Jon Stewart Takes on Goldman Sachs [Video] [View article]
People can lambast Stewert's comedy as much as they want but he is right in the fact that GS and all banks are using low government cost of capital, Federal Reserve backstops, and government bond buyouts to finance their profitability while taxpayers shoulder all their risk. This is not to mention TARP and all the other schemes of directly giving money to banks nor the accounting schemes to hide their losses. Do banks deserve bonuses while they make money off of arbitrating taxpayer financed advantages that we gave them? Would they make profit solely off their prudence, intelligent judgement, and hard work? The answer is an obvious no.
Are banks doing their job lending or have just become a middleman between the mortgage broker and Fannie Mae and Freddie Mac sucking out the spread just to say they are still a bank? Is Goldman Sacs really good for the public when they spend most of their time writing code that "can manipulate the market" and work to widen spreads for everyone buying and selling stock these days? Is the billions we gave Goldman really being put to good use when it is spent bolstering their program trading?
Jon Stewart is not just Jon Stewart, he represents the scorn and cynicism of all his staff. And that cynicism comes straight from the experience and insight of the general public. The statement is clear, "Stop begging for shelter from the free market and then rewarding yourself for selling the free bread we give you at a 15% markup and calling it capitalism. And for goodness sake Goldman, boost your capital to an acceptable level to your lending before you pay out bonuses. And by the way what is with your announcing record profit and bonuses the same week you beg for special dispensation to violate VaR requirements by abiding only to flimsy SEC requirements (which is the regulatory arbitrage the FDIC has been lambasting financial institutions like yours which decimate the FDIC because inevitably they gamble and go bankrupt with insufficient capital and then require government infusions)? I really want to know. How stupid do you think we are?"
Hear that cheering for Jon Stewart GS? That means we are getting sick of your financial antics.
Coming Soon: Banking Crisis of Historic Proportions [View article]
If you hadn't noticed big banks, especially the ones to big to fail are feasting off the carnage of littler banks and off of their customers both depositors (who get almost no interest) and borrowers who they keep raising rates on. I know, some may argue that banks are loaning at historically low rates to new homeowners, but look at the reason why. The government is using Fannie Mae and Freddie Mac to buy up all the unprofitably and economically unsound loans which they either get the Fed to buy or write them off and charge it to the taxpayer every quarter.
So in essence, what do we have? An arbitrary, favoritist, banking sector brough on by direct government intervention. All I can say is, "What do you expect when you let government interfere to this extent in the market?" If you think you are going to do well get in the giant line of people willing to bow down and kiss politicians and bureaucrats feet.
Washington's Dilemma: This Isn't a Recession, It's a Collapse [View article]
California's problems are systemic meaning even if you bail them out this year they will have the same problems next year and next year ad infinum. It is not something the Federal government can deal with long term because they have a similar systemic problem. The only difference is that they have no law barring them from infinite debt and depreciating the dollar to fund themselves (although they are constrained to whether or notr they can get anyone to fund their debt as is grows every year).
The Federal government should not have spent all its money on a spending plan, but should have passed a real stimulus plan that included reserve funds to aid State programs temporarily that needed funding, extend unemployment, invest in better mass transportation and communication lines, and other more stimulating, meaningful, and productive things than what we got. Rather, we got a whole lot of Democratic pork and more buraucrats that don't add much to productivity. To me, the Democratic porkus looks and smells about as rotten as the Republican pork everyone rallied against to start with.
We didn't need 2x the stimulus (we got almost 0). We needed a real stimulus program. What we really need is 2x better rule of law, 2x less wasteful government spending, and 2x more austerity.
That aside, Gergor Macdonald is right that States, counties, cities, and municipalities are where the rubber meets the road and government actually produces the communal goods and services you consume. A collapse in them is diasterous for public morale since people will clearly see the disconnect between giving so mucg to the Federal government and getting virtually nothing in return.
The federal government takes considerably more and delivers multiples of times less than any other government body, even when comparing the incredibly inefficient State of California. If anyone could have stimulated the economy it is your local cities and counties. The fact that it hasn't ended up there shows that your money is not doing much for you or the economy. Now we will all suffer yet another string of consequences caused by a loose spending inefficient federal government and a lax easy money Federal Reserve. I suppose that's why the founding fathers liked States rights so much.
