being used widely as a medium of exchange, but I'll wager that our grandchildren or great-grandchildren will.

Apr 30 10:42 AM

[Econ 101:]

Whitslack-
What good are laws that are ignored by the highest levels of the executive branch??? What good are laws that senior members of congress violate and flaunt their actions?


While I might quibble with some details of this article, the basic principle that the people are fed up with corruption at the highest level is spot on. In most cases when a competitor consistantly beats the statistical average for no apparent reason it raises the question "WHY?" Goldman Sacks has done this for years, leads me to believe that they have had insider info for years due to the infestation of the government with GS frat boys.

There will be no Special Prosecutor...it is poitically impossible, everyone loves BHO and the D's are in control in congress so there will be no show trial. If anyone dares to start an investigation at the state level he will be crushed...just look at Elliott Spitzer, he was set up. Andrew Cuomo will also be crushed if he continues.

Why was Caroline Kennedy not appointed to HRC's Senate seat? Too honest, too niave to sit there? Certainly too much Charisma for the other 99...

Apr 30 11:02 AM

[wobatus:]

Ken Lewis bullied. Sounds like it was a pretty easy thing to do.


On Apr 30 08:41 AM yellowhoard wrote:

> Wake up folks. This is fascism in all its glory.
>
> Lewis was bullied into doing something that was not in the best interest
> of the shareholders.
>
> We'll be seeing a lot more of this. Get used to it.

Apr 30 12:12 PM

[wobatus:]

Geting negative recommendations for this kind of statement is typical. It REALLY pisses off the gold bugs no end. Y'all should be happy. Gold has done well for you. Even though the stock market has made a little rally and civilization hasn't ended YET, don't worry. This too must pass. :)


On Apr 30 08:11 AM wobatus wrote:

> And valuable, but why? What's it used for. Some industrial uses and
> jewelry. And because people trust it. It's archaic. And if society
> breaks down, what good will it do you?
>
> When people are going to gold, circulation slows, transactions slow...
>

Apr 30 12:15 PM

[wobatus:]

Why don't people just vote them out? Convince people of your position and they won't get elected anyway.


On Apr 30 09:08 AM User 157977 wrote:

> Congress is the real problem. Lifetime politicians have corrupted
> the government. The executive branch is limited to two 4 year terms
> after which they are replaced. The same should hold true for Congress,
> why should they be allowed to serve a lifetime? Look back over 40
> years, with many of the same individuals still in Congress today,
> many of which have been corrupted by lobbyists, mainly environmental
> lobbyists. These are the same people who have thwarted the ability
> of the USA to establish an energy plan/policy that would make us
> self sufficient in our energy needs.
>
> The lack of a self sufficient energy policy is slowly killing "capitalism".
> We need to surgically remove the "cancer" in Congress by immediately
> establishing term limits, without any grandfather clauses, two terms
> and go out and give a speech.
>

Apr 30 12:16 PM

[wobatus:]

It has a 5,000 year track record, but why? People accept it, but why? It isn't oil. It isn't wheat (perishable, but valuable). It isn't coal. Or a forest. Or copper. Or water.

Monotheism has also been around for thousands of years. And, not to put down believers, that doesn't mean there is a God, necessarily.

I understand that gold has many desirable attributes as a store of value. But the one thing I believe it lacks is value in and of its own self. it isn't valued because it is useful, other than serving as a scarce resource which people accept as a way to store value.

Which is also not to say people shouldn't have some of their assets in gold, and not everything tied to the dollar.


On Apr 30 10:42 AM Carlos Lam wrote:

> On Apr 30 09:46 AM biodummy wrote:

Apr 30 12:25 PM

[wobatus:]

The period was also one where certain folks were perpetually disadvantaged. That's why you had a lot of wobblies etc. supporting bryan and free silver (don't crucify me on a cross of gold, etc.).

If you read Hard Times by Studs Terkel, there's a passage where a black tenant farmer talks about the Depression. He says something along the lines of, we just called it hard times. That's the way things always were. Just that it started hitting the well off white folks, and they called it a Great Depression.

Thos panics use to mean depravation, degradation and poverty. The wild swings may have led to an overall rise in wealth, but unfortunately, not a lot of trickle down for some.

There is no denying that the money supply did shrink by 25%, and that the fed was liquidationist to a great extent. This was not just caused by fear of government confiscation. Too much of it came before.

If one leaves things perfectly laissez faire, and just ride the boom and bust and don't bring the lowest rung into the system and along for the ride, believeing they have a stake and a benefit, then you'll have breakdown and you can end up like russia did. They'll come and take it, right or wrong.

Anyway, i get far afield here.

On Apr 30 10:42 AM Carlos Lam wrote:

> On Apr 30 09:46 AM biodummy wrote:

Apr 30 12:35 PM

[Gedankonomist:]

Well, why do people pay millions for pretty paintings? Thousands for a bottle of champagne? They aren't useful for much. Or buy a huge oversized truck when a much smaller vehicle will do? Why do pro sports players get paid so much?

