Jack Walker

CFTC: The Key to Market Manipulation

Avery,

This is an enlightening expose of market manipulation for the benefit of a few at the cost of society as a whole, well done. It seems as if Goldman’s quarterly profits are being paid, in part, by everybody else through higher commodity prices. This is a financial scandal of epic proportions.

The second part of the problem is to rid the commodities markets from long-term pension fund participation, which seems entirely inappropriate with their fiduciary responsibility of investing for long-term capital growth and income. The commodity markets are not long-term capital markets, they are price discovery markets intended for a completely different role. The large long-term capital participation of pension funds and trusts is another example of increasing commodity costs of society as a whole for the benefit of the brokers, dealers and Commodity Trading Advisers who have convinced pension fund trustees that commodities are just another asset class to be considered for long -term investing. This is a second scandal of epic proportions.

Jack

Geithner's Financial Reform Is Doomed to Fail

Steven,

This is a well thought out article. Now what is the plan to get it communicated to those who could start a meaningful discussion and perhaps get it implemented?

Jack

Jobless Claims Would Have to Approach 1M to Reach 1982 Level

Mark,

Your adjustment to the unemployment numbers makes good sense. Keep up the good work. We need more balance to the overwhelming negative bias we receive from financial media.

Jack

The VIX and the 2002-3 Market Bottom

Toro,

This is a well-prepared article showing the relationship between SPX and the VIX. So far, the current downturn looks very much 2002-2003. If it follows the same pattern, it could take awhile yet for the final bottom to be made and retested and we will not see higher highs in the VIX.

With reference to Russell Napier’s book, Anatomy of the Bear, it seems to me the 1975 low at 62 was also a slow long selling exhaustion affair.

Jack

Barron's Calls a Bottom

Eli,

How many times has Barron's called the bottom in the last year?

In the long run equity prices are a function of earnings and there is no confidence in the current earnings projections. Nobody can accurately project earnings in this envoronment.

Jack

FAS 157 and Other Regulatory Actions: Good Intentions, Unintended Consequences

Frank,

Nice job documenting and explaining what many of us knew was a significant contributing factor to the banking problem. There are good arguments on both sides of this issue, but why is there no solution to the problem? Are the politicians and bankers unable to resolve this issue or don’t they get it?

Jack

Predatory Legislators

Peter,

This is a well prepared and thoughtful article, but it should also include the bigger picture issue of lagging average household incomes.

How much blame should we ascribe to the borrowers who saw an opportunity to bridge the gap between household income and rising cost of living? If your friends and neighbors were using their house appreciation to support an ever demanding middle class life style and the banks were facilitating this process don’t you think you would also want the same opportunity?

As for the legislators they were also attempting to solve the same problem of lagging household incomes and life style maintenance. After all, there were a lot of people employed in the housing game, from builders, to real estate brokers and agents as well as the lenders. All of whom were hoping to support their life style from the housing phenomenon. These are the people who elected the legislators to further their employment and income opportunities. How could the legislators have denied the demands from their constituents for a better lifestyle when a solution appeared in the form mortgages and housing?

Don’t you think the structural issues and the solutions to the problems of lagging household incomes should be included in analysis?

Jack

Gold Continues to Climb as Economic Catastrophe Looms

John,

Can you provide more details about your comment:

"This is despite the activity of price-depressants such as official gold sales by the IMF and official 'approval' for massive naked short positions to be opened by new 'bullion' banks."

Specifically, who are the new bullion banks and who granted such approval for massive naked shorts?

Jack

Will the Stimulus Become a $3 Trillion Nightmare?

Mark,

You raise some very valid points. While most would agree that stimulus spending is necessary to offset the lack of private sector demand the concern and skepticism is appropriately focused cutting it back in two or three years. Unless average incomes rise substantially the additional tax burdens will be a real problem. How will be get average incomes to rise?

As for a high speed rail line from Los Angeles to Las Vegas, what is pork to some is brining home the bacon for others. Politicians are sent to Washington to bring home the bacon. The people in Las Vegas would probably agree that a European style modern high speed rail line over the insufferable and often traffic jammed California desert to Los Angeles would be good idea, unless it is priced so high that nobody can afford to use it.

Jack

John Taylor Clears the Way for an Informed View of the Financial Crisis

Ira,

Thanks for bringing John Taylor‘s working paper to our attention. If loose monetary policy from 2001 to 2006 was one of the primary contributing factors to the current state of affairs, we appear to be committing the same error once again. What are the chances that his findings will now be incorporated into fiscal and monetary policy?

Jack

What Will Happen If America Returns to an Historical Savings Rate?

Thanks for this very interesting article.

While there are many factors that have contributed to the current state of affairs one of the most significant as you have appropriately identified is the inability of median family income to keep up with rising costs. Many people used the “House ATM” financial planning strategy since it was the only available means to bridge the gap. Those claiming that stability in housing market is the answer to the nation’s economic problem are missing the basic fundamental cause.

We should all be dismayed by the lack of attention being given to the real problem.

Is it inevitable for rising median family income in the developing world to be accompanied by stagnant or declining median family income in the US? Is it a zero sum game and is International Economic Trade Theory all wrong? If so, will the US be forced into trade protectionism?

Interestingly, while Germany and France have single payer health care systems they seemed to have maintained higher savings rates however, Japan, Canada and the UK with similar health care systems followed the US with declining savings rates. What are the determining variables accounting for this disparity? Are they political, social, economic or some combination all them all?

Fiat Money and a Profligate Congress: A Bad Combination

Thomas,

Thanks for bringing Lehrman & Muller's writings to our attention once again.

Even if a new gold standard was the right solution how could it be implemented short of a worldwide economic breakdown and chaos? It seems democracies are incapable of important structural changes without a crisis.

Jack