California - And by Extension the U.S. - Headed for Permanently Smaller Economy [View article]
Government often misallocate resources and bet on technologies and ideas that at the time seem rational but wind up being obsolete by the time they are applied. That is why it is best for the government to take the back seat and let the free market determine what is most rational and expedient. While we finance biofuels it is possible that a hydrogen economy overtakes them. While we praise corn based ethanol which increases scarity in food and is not competitive with oil it is possible that seweed or other biolfuels are much better.
Mass transport is useful and rational especially people residing in higher density cities. The fact we don't invest more on creating and maintaining them is sad. There is no reason for our mass transport to look worse than third world countries.
I agree with the author that we are looking at a smaller economy not because the US is incapable of growing and developing into the next phase of economic prosperity but because our government is dead set on trying to preserve the old structure at whatever inefficient cost it may take. We need a better health care system, a better trasportation system, more efficient fuels, and more competitive high speed communications systems (Internet especially). Asia has surpassed the US in all of these things aside from a rational replacement for gas (they don't need it as much because they have mass transportation, denser housing, and more fuel efficient cars).
We need to get on the fast track to actually being competitive rather than listening to politicians gripe about how great we are all day. We are less efficient every day government disincintivises the promising while rewarding the obsolete to remain. creative destruction is the only path to permanent prosperity. The sooner we face it the better off we will be.
Exclusive: Big Banks' Recent Profitability Due to AIG Scam? [View article]
The concept of fake asset pricing goes over the head of most people. That's why financial institutions love it so much. They can do what they like without looking like outright liars and crooks.
When Goldman said they didn't need AIG to pay them I couldn't stand but laugh. They claimed all their positions were hedged. Probably so, by a another slew of faltering insurers who can't hope to cover their derivatives obligations. And then, probably after the fact AIG was going bust.
Anyway, there are a million ideas of how to avoid mark to market and/or find ways to book a transaction at an inflated price to raise the price of thousands of similar derivatives. It is a game that has been around for centuries. It's just funny to see the government so obviously involved in the price fixing.
The Calm Before the Stock Market Storm [View article]
That is very simple, the government spends deficits and the Fed engages in QE which increase money supply and shove down the dollar thus stimulating stocks which fall slower than the devaluation of everything else by rising. The opposite relation to the dollar and stock prices has been going on for years and remains over 90% correlated.
There is more than one way to skin a cat. As for stock market price manipulation by big players, off market trading including after hours, flash trading, micro millisecond trading, etc. make the opportunities rife for participants to make matching trades, dump a stock to another firm and clear with them after the market, etc. There are tons of ways to hand the ball to other players without letting a real market participant in. Likewise, there are tons of ways to falsify volume through HFT, attempt to wash out stop losses by dropping price in 1/100th of a second to make them clear (like the flash crash). Of course stuff like this has been going on for years under the guise of improving market liquidity. It should really stop. The only fair market is one that prevents participants from circumventing it and allows all comers into the process at all times.
It doesn't require a genius to see how to take advantage of current trading rules at the cost of others. Just ask Goldman Sacs.
Stocks Remain Poised for Steep Decline [View article]
I've heard this bear call on the downturn in November and now I hear it again. The simple fact is that stocks and commodities are running up on inflation as money comes out of bonds and the Fed must eat its own tail (US Treasuries they auction). I simply don't see an end to it unless the Fed wants to stop the lying and slay the inflation dragon by reversing QE, raising interest rates and doubling or tripling the US interest payment on its debt.
Undoubtedly, that will mean another downturn and government austerity. It will happen but probably after the next election as any economic fool knows the outcome and Obama will want to get re-elected before he plunges us into another hole (maybe much darker than the first one). What we aredoing here is worse than even Greenspan's easy money policies. We have made easier money policies to solve this downturn like Greenspan did to solve the downturn before this. The only thing is clearly the easy money is only going to the banks and the well connected this time (there isn't enough to go around this time without causing mass inflation).