The market is what it is.

On Apr 30 12:25 PM wobatus wrote:

> It has a 5,000 year track record, but why? People accept it, but
> why? It isn't oil. It isn't wheat (perishable, but valuable).
> It isn't coal. Or a forest. Or copper. Or water.
>

Apr 30 12:45 PM

[Dave Wrixon:]

The problem for gold is that provided guarantee of authenticity before the rise of the Information Age. Basically, the computer has rendered and the rise of the modern finance industry have rendered it obsolete,

Another device that was used for the same purpose was tally sticks. Do you seriously believe they have a chance of coming back as well?

en.wikipedia.org/wiki/...


On Apr 30 10:42 AM Carlos Lam wrote:

> On Apr 30 09:46 AM biodummy wrote:

Apr 30 12:59 PM

[bindlepete:]

What we need to start off with is a foensic analysis of the Ckaims of 12.9 billion made by Goldman Sachs on the assets of AIG. Second, a similar examination and exposure of the ML/GS relationship and the disclosure of any side letters that may have been involved.

Then there is the criminal prosecution of Hanry Paulson for his decison and to save AIG and the bullying/threats of his office or person while serving as Secty of Tres.

The problem can be solved at a later date if convictions are made by Obama's pardon but it should not be swept under the rug on a premtive decision not to prosecute. If Obama has the will to grant such a pardon it can be done after the trial.

Apr 30 01:09 PM

[wobatus:]

Yes, but no one seriously advocates using fine wine and paintings (which give me far greater pleasure than a lump of gold) as currency.

Indeed, the market is what it is. My question is: why?

Stocks I can look at discounted future cash flow (ah, but in what cash spwecie? :)) Gold, I need to rely on people continuing to value it as they have (and sometimes it is a lot less valuable than at other times. It doesn't generate income.

Again, I am not advocating not having some portion of your wealth in gold. As you say, the market is what it is. I have to deal with people and the markets as they are.

I wonder how much gold Warren Buffett has.


On Apr 30 12:45 PM Gedankonomist wrote:

> Well, why do people pay millions for pretty paintings? Thousands
> for a bottle of champagne? They aren't useful for much. Or buy a
> huge oversized truck when a much smaller vehicle will do? Why do
> pro sports players get paid so much?
>
> The market is what it is.
>
> On Apr 30 12:25 PM wobatus wrote:

Apr 30 01:25 PM

[wobatus:]

Goldman, while admittedly influential "consistently beats the statistical average" may be partially because it hires very smart, driven, focused people who are highly skilled. if you actually believe it is all a matter of dart throwing, as per a strong efficent market theory, that's one thing. of course, they are also well-compensated, so on that score, iot dovetails somewhat with market theory: you get what you pay for.

I am not talking here about AIG and recent bailout, but a fairly long history of doing well financially. And Warren Buffett uses them for his deals, I believe.

Anyway, back to the pitchforks y'all.


On Apr 30 11:02 AM Econ 101 wrote:

> Whitslack-
> What good are laws that are ignored by the highest levels of the
> executive branch??? What good are laws that senior members of congress
> violate and flaunt their actions?
>
>
> While I might quibble with some details of this article, the basic
> principle that the people are fed up with corruption at the highest
> level is spot on. In most cases when a competitor consistantly beats
> the statistical average for no apparent reason it raises the question
> "WHY?" Goldman Sacks has done this for years, leads me to believe
> that they have had insider info for years due to the infestation
> of the government with GS frat boys.
>
> There will be no Special Prosecutor...it is poitically impossible,
> everyone loves BHO and the D's are in control in congress so there
> will be no show trial. If anyone dares to start an investigation
> at the state level he will be crushed...just look at Elliott Spitzer,
> he was set up. Andrew Cuomo will also be crushed if he continues.
>
>
> Why was Caroline Kennedy not appointed to HRC's Senate seat? Too
> honest, too niave to sit there? Certainly too much Charisma for the
> other 99...

Apr 30 03:16 PM

[wobatus:]

Maybe it would have been left out in the cold, all its shareholders wiped out. If "they" wanted to, i imagine "they" could have pulled the plug on it.

I mean, given what is being expressed, how could you put it past them?


On Apr 30 12:28 PM Freya wrote:

> "Lewis was bullied" is exactly the point.
>
> Had he gone public, right then and there, BofA would not be where
> it is right now.

Apr 30 03:19 PM

[wobatus:]

What i find funny, gedankonomist, is that you got negative recs for what you said, too. I mean, it is hard to quibble with what you said. It's true.

I know Goring had a big collection of paintings and champagne, burgundy and bordeaux. I wonder how much gold he had. :)

Anyway, I rec'd your post.

have a good one.


