Tuesday Outlook: Leaving Las Vegas

It may seem odd but lead picture today is of Robert DeNiro in the movie Casino. It follows with my long-term thinking regarding how Wall Street has been organized and operated since the 1990s: a casino architecture where it’s easy for investors to find their way in but impossible to find the exit while Da Boyz rip ‘em off.

This being a political year, there will be plenty of finger-pointing going on. But, this financial crisis has been the result of a great bipartisan effort. It began with the bipartisan destruction of the Glass-Steagall Act which was enacted after the Great Depression prohibiting cross ownership of banks and brokers. The leaders to drop the act's prohibition in the 1990s were Republican Phil Gramm and Treasury Secretary Robert Rubin.

Unlocking the previously closed gate was Federal Reserve Chairman Alan Greenspan. His fingerprints are on every successive poor monetary policy decision until his recent retirement and farewell tour.

Then we can point to a host of troubles that followed from a housing bubble, rating agency carelessness and fee conflicts, outright fraud and carnival-like financial media cheerleading. Once the fox was in the henhouse, trouble followed as regulators were unable to deal with the array of new products emanating from Wall Street.

Like the bear market of 2000-2003, there will be jail time for some of the more notorious players. We have a government-made mess and they are obliged to clean it up. Unfortunately, 'they' is us.

The Fed and Treasury worked long and hard over the weekend… again. Monday they injected $70 billion into the market, assisted in creating another fund for banks to use, tried and failed to arrange a shotgun wedding with Lehman (LEH), got a deal done for Merrill (MER)/Bank of America (BAC) [unless shareholders revolt] and are now working on AIG (AIG), WaMu (WM), Wachovia (WB) and so forth. They may also choose to intervene directly in equity markets.

And, late breaking news has them trying to organize a rescue for AIG with Goldman (GS) and JPMorgan (JPM). Once they’ve gone down this path , there is no stopping them--in for a penny, in for a pound.

The worst part are the innocent people who are losing their jobs and savings while some of the bigger players and fraudsters still have their yachts.

Depending on where you looked, markets were either slaughtered [financials] or just sold-off hard [tech]. Nevertheless, volume was heavy while breadth probably put in a negative 10/90 day.




















































































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