U.S. Energy Policy Is Responsible for Unrest in Egypt [View article]
I also have been in support of LNG (liquified natural gas) and methanol. Ethanol still requires government subsidies, eats our food supply pushing up grocery prices, and requires government regulations to get their portion of the market.
The US needs to get out of Middle East dependence more than foreign energy. If the US moves to natural gas they will be owing money to a much saner Canada than the Middle East. That is a good thing. I don't see major wars being started there.
After that the US can start to tackle their greater problem of an out of control, debt laden government. What the US should fear the most is their own government and self centered politicians. They are ruining the country and impoverishing all other Americans. everytime they print another debt dollar they are siphoning away your wealth to put into their friends pocket. To them it beats taxing you for it. We need to wake up and stop the Alice and Wonderland money madness.
Shale Gas Revolution: Real or Unreal? [View article]
It never ceases to amaze me that the US runs massive deficits buying oil from the Middle East when they have a surplus of natural gas that is cheaper per BTU. Then they compress the natural gas as LNG and ship the natural gas to China which uses it for automobiles there which is cheaper than gas. Then we decry how dependent we are on Middle East oil.
Does this make sense to you? Perhaps. The oil industry and its lobbyists pay good money to get our government to embrace the irrational. The shale revolution just amplifies the glut in natural gas we have but can't use thanks to government's persistence to keep us addicted to an overpriced overseas energy solution that gets our soldiers killed, makes us run unsustainable deficits, and forces us to embrace tyrants and undemocratic Middle East countries until they turn our backs on us and declare us enemies. It is the pursuit of oil that we embraced Iran and gave them massive amounts of weapons only to lose them all when the Shaw got run out of the country only to have them all go to fundamentalists who call for the destruction of America, put Saddam Hussein in power only to have him attack our allies, and supported the Taliban only to have them attack the heart of America. The sooner we realize we must rely on domestic energy solutions the better off we will be.
The failure of manufacturing in many ways handicaps innovation at home. Much of innovation comes from figuring out how to make things better, more efficient, cleaner, and faster. It is hard to do that when your manufacturing is in China or Japan. In fact, what happens is China or Japan creates those solutions and patents it themselves.
Asia's patents have been growing at a phenomenal rate as US patents have not thanks to our giving up of our manufacturing base. As Adam Smith would tell you, the wealth of a nation is in its ability to produce. Yes that applies to goods and services. But when you leave out goods you lose not only jobs but you lose a deeper understanding of how things are made and the creativity and innovation that goes along with it. Simply put, we can not do without the second.
Percent of the population employed and average salary are real indicators. The official unemplyment rate is the lying statistic since it really is only a measure of liability claims on the govetrnment and nothing more. The best metric would be the # of working age men and women between 20-65 and the # of them employed (either with a salary or filing as self employed). Thus we could get a % of the able bodied workforce that is employed, the growth or decline in overall wages, and see if actually the economy is healthier or not. Other countries report the % of employed people regularly and average salary. In the US we are flying in the statistical dark with what the government discloses. It makes for a more interesting stock market but is also bad economics.
The index is not the only thing that hasn't changed much. The Trade Center hole in the ground is still sitting there. What a shame and embarassment.
There has been very little progress and a lot of harm done in the last 8 years financially and socially.
The only reason we are clamoring for government support these days is because government has completely failed at insuring economic security, regulatory honesty, and fiscal restraint. That which is destroying us is that which we have asked to save us.
I think we need to take a good long hard look at ourselves and what we are doing or not doing to insure domestic teanquilty. Certainly, being beholden to the rest of the world for oil, commodities, cheap labor, etc. is not a good way at protecting our safety erconomically or otherwise. Needlessly running up our debt to levels where we must beg China and others to buy our bonds also weakens the US. Economic strength more often proves more valuable than military strength. Without a strong economy it doesn't matter what you spend in defense, as proven by the fall of the USSR. We should wise up now and stop thinking government can solve everything by printing more money. This only leads to crippling our free market economy which is the source for our past economic resliency.
Another Manic Monday: Greenspan Finally Agrees With Me [View article]
"But the trillion-dollar conglomerates that inhabit this new financial world are not free enterprises. They are rather wards of the state, extracting billions from the economy with a lot of pointless speculation in stocks, bonds, commodities and derivatives." This is very true.