On Apr 30 12:45 PM Gedankonomist wrote:

> Well, why do people pay millions for pretty paintings? Thousands
> for a bottle of champagne? They aren't useful for much. Or buy a
> huge oversized truck when a much smaller vehicle will do? Why do
> pro sports players get paid so much?
>
> The market is what it is.
>
> On Apr 30 12:25 PM wobatus wrote:

Apr 30 03:22 PM

[Carlos Lam:]

On Apr 30 12:25 PM wobatus wrote:

> It has a 5,000 year track record, but why? People accept it, but
> why? It isn't oil. It isn't wheat (perishable, but valuable). It
> isn't coal. Or a forest. Or copper. Or water.
>
> Monotheism has also been around for thousands of years. And, not
> to put down believers, that doesn't mean there is a God, necessarily.

Gold accept gold because it's rare, portable, durable, and shiny. My argument isn't that it's useful like oil or lumber, merely that it's been accepted for trade for millennia. If you would rather have your wealth in agricultural land or forest, by all means do so! They both are much more useful than gold, but they do not have the portability that gold does. As you mentioned, wheat (and other crops) are perishable.

Apr 30 03:57 PM

[doubleguns:]

Food, guns and ammo when gold becomes worthless.

Apr 30 04:51 PM

[wobatus:]

Was that a Waren Zevon song? :)


On Apr 30 04:51 PM doubleguns wrote:

> Food, guns and ammo when gold becomes worthless.

Apr 30 05:49 PM

[wobatus:]

Yeah, i know the reasons. Good points. In this day and age you can have a commodity basket. Uh oh, more derivatives. :)

Even with wheat futures (all the wheat this fine land can produce for 100 years), you can have droughts and land can go infertile. Someone could poison your land.

I still get stuck on the why, even with the attributes you cite.

But you are right, it is what it is and has been that way for millenia. People are stubborn. :)


On Apr 30 03:57 PM Carlos Lam wrote:

> On Apr 30 12:25 PM wobatus wrote:

Apr 30 05:53 PM

[Glen L.:]

Gold standard... golden opportunity... good as gold... golden anniversary... golden parachute... black gold.

The last one tells you something. People don't refer to gold as "yellow oil". Nor do they say "oily anniversary", "wheat standard", or "mahogany parachute". Gold is the near-perfect money because of its beauty, durability, maleability, purity, portability, yes... but first and foremost because people LOVE it as MONEY. Likewise, to a somewhat lesser extent, the other precious metals, which also can be used to make coins that make that pleasant jingle in your pocket, or toss them in your hand. Something extra satisying about that heft, too.

Oh, here's one other expression: paper anniversary. The first anniversary, the least of them all. Paper money printed with the phrase "full faith and credit of the [insert name of lying government here]" is worth the LEAST of all forms of money, as proven over and over throughout history.

In Zimbabwe, thanks to the rich gold streams in that country, poor people are able to buy bread by panning for tiny grains of gold. And what is a loaf bread selling for? About a gram of gold -- and 1/28 of the spot price is somewhere between $2.50 and $3.50 these days, precisely what it's worth to us.

Gold is money. All of you doubters need to accept that fact and get over it. Or see how many of your paper dollars I'll charge you to buy a gram of my gold when Zimbabwe comes to America.

Apr 30 06:56 PM

[Jason Rines...:]

Macro historic view:

1) Those in charge of the treasury loot it
2) government installs police state to quell civil insurrection & to retain power
3) government cannot last as the workers do not produce to sustain the police state, no matter how hard they are whipped
4) government falls to physical revolution, defaults on debt becoming a new 'name', or is conquered

Rinse and repeat until mankind has mastered genetic engineering.

Apr 30 07:44 PM

[Glen L.:]

In the previous comment I meant to say that Zimbabwe poor are paying just about the same for a loaf of bread as we do in America. Gold has universal value.

Further comment on Mr. Goodman's article, which has mostly been ignored in the gold bug vs. fiat bug debate:

I broadly concur with his historical and macro economic analysis. However, I don't think it's correct to say that the people losing faith with the institutions was or is the exact cause of the Depression or any other severe economic downturn you care to mention. The cause of each and every expansionary phase of the business cycle was government intervention in the marketplace (this is even true of the tulip mania in Holland almost 400 years ago), and the collapse of the expansionary bubble is just the natural, inevitable market reaction. Therefore, it matters not whether the people have or haven't faith in the governments or banks or tulipmongers, what goes up must come down, i.e. back to equilibrium. The crucial point for everyone to understand now is that worldwide catastrophes like the Depression and the current fiasco happen when government (and its central bank cohort) try to intercede to mitigate the effects, i.e. prevent the deflation of the bubble or attempt to reflate it.

