Losing All Respect for the System

The market is at a crossroads. You either listen to people in the club whose vested interests represent trillions of dollars, and who will be wiped out should market prices fall to anything approximating economic value, or you follow your nose.

As for me, I cannot in good conscience do anything more at this point than to go to day trading, in cash every day (USD during one day, Euro or Yen for a few hours the next). I regret that my position is of little help to the huge majority of you, but I have done what I can do, and I have little more to give.

My problem is that I have lost all respect for the system. It is clear to me that Humungous Bank & Broker, for the most part, are flat-out liars. Politics is strictly controlled by Party machinery who are bed-mates with HB&B and their Friends & Family, a few of whom control corporate America.

What is happening in the US today is little different than in Russia or China except that there is a pretense offered to Americans that the leaders in government, industry and financial services are serving the public.

There is a once great investment bank called Merrill Lynch (MER) that I think is now toast. The stock price was almost $100 a year ago, recently well below $40. Yet a Goldman Sachs (GS) man is parachuted in from the NYSE and in a matter of a couple months has a personal income of $84 million. This is sick. If I worked at Merrill Lynch today, I would walk out in disgust.

Like I say, you listen to these people or you follow your nose.

Comments

[globalmacro]

I felt the same way when I went to cash in 1982. I'm still trying to time my reentry. Those crooked bastards.

[nukldrager]

Agree totally, but can't afford the pessimism even if it's ultimately denial.
What about the Richard Russell interview "Dow Theory..." from 4/14. If the basic bear market is not in, isn't it natural for values to go down?

[youngolf]

Absolutely, well said Bill.....Bravo for men still left like you.
I quit the health insurance industry in 2001, after 20 years...because of the deterioration in ethics and the total insanity of the current healthcare system. Since our WWII business leaders have all retired and are in their 80's...we are being run by a manipulating, cheating, self-enriching at any costs generation who cares nothing about the future......hopefully, we can get another generation up with some values that will turn things around.
Which is why I am making the sacrifice to teach business in the high schools.....I have to do something to leave a legacy - and stay sane while I watch 'Rome burn' (Credit Crisis, Tax Code, Gas Prices, Iraq, Katrina, Immigration, Healthcare Costs.....).

I even called my senators - told them I wanted to enroll in the same high level health insurance plan they had...that I am buying for them with my taxes...that I cannot find or afford for myself - they sent me a Senate letter 'thanking me for writing'.

[CM in MA]

Bill, the pain in your article is palpable. Ayn Rand is criticized as espousing a philosophy fit only for callow youths. Yet, we're now in a situation that she envisioned. Many of our corporate leaders (certainly can't call these pretenders "titans") engage in self-serving behavior, but fail to remember the corollary that their interest must also be mutually beneficial to those with whom they are dealing. The list would include: shareholders, customers, the public, and politicians. With the two major political parties essentially sharing power, there is no need for either politicians or corporations to deal with anyone else but themselves. Perhaps it was always so. Americans have the power to change things if only they would make the effort to do so. This means getting involved and doing such things as voting for a third party. Until we do, we'll get more of the same from Washington and the corporate boardrooms. Stupidity is often defined as doing the same thing over and over with the expectation of different results. America, and capitalism, is better than China or Russia. America is better than it is behaving right now both domestically and internationally. America is beacon of hope for millions around the world. Anyone who hasn't should visit Lexington and Concord. The sacrifice made on behalf of freedom by those brave patriots is also still palpable when walking those grounds. What have any of us done to earn that sacrifice?

[Simple Simon]

Bravo! Once we were an industiral giant, leading the world in technology and production of high quality discretionary products. If the 1948 dollar , backed by precious metals, was a full dollar; then what is it today? A nickel? If we're going to try to make it by trafficking in information; let's bring back 'truth in lending', and expand that to include 'realistic remuneration for CEO's'. NoO one needs that much intoxicating filthy lucre. And while we're at it, how much money is being raked in by the lottery and the casinos? Enough to pay for the war? Does anyone remember Rhett Butler? The fellows who profit from war, while Atlanta was burning to the ground? And entirely new Congress, and Senate ( sans country club lawyers and their 'bedfellows ) ? What do any of them really know what it's like to find work when every plant in the state is a shattered window, weed choked, crumbling home for rats?

[proseadvocate]

You haven't said the half of it. There is more greed, corruption and obfuscation now than in the roaring 20's when there was virtually no regulation. The Bushites have dismantled the regs under a pretense that all government is bad. If so, why should they be different. We are heading for a world-wide calamity worse than the Great D, especially in the US since then we at least grew our own food, made our own clothes and knew how to add and subtract. Bill Gates has turned us into a nation of machinists who wouldn't dare run a machine in a factory. Go figure.

[veryold]

yes, but we still need your guidance

[whidbey]

What bunch of soreheads! Cara carrots? The system is working and ML is no worse than the Bank of Canada, or had you noticed? There are investment opportunities- if you want them. But sitting around sucking marbles must be more fun for this collection of malcontents, and their leader. I have an idea, take a few days and find an adult to supervise your little day camp meetings. That way you won't hurt yourselves with the spoons. Get serious!

[CM in MA]

Whidbey, I'm not at all a sorehead. No need to waste more words on you.

[nukldrager]

Not so fast whidbey... take a visit to the North Bridge in Concord, Mass.
Unless you're an islamic fundamentalist, you can't help but be moved by the place and it's history. Free speech is great ain't it?

[jackooo]

Finally someone tells it like it is. I saw this ages ago when I entered the market. (50 yrs. ago)
The SEC will save us... lol lol

[Goldenrod2]

Thank you Mr. Cara for your candor.

It is astonishing to see the number of people who (based on their behaviour) appear to believe that it is impossible to permanently damage the United States, that any selfish manipulation will not have long lasting effects....that this country of ours is theirs to plunder as the just spoils of political warfare.

It also troubling, that mainstream media is becoming increasingly more consolidated, leading to fewer news organizations who can and will develop stories which could be embarrassing to someone in the power structure of government or advertisers.

Ironically, we piously lecture the world on the spread of democracy, and fail to practice it very well ourselves.

[horse_sense]

The only real and present danger to America is high taxes
which feeds the monster known as government and stifles
initiative and risk taking.

Private companies can never do serious damage since they
are faced with competition. The government monster has no
competition. It is monopoly at it's worst.

[youngolf]

Competition is a good thing - when the resource isn't extremely scarce or controlled by a few (try oil), or there is great Risk involved (try healthcare financing)...Free market competition is not the do all, end all (otherwise put our drinking water for sale on the open market!)......and neither is socialism. Greed has to be regulated in some way.

[proseadvocate]

Free trade is a platitude that the modern-day robber barons use to hide their own no-bid contracts on the backs of working fools who believe their lies. Any honest or real economist knows that unfettered markets lead to predatory practices and monopolies. Look at Airlines. they said deregulation is good for the consumer. Hah. They are all bankrupt and flying with duct tape while the bosses get bonuses. Only when the truth is seen as absolute and not a moving target subject to lies called "spin" will there be any hope.