Regarding the tax increases, no amount of tax increases will cover Obama's laughable government expenditures. He will spend until we are all broke. We should not encourage him or government by letting them permanently tax more. If you want to see a recovery tax less, spend less, and get government out of the kitchen and into the cellar again. It's the private sector that drives the economy. The public sector is nothing but a tax on society. The bigger it is the worse off we are.
Actually silver had almost always been a small byproduct of gold mining and was dumped on the market to make the extra $5 per ounce for years. The fact that silver is now being seen as a store of value and now being hoarded along with gold changes all that.
The simple fact is silver stockpiles are inadequate for this usage unlike gold. Until more silver mines open up due to being affordable to mine now the price should stay over $30. And if silver demand spikes again the gold silver spread will continue to narrow simply because no matter what the price is, supply doesn't change much.
China Is Now in Firm Control of U.S. Debt Markets [View article]
CRK, I fully agree that people tend to believe that China is this great efficiency engine that is going to eat our lunch. Thay aren't, nor are they quietly plotting our demise. They are just trying to steer a command economy in disctressed times. That probably means hedging their bets any way they can. If the US is silly enough to think the rest of the world won't hedge their bets and buy endless resevoirs of US treasuries then the problem lies firmly in the US's hands not anyone elses.
The simple fact is, too much $ and too many treasuries = inflation and higher bond rates. No one is forcing Treasury bond rates up on purpose besides the misguided administrations of Bush Jr. and Obama. Blame the real culprits not some strange foreign power that has been happy to fund your excesses for decades. They only funded them because they trusted that your economy was more stable than theirs. It's not a sign of dominence over America, or a sign that they have no choices. Their habit of buying Treasuries has largely been a sign of trust. That trust is now in question.
Wouldn't you question someone's trust if they just made your long term investment in them loose 30% of it's value in less than a year? I would. So can you really blame them? Is this the act of someone really in control? The answer is no on both counts. Is their recent actions a signal things are changing? Does it not show they can be dollar risk adverse? The answer is yes on both accounts. They aren't in control and they don't need to be as heavily leveraged in US Treasuries as they have been before.
We make America what it is. If we want to bankrupt ourselves it will solely be us who does it.
Jon Stewart Takes on Goldman Sachs [Video] [View article]
Are banks doing their job lending or have just become a middleman between the mortgage broker and Fannie Mae and Freddie Mac sucking out the spread just to say they are still a bank? Is Goldman Sacs really good for the public when they spend most of their time writing code that "can manipulate the market" and work to widen spreads for everyone buying and selling stock these days? Is the billions we gave Goldman really being put to good use when it is spent bolstering their program trading?
Jon Stewart is not just Jon Stewart, he represents the scorn and cynicism of all his staff. And that cynicism comes straight from the experience and insight of the general public. The statement is clear, "Stop begging for shelter from the free market and then rewarding yourself for selling the free bread we give you at a 15% markup and calling it capitalism. And for goodness sake Goldman, boost your capital to an acceptable level to your lending before you pay out bonuses. And by the way what is with your announcing record profit and bonuses the same week you beg for special dispensation to violate VaR requirements by abiding only to flimsy SEC requirements (which is the regulatory arbitrage the FDIC has been lambasting financial institutions like yours which decimate the FDIC because inevitably they gamble and go bankrupt with insufficient capital and then require government infusions)? I really want to know. How stupid do you think we are?"
Hear that cheering for Jon Stewart GS? That means we are getting sick of your financial antics.
Coming Soon: Banking Crisis of Historic Proportions [View article]
So in essence, what do we have? An arbitrary, favoritist, banking sector brough on by direct government intervention. All I can say is, "What do you expect when you let government interfere to this extent in the market?" If you think you are going to do well get in the giant line of people willing to bow down and kiss politicians and bureaucrats feet.
Washington's Dilemma: This Isn't a Recession, It's a Collapse [View article]
The Federal government should not have spent all its money on a spending plan, but should have passed a real stimulus plan that included reserve funds to aid State programs temporarily that needed funding, extend unemployment, invest in better mass transportation and communication lines, and other more stimulating, meaningful, and productive things than what we got. Rather, we got a whole lot of Democratic pork and more buraucrats that don't add much to productivity. To me, the Democratic porkus looks and smells about as rotten as the Republican pork everyone rallied against to start with.