The Great Depression would have been an ordinary depression (the old word for recession, which replaced the older term "panic") without the massive interventions of both Hoover and Roosevelt, and would likely have ended within a year or two, like all preceding downturns in American history. (Those who bring up American history prior to 1929 to claim that the business cycle is a fault of capitalism always fail to mention the fact that previous downturns were always brief). But the nanny-state politicians tried one bogus market intervention after another, and the US suffered its worst economy ever, lasting until 1946. Now we see Obama and the Congress repeating the mistakes of Bush, as FDR repeated Hoover's mistakes, compounding them by another order of magnitude, and gambling America's future away with my money and yours.

Americans' loss of faith in their government was caused by the Depression, rather than the other way around.

Apr 30 08:08 PM

[nova:]

Avery Goodman,
You are absolutely correct that no lawless society can function/exist for long.

How can a bank loan money if borrowers do not need to pay back?
No contracts and/or business deals can be initiated and implemented if the parties can cancel/terminate their obligations at-will.

Finally, why did communist Soviet Union collapse and why is communist China still there and growing stronger and stronger?
After living in Soviet Union for 20 years, I have a very simple answer: It is corruption and lack of lawlessness.

In the last 20+ years prior to the Soviet collapse, corruption was flourishing with impunity and rules of law were totally disregarded. At the same time in China, high corruption was/is punishable by death with properties/estates are subject to total confiscation.

Apr 30 08:14 PM

[D. McHattie:]

Why is gold valuable?

There are some things that naturally evoke positive feelings in people, perhaps somewhere deep in the human psyche.

Blue sky is one of these things. Flowing water is another. Lush vegetation. Flowers. And gold.

Gold is beautiful, there is no way around it. When beautiful women wear gold they become even more beautiful.

As long as gold remains scarce, people who lack gold but possess other items of value will be willing to exchange those items for gold.

Apr 30 09:07 PM

[PainfullyAware:]

On Apr 30 12:16 PM wobatus wrote:

> Why don't people just vote them out? Convince people of your position
> and they won't get elected anyway.




I think you need to look into "Electronic Voting" and all the ails that have never been fixed. All of the currently used systems have failed Accounting and Hacking Tests, yet they were called into service.

As Long As The Perception By The Public Is That The "Race" Is Close - The Results Can Be Tipped With No Accountability In Hard Copy That Is Not Created "As Voted".

Germany Recently Outlawed Electronic Voting In Their Country - The Question Should Be Asked As To Why.

To Assume Benevolence Is Foolish.

Humanity Is Constant; Only The Tools And The Environment Change.

Apr 30 09:12 PM

[nova:]

Joe Stalin once said: "It is not that important how people vote. The most important is who counts these votes!"

To stay in power, incumbents use any legal and "not so legal" means to keep themselves in the office.

Apr 30 09:28 PM

[PainfullyAware:]

On Apr 30 03:16 PM wobatus wrote:

> Goldman, while admittedly influential "consistently beats the statistical
> average" may be partially because it hires very smart, driven, focused
> people who are highly skilled. if you actually believe it is all
> a matter of dart throwing, as per a strong efficent market theory,
> that's one thing. of course, they are also well-compensated, so
> on that score, iot dovetails somewhat with market theory: you get
> what you pay for.




I think that you should also look into HOW The Presidents Working Group On Financial Markets wields influence. Another Topic to research is the SEC Red Book.

Goldman, JP Morgan, And Most All Of The "Too Big To Fail" are where the "Rubber Meets The Road" for the Plunge Protection Team. Why wouldn't you give special treatment to those that do your bidding?

The Complexity Of Corruption Is Vast.

Those Who Refuse To Look And Question Will Never See.

Transparency And Accountability In All Transactions Would Be True Capitalism; We Have Something Very Different.

Apr 30 09:29 PM

[metastar:]

Wow, you're one angry dude! Its good to see. It's only because you walk with eyes opened. If more Americans were angry we would actually have some hope for real meaningful change. Now that's what animal spirits mean to me.

Apr 30 10:42 PM

[Dave Wrixon:]

Sure, when America gets into the same mess as Zimbabwe, and note the when not an if, then you will be able to buy bread with Gold. But by then the US will account for less than 1% of the World Economy, so who gives a damn?