We didn't need 2x the stimulus (we got almost 0). We needed a real stimulus program. What we really need is 2x better rule of law, 2x less wasteful government spending, and 2x more austerity.
That aside, Gergor Macdonald is right that States, counties, cities, and municipalities are where the rubber meets the road and government actually produces the communal goods and services you consume. A collapse in them is diasterous for public morale since people will clearly see the disconnect between giving so mucg to the Federal government and getting virtually nothing in return.
The federal government takes considerably more and delivers multiples of times less than any other government body, even when comparing the incredibly inefficient State of California. If anyone could have stimulated the economy it is your local cities and counties. The fact that it hasn't ended up there shows that your money is not doing much for you or the economy. Now we will all suffer yet another string of consequences caused by a loose spending inefficient federal government and a lax easy money Federal Reserve. I suppose that's why the founding fathers liked States rights so much.
California - And by Extension the U.S. - Headed for Permanently Smaller Economy [View article]
Mass transport is useful and rational especially people residing in higher density cities. The fact we don't invest more on creating and maintaining them is sad. There is no reason for our mass transport to look worse than third world countries.
I agree with the author that we are looking at a smaller economy not because the US is incapable of growing and developing into the next phase of economic prosperity but because our government is dead set on trying to preserve the old structure at whatever inefficient cost it may take. We need a better health care system, a better trasportation system, more efficient fuels, and more competitive high speed communications systems (Internet especially). Asia has surpassed the US in all of these things aside from a rational replacement for gas (they don't need it as much because they have mass transportation, denser housing, and more fuel efficient cars).
We need to get on the fast track to actually being competitive rather than listening to politicians gripe about how great we are all day. We are less efficient every day government disincintivises the promising while rewarding the obsolete to remain. creative destruction is the only path to permanent prosperity. The sooner we face it the better off we will be.
Exclusive: Big Banks' Recent Profitability Due to AIG Scam? [View article]
When Goldman said they didn't need AIG to pay them I couldn't stand but laugh. They claimed all their positions were hedged. Probably so, by a another slew of faltering insurers who can't hope to cover their derivatives obligations. And then, probably after the fact AIG was going bust.
Anyway, there are a million ideas of how to avoid mark to market and/or find ways to book a transaction at an inflated price to raise the price of thousands of similar derivatives. It is a game that has been around for centuries. It's just funny to see the government so obviously involved in the price fixing.
The Calm Before the Stock Market Storm [View article]
There is more than one way to skin a cat. As for stock market price manipulation by big players, off market trading including after hours, flash trading, micro millisecond trading, etc. make the opportunities rife for participants to make matching trades, dump a stock to another firm and clear with them after the market, etc. There are tons of ways to hand the ball to other players without letting a real market participant in. Likewise, there are tons of ways to falsify volume through HFT, attempt to wash out stop losses by dropping price in 1/100th of a second to make them clear (like the flash crash). Of course stuff like this has been going on for years under the guise of improving market liquidity. It should really stop. The only fair market is one that prevents participants from circumventing it and allows all comers into the process at all times.
It doesn't require a genius to see how to take advantage of current trading rules at the cost of others. Just ask Goldman Sacs.
Stocks Remain Poised for Steep Decline [View article]
Undoubtedly, that will mean another downturn and government austerity. It will happen but probably after the next election as any economic fool knows the outcome and Obama will want to get re-elected before he plunges us into another hole (maybe much darker than the first one). What we aredoing here is worse than even Greenspan's easy money policies. We have made easier money policies to solve this downturn like Greenspan did to solve the downturn before this. The only thing is clearly the easy money is only going to the banks and the well connected this time (there isn't enough to go around this time without causing mass inflation).
U.S. Energy Policy Is Responsible for Unrest in Egypt [View article]
The US needs to get out of Middle East dependence more than foreign energy. If the US moves to natural gas they will be owing money to a much saner Canada than the Middle East. That is a good thing. I don't see major wars being started there.