On Apr 30 06:56 PM Glen L. wrote:

> Gold standard... golden opportunity... good as gold... golden anniversary...
> golden parachute... black gold.
>
> The last one tells you something. People don't refer to gold as
> "yellow oil". Nor do they say "oily anniversary", "wheat standard",
> or "mahogany parachute". Gold is the near-perfect money because
> of its beauty, durability, maleability, purity, portability, yes...
> but first and foremost because people LOVE it as MONEY. Likewise,
> to a somewhat lesser extent, the other precious metals, which also
> can be used to make coins that make that pleasant jingle in your
> pocket, or toss them in your hand. Something extra satisying about
> that heft, too.
>
> Oh, here's one other expression: paper anniversary. The first anniversary,
> the least of them all. Paper money printed with the phrase "full
> faith and credit of the [insert name of lying government here]" is
> worth the LEAST of all forms of money, as proven over and over throughout
> history.
>
> In Zimbabwe, thanks to the rich gold streams in that country, poor
> people are able to buy bread by panning for tiny grains of gold.
> And what is a loaf bread selling for? About a gram of gold -- and
> 1/28 of the spot price is somewhere between $2.50 and $3.50 these
> days, precisely what it's worth to us.
>
> Gold is money. All of you doubters need to accept that fact and
> get over it. Or see how many of your paper dollars I'll charge you
> to buy a gram of my gold when Zimbabwe comes to America.

May 01 01:10 AM

[wobatus:]

Oh please, that was funny. You don't know the song: "Lawyers Guns and Money"? Oh well, I made myself laugh at least.


On Apr 30 05:49 PM wobatus wrote:

> Was that a Waren Zevon song? :)

May 01 08:30 AM

[wobatus:]

If it was all Hoover and Roosevelt, why was it pretty much across the industrialized world?


On Apr 30 08:08 PM Glen L. wrote:

> In the previous comment I meant to say that Zimbabwe poor are paying
> just about the same for a loaf of bread as we do in America. Gold
> has universal value.
>
> Further comment on Mr. Goodman's article, which has mostly been ignored
> in the gold bug vs. fiat bug debate:
>
> I broadly concur with his historical and macro economic analysis.
> However, I don't think it's correct to say that the people losing
> faith with the institutions was or is the exact cause of the Depression
> or any other severe economic downturn you care to mention. The cause
> of each and every expansionary phase of the business cycle was government
> intervention in the marketplace (this is even true of the tulip mania
> in Holland almost 400 years ago), and the collapse of the expansionary
> bubble is just the natural, inevitable market reaction. Therefore,
> it matters not whether the people have or haven't faith in the governments
> or banks or tulipmongers, what goes up must come down, i.e. back
> to equilibrium. The crucial point for everyone to understand now
> is that worldwide catastrophes like the Depression and the current
> fiasco happen when government (and its central bank cohort) try to
> intercede to mitigate the effects, i.e. prevent the deflation of
> the bubble or attempt to reflate it.
>
> The Great Depression would have been an ordinary depression (the
> old word for recession, which replaced the older term "panic") without
> the massive interventions of both Hoover and Roosevelt, and would
> likely have ended within a year or two, like all preceding downturns
> in American history. (Those who bring up American history prior to
> 1929 to claim that the business cycle is a fault of capitalism always
> fail to mention the fact that previous downturns were always brief).
> But the nanny-state politicians tried one bogus market intervention
> after another, and the US suffered its worst economy ever, lasting
> until 1946. Now we see Obama and the Congress repeating the mistakes
> of Bush, as FDR repeated Hoover's mistakes, compounding them by another
> order of magnitude, and gambling America's future away with my money
> and yours.
>
> Americans' loss of faith in their government was caused by the Depression,
> rather than the other way around.

May 01 09:52 AM

[wobatus:]

Dave, you make me laugh.

I love the "because it is beautiful and people love it" arguments. And of course, folks do.

Is there enough of it, now and being found, for the increasing amounts of things, people, etc. to spend it on? Would you have constant DE-flation if that were the standard? And wouldn't that likewise cause problems, planning wise?

Just tossing that out there.

Next, all fiat currencies end, and all empires end. And gold is still there. But during times when civilization breaks down, your gold may but also may not protect you. maerauding bands may come take it, or existence all around you may be such that gold isn't buying the material comforts it did when society functioned.

A functioning society is worth a lot. :)


On May 01 01:10 AM Dave Wrixon wrote:

> Sure, when America gets into the same mess as Zimbabwe, and note
> the when not an if, then you will be able to buy bread with Gold.
> But by then the US will account for less than 1% of the World Economy,
> so who gives a damn?

May 01 09:59 AM

[wobatus:]

Yeah yeah, i know. Don't think i don't know how to read. :)

On Apr 30 09:29 PM PainfullyAware wrote:

> On Apr 30 03:16 PM wobatus wrote:

May 01 10:03 AM

[wobatus:]

Oh, i understand they can get ensconsed, that there is corruption, manipulation, etc. I also think voters and citizens have some responsibility for how things get the way they are. And i think sometimes the cynical should try being a step beyond cynical. You may be less aware than you think. Certain in less pain. :)

I am teasing.

Take care. All the best.


On Apr 30 09:12 PM PainfullyAware wrote:

>
> On Apr 30 12:16 PM wobatus wrote:

May 01 10:07 AM

[wobatus:]

I think most americans are angry. I know I am. Grrrr. At politicians. At the fed. At other voters. At illegal immigrants. At the money-changers. I am mad at Bush. I am mad at Obama. I am mad at the sub-prime mortage originators, the brokers, the folks that were too ignorant and spent beyond their means and got mortgages for huge properties they couldn't afford while i lived within my means, and now they are getting bailed out. I am mad at unions, especially the job-bank guys at the auto companies, but pretty much all of them. I am mad at excessive executive pay. I am mad at institutional shareholders that let all this go on and didn't care and were lousy stewards of capital. I am mad about corporate governance. I am angry at lazy boards made up of politically-correct appointees or cynosures of do-nothing. I am furious about the Community Reinvestment Act. I am apoplectic at the huge percentage of government workers per every private sector actor. I am REALLY mad at islamic fundamentalist terrorists. In fact, I am pretty pissed-off at all killers and murderers, from Colombine to Kandahar. I am at my wits end with idealogues. I have had it up to here with trimmers. I am mad at the self-righteous divine or godless.

Seriously, I am angry, and most folks I know are. But not always.


On Apr 30 10:42 PM metastar wrote:

> Wow, you're one angry dude! Its good to see. It's only because you
> walk with eyes opened. If more Americans were angry we would actually
> have some hope for real meaningful change. Now that's what animal
> spirits mean to me.

May 01 10:20 AM

[wobatus:]

Are you saying, in the Hobbesian state of nature, there would be no business cycle? Would there be a lot of business being conducted?


On Apr 30 08:08 PM Glen L. wrote:

> In the previous comment I meant to say that Zimbabwe poor are paying
> just about the same for a loaf of bread as we do in America. Gold
> has universal value.
>
> Further comment on Mr. Goodman's article, which has mostly been ignored
> in the gold bug vs. fiat bug debate:
>
> I broadly concur with his historical and macro economic analysis.
> However, I don't think it's correct to say that the people losing
> faith with the institutions was or is the exact cause of the Depression
> or any other severe economic downturn you care to mention. The cause
> of each and every expansionary phase of the business cycle was government
> intervention in the marketplace (this is even true of the tulip mania
> in Holland almost 400 years ago), and the collapse of the expansionary
> bubble is just the natural, inevitable market reaction. Therefore,
> it matters not whether the people have or haven't faith in the governments
> or banks or tulipmongers, what goes up must come down, i.e. back
> to equilibrium. The crucial point for everyone to understand now
> is that worldwide catastrophes like the Depression and the current
> fiasco happen when government (and its central bank cohort) try to
> intercede to mitigate the effects, i.e. prevent the deflation of
> the bubble or attempt to reflate it.
>
> The Great Depression would have been an ordinary depression (the
> old word for recession, which replaced the older term "panic") without
> the massive interventions of both Hoover and Roosevelt, and would
> likely have ended within a year or two, like all preceding downturns
> in American history. (Those who bring up American history prior to
> 1929 to claim that the business cycle is a fault of capitalism always
> fail to mention the fact that previous downturns were always brief).
> But the nanny-state politicians tried one bogus market intervention
> after another, and the US suffered its worst economy ever, lasting
> until 1946. Now we see Obama and the Congress repeating the mistakes
> of Bush, as FDR repeated Hoover's mistakes, compounding them by another
> order of magnitude, and gambling America's future away with my money
> and yours.
>
> Americans' loss of faith in their government was caused by the Depression,
> rather than the other way around.

May 01 10:23 AM

[wobatus:]

I want to get back to this but tone it down. Prior to the New Deal, or the market crash, whenever, or prior to the Fed, whenever we are discussing, say 19th century to 1907 panic, we had great growth, but huge cycles. Caused or not caused by government intervention, or a certain type of intervention (I know someone has put forth the point ALL cycles are caused by the government intervening), whatever.

Certainly, during a lot of that time, one has a hard time denying the fruits of overall expansion were universally open to all (I am not saying they weren't universally shared, we take that as a given). I mean, we had slavery racticed pretty much everywhere, and not stamped out mostly in the U.S. until the second half of the 19th century.

Even tehreafter, many lived in virtual peonage, and not just the serfs of russia, but many people here as well. Women couldn't vote. The franchise was denied to many others.

Many advanced by dint of smarts, hard work, some luck. many did not, and were to a large extent locked in place.

Now, these are separate arguments, political rights versus economic freedom. I don't think the distinction was quite as broad to a laborer in 1900, a coalminer in West Virginia, a railsplitter, yada yada.

Right or wrong (and not meaning to get back to gold, really), you had bryan's supporters feeling oppressed by the eastern money men, and the gold standard, as keeping them down.

You had finacial panics. You had overall expansion over time, but huge, and hugely painful downturns, and for some it may have seemed almost impossible to come up out of the dregs. Like that black tenant farmer in Hard Times I mentioned. Of course, to move away from that legacy, it was damn hard for some white tenant farmers as well.