After that the US can start to tackle their greater problem of an out of control, debt laden government. What the US should fear the most is their own government and self centered politicians. They are ruining the country and impoverishing all other Americans. everytime they print another debt dollar they are siphoning away your wealth to put into their friends pocket. To them it beats taxing you for it. We need to wake up and stop the Alice and Wonderland money madness.
Shale Gas Revolution: Real or Unreal? [View article]
Does this make sense to you? Perhaps. The oil industry and its lobbyists pay good money to get our government to embrace the irrational. The shale revolution just amplifies the glut in natural gas we have but can't use thanks to government's persistence to keep us addicted to an overpriced overseas energy solution that gets our soldiers killed, makes us run unsustainable deficits, and forces us to embrace tyrants and undemocratic Middle East countries until they turn our backs on us and declare us enemies. It is the pursuit of oil that we embraced Iran and gave them massive amounts of weapons only to lose them all when the Shaw got run out of the country only to have them all go to fundamentalists who call for the destruction of America, put Saddam Hussein in power only to have him attack our allies, and supported the Taliban only to have them attack the heart of America. The sooner we realize we must rely on domestic energy solutions the better off we will be.
Forget 'Manufacturing' [View article]
Asia's patents have been growing at a phenomenal rate as US patents have not thanks to our giving up of our manufacturing base. As Adam Smith would tell you, the wealth of a nation is in its ability to produce. Yes that applies to goods and services. But when you leave out goods you lose not only jobs but you lose a deeper understanding of how things are made and the creativity and innovation that goes along with it. Simply put, we can not do without the second.
The Employment Report Belly Flop [View article]
Gone Nowhere in 8 Years [View article]
There has been very little progress and a lot of harm done in the last 8 years financially and socially.
The only reason we are clamoring for government support these days is because government has completely failed at insuring economic security, regulatory honesty, and fiscal restraint. That which is destroying us is that which we have asked to save us.
I think we need to take a good long hard look at ourselves and what we are doing or not doing to insure domestic teanquilty. Certainly, being beholden to the rest of the world for oil, commodities, cheap labor, etc. is not a good way at protecting our safety erconomically or otherwise. Needlessly running up our debt to levels where we must beg China and others to buy our bonds also weakens the US. Economic strength more often proves more valuable than military strength. Without a strong economy it doesn't matter what you spend in defense, as proven by the fall of the USSR. We should wise up now and stop thinking government can solve everything by printing more money. This only leads to crippling our free market economy which is the source for our past economic resliency.
Another Manic Monday: Greenspan Finally Agrees With Me [View article]
Regarding the tax increases, no amount of tax increases will cover Obama's laughable government expenditures. He will spend until we are all broke. We should not encourage him or government by letting them permanently tax more. If you want to see a recovery tax less, spend less, and get government out of the kitchen and into the cellar again. It's the private sector that drives the economy. The public sector is nothing but a tax on society. The bigger it is the worse off we are.
Silver Is Too Rich vs. Gold [View article]
The simple fact is silver stockpiles are inadequate for this usage unlike gold. Until more silver mines open up due to being affordable to mine now the price should stay over $30. And if silver demand spikes again the gold silver spread will continue to narrow simply because no matter what the price is, supply doesn't change much.
China Is Now in Firm Control of U.S. Debt Markets [View article]
The simple fact is, too much $ and too many treasuries = inflation and higher bond rates. No one is forcing Treasury bond rates up on purpose besides the misguided administrations of Bush Jr. and Obama. Blame the real culprits not some strange foreign power that has been happy to fund your excesses for decades. They only funded them because they trusted that your economy was more stable than theirs. It's not a sign of dominence over America, or a sign that they have no choices. Their habit of buying Treasuries has largely been a sign of trust. That trust is now in question.
Wouldn't you question someone's trust if they just made your long term investment in them loose 30% of it's value in less than a year? I would. So can you really blame them? Is this the act of someone really in control? The answer is no on both counts. Is their recent actions a signal things are changing? Does it not show they can be dollar risk adverse? The answer is yes on both accounts. They aren't in control and they don't need to be as heavily leveraged in US Treasuries as they have been before.
We make America what it is. If we want to bankrupt ourselves it will solely be us who does it.