And even if it is ALL caused by government intervention, certainly, there are different kinds of government intervention. What caused the tulip bubble and panic. or the panics after the civil war, or 1907, or now, may be caused by different things the government does.

So. We vote them out. We look to change things. This author advocates commissions, inquiries or prosecutions of Paulsen, Bernanke, Goldman's trading, etc. maybe that is time and money well spent. Personally, I like Bernanke and think he is well-meaning. I could be very wrong. I may be naive, but probably less so than some of you may think.

Get everything out and open and under the clear blue sky and we can all discuss and debate and decide where we go from here and how to get out of this mess. Because it probably isn't easy. Well, maybe some of you do have the solutions. I am open to listening. :)

Take care all. I enjoy this kind of discussion, acknowledging that sometimes be a little flip.

Best of luck in markets and life.




On Apr 30 12:35 PM wobatus wrote:

> The period was also one where certain folks were perpetually disadvantaged.
> That's why you had a lot of wobblies etc. supporting bryan and free
> silver (don't crucify me on a cross of gold, etc.).
>
> If you read Hard Times by Studs Terkel, there's a passage where a
> black tenant farmer talks about the Depression. He says something
> along the lines of, we just called it hard times. That's the way
> things always were. Just that it started hitting the well off white
> folks, and they called it a Great Depression.
>
> Thos panics use to mean depravation, degradation and poverty. The
> wild swings may have led to an overall rise in wealth, but unfortunately,
> not a lot of trickle down for some.
>
> There is no denying that the money supply did shrink by 25%, and
> that the fed was liquidationist to a great extent. This was not just
> caused by fear of government confiscation. Too much of it came before.
>
>
> If one leaves things perfectly laissez faire, and just ride the boom
> and bust and don't bring the lowest rung into the system and along
> for the ride, believeing they have a stake and a benefit, then you'll
> have breakdown and you can end up like russia did. They'll come and
> take it, right or wrong.
>
> Anyway, i get far afield here.
>
> On Apr 30 10:42 AM Carlos Lam wrote:

May 01 10:46 AM

[wobatus:]

Sorry, meant to say, of course, that fruits of growth was not universally available to all. Probably obvious from the context. And please excuse my mis-spellings and perhaps not being focused on topic.

Were economic swings in the past caused by government intervention? Lack of trust in government? Which came first, the lack of trust or the panics? How did the gold standard effect that? Or fiat currency, free banking, whatever? Was a large belly, watch fob and mutton-chops really the byword of succesful masculine fashion?

Was the greater growth stretch because of certain policies? Which factors were most important? Did man reach a tipping point in certain areas of industry, etc., in certain locales? Did you ever read Guns Germs and Steel? Does the law of large numbers make large growth rates unsustainable over time?

Can any Met pitch wortha damn beyond Johan Santana?

On May 01 10:46 AM wobatus wrote:

> I want to get back to this but tone it down. Prior to the New Deal,
> or the market crash, whenever, or prior to the Fed, whenever we are
> discussing, say 19th century to 1907 panic, we had great growth,
> but huge cycles. Caused or not caused by government intervention,
> or a certain type of intervention (I know someone has put forth the
> point ALL cycles are caused by the government intervening), whatever.
>
>
> Certainly, during a lot of that time, one has a hard time denying
> the fruits of overall expansion were universally open to all (I am
> not saying they weren't universally shared, we take that as a given).
> I mean, we had slavery racticed pretty much everywhere, and not stamped
> out mostly in the U.S. until the second half of the 19th century.
>
>
> Even tehreafter, many lived in virtual peonage, and not just the
> serfs of russia, but many people here as well. Women couldn't vote.
> The franchise was denied to many others.
>
> Many advanced by dint of smarts, hard work, some luck. many did not,
> and were to a large extent locked in place.
>
> Now, these are separate arguments, political rights versus economic
> freedom. I don't think the distinction was quite as broad to a laborer
> in 1900, a coalminer in West Virginia, a railsplitter, yada yada.
>
>
> Right or wrong (and not meaning to get back to gold, really), you
> had bryan's supporters feeling oppressed by the eastern money men,
> and the gold standard, as keeping them down.
>
> You had finacial panics. You had overall expansion over time, but
> huge, and hugely painful downturns, and for some it may have seemed
> almost impossible to come up out of the dregs. Like that black tenant
> farmer in Hard Times I mentioned. Of course, to move away from that
> legacy, it was damn hard for some white tenant farmers as well.<br/>
>
> And even if it is ALL caused by government intervention, certainly,
> there are different kinds of government intervention. What caused
> the tulip bubble and panic. or the panics after the civil war, or
> 1907, or now, may be caused by different things the government does.
>
>
> So. We vote them out. We look to change things. This author advocates
> commissions, inquiries or prosecutions of Paulsen, Bernanke, Goldman's
> trading, etc. maybe that is time and money well spent. Personally,
> I like Bernanke and think he is well-meaning. I could be very wrong.
> I may be naive, but probably less so than some of you may think.
>
>
> Get everything out and open and under the clear blue sky and we can
> all discuss and debate and decide where we go from here and how to
> get out of this mess. Because it probably isn't easy. Well, maybe
> some of you do have the solutions. I am open to listening. :)
>
> Take care all. I enjoy this kind of discussion, acknowledging that
> sometimes be a little flip.
>
> Best of luck in markets and life.
>
>

May 01 11:38 AM

[PainfullyAware:]

I do wish that I was less aware; it would be less painful.

However, Safety Is A Function Of Awareness.

Those who refuse to discuss the proximity of Lions become "Big Kitty Snacks".

I am not Cynical - I am Concerned.

Apathy Has Brought Us To Our Current Situation. There is nothing like being uncomfortable to pique interest in public affairs. We Are Definitely Going To Get "Change".


On May 01 10:07 AM wobatus wrote:

> Oh, i understand they can get ensconsed, that there is corruption,
> manipulation, etc. I also think voters and citizens have some responsibility
> for how things get the way they are. And i think sometimes the cynical
> should try being a step beyond cynical. You may be less aware than
> you think. Certain in less pain. :)
>
> I am teasing.
>
> Take care. All the best.

May 01 03:14 PM

[PainfullyAware:]

I agree with you on this point; More will become angry in the future.

Complexity Favors The Sinister. We Need Systematic Simplification.

No Special Case Legislation, Term Limits, and Sunset Provisions For All Laws Not Contained In The Constitution.

Governance Is Where "The Rules Of The Game" Are Set.



On May 01 10:20 AM wobatus wrote:

> I think most americans are angry. I know I am. Grrrr. At politicians.
> At the fed. At other voters. At illegal immigrants. At the money-changers.
> I am mad at Bush. I am mad at Obama. I am mad at the sub-prime
> mortage originators, the brokers, the folks that were too ignorant
> and spent beyond their means and got mortgages for huge properties
> they couldn't afford while i lived within my means, and now they
> are getting bailed out. I am mad at unions, especially the job-bank
> guys at the auto companies, but pretty much all of them. I am mad
> at excessive executive pay. I am mad at institutional shareholders
> that let all this go on and didn't care and were lousy stewards of
> capital. I am mad about corporate governance. I am angry at lazy
> boards made up of politically-correct appointees or cynosures of
> do-nothing. I am furious about the Community Reinvestment Act.
> I am apoplectic at the huge percentage of government workers per
> every private sector actor. I am REALLY mad at islamic fundamentalist
> terrorists. In fact, I am pretty pissed-off at all killers and murderers,
> from Colombine to Kandahar. I am at my wits end with idealogues.
> I have had it up to here with trimmers. I am mad at the self-righteous
> divine or godless.
>
> Seriously, I am angry, and most folks I know are. But not always.
>

May 01 03:22 PM

[wobatus:]

Yeah. Once you look, it is hard not be in pain. Understood.

Carpe diem, gather ye rosebuds...


On May 01 03:14 PM PainfullyAware wrote:

> I do wish that I was less aware; it would be less painful.
>
> However, Safety Is A Function Of Awareness.
>
> Those who refuse to discuss the proximity of Lions become "Big Kitty
> Snacks".
>
> I am not Cynical - I am Concerned.
>
> Apathy Has Brought Us To Our Current Situation. There is nothing
> like being uncomfortable to pique interest in public affairs. We
> Are Definitely Going To Get "Change".

May 06 11:00 AM

[Nate0624:]

This is the most relevant, well written piece I've read in a long time. It motivated me to get a stupid user Id & password for this site.

Great Article ! spot on.

Jul 27 11:32 AM

[Freya:]

Painfullyaware: these are your statements gleaned from the Comments above, "Governance is Where 'the Rules of the Game are Set'."
"Those Who Refuse To Look And Question Will Never See."
"Humanity Is Constant; Only The Tools And The Environment Change."

Humanity Is Constant, are you? You "Refuse To Look And Question". If Governance Is Not Set, What Rules Do You Use and your Latest And As Far As I Am Concerned, Greatest..."Views Untested Are Useless".

Please apply that last statement to this Article or do your Words Change depending on the Article?

"To Assume Benevolence Is Foolish." is another one of yours from above. Can that statement be applied to all of your comments?

May 02 11:58 PM

[Freya:]

"Lewis was bullied" is exactly the point.

Had he gone public, right then and there, BofA would not be where it is right now.

Apr 30 12:28 PM

[Freya:]

Lewis did what no prudent man would have. He did not CYA. One would think he would have either taped the converstion or had it put into a MOU.

For this alone, I find his judgement to be fundamentally flawed. He trusted the Government.

BofA is better off without him.

Apr 30 06:48 AM