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James Gornick
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I am an economist who created theorems being bantered about for the Austerity v. Coase oppression investing, and new nest egg investing lifestyle rules. The theorems are measuring affects on markets and human unit plights over these next decades. I have been an analyst for over 21 years.... More
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  • Has George Soros and John Paulson Efforts, Injected Massive Governmental Involvement In The Financial Markets? 1 comment
    Apr 2, 2012 2:13 PM | about stocks: BAC.PJ, BAC, JPM, C, C, WFC, WFC.J, STT, GS, GS, GS, XLF, FAS, FAZ, IYG, RYF
    Financial Crises Create Opportunities.

    Prudent and discerning entrepreneurs who save their capital for a perfect storm are able to acquire assets at fire-sale prices and put these assets to higher and better uses. At who's expense do they pull off these financial swings in the sectors of the markets they choose? What happens when their goals are not the same as a nation's goal? What is their success as to being on the insiders information track to save them from being on the wrong side of the bets? One of the best examples are, the recent filings with the SEC on their shift of bank holdings and their process of getting rid of enormous amount of shares.

    History has told us of the biggest asset bubble contributing to this Recession (Depression), occurring in housing, was largely attributable to artificially low interest rates, government agencies and concomitant policies that pushed profligate lending, and the lobbying and more brutish efforts put forth by the groups that proliferated around and prescribed to the Pollyannaish at best and perverse at worst "home-ownership for every American" persuasion.
    Big government has tried to stay hidden. Many smart reporters have been working to pull the veil back and expose these organizations, most notably is these reporters going after the Center for Responsible Lending (NYSE:CRL). As readers may recall, most recently the media examined the Center's alleged lobbying violations.

    This organization is highly significant in that for its efforts, the CRL has won a front row seat in helping design the Consumer Financial Protection Agency (CFPA), as one of its major architects is former CRL senior executive Eric Stein who is serving as the Treasury Deputy Secretary for Consumer Protection and will likely be tabbed as the CFPA Czar. Like with all of the economic and social justice-peddling shell organizations, in the case of the CRL the acorn does not fall far from the tree (ACORN).

    Hidden beneath an innocuous title is an organization in the CRL whose activities serve ends directly opposite of those they purport to promote.
    Under the guise of fostering fairness in lending, the CRL has been used as an attack dog to force banks to lend to poor credit risks. Due to the Community Reinvestment Act (NASDAQ:CRA), redlining lawsuits and the intimidation of groups like the CRL, many banks were threatened into creating mortgage products such as Alt-A and NINJA loans, discarding all rational lending standards, and helping create a market ripe for speculators and sure to ultimately be delinquent homeowners.


    The Liquidity Solvency


    This writer has identified liquidity crisis and distinguishing it from a solvency crisis for the past several years. It's something like an essential precursor to develop and execute a rescue plan (or to adopt "Plan B" if the first rescue plan fails to return the country and its many mistresses to the style to which they have grown accustomed).

    Forgive me for nitpicking, but either market actors of Soros and Paulson and company, as the header for the title of this article, are so beyond reliable or rational function that they cannot bear price discovery, or solvency and liquidity are in equal measure gummed up all through the works.

    Federal Reserve, with the assistance of the knowledge of the Elite Hedge-Fund
    participants; "Quietly" injecting $650 billion of cash into the system, as the Fed decided to delay total chaos and prevent cats and dogs from living together before Easter, but it doesn't solve the basic issue faced by most (heavily leveraged) finance institutions: their liabilities may well significantly exceed their (still deteriorating) assets. As if that's not enough, almost no one knows how long and to what degree insolvency has been sloughing rotten skin off all over the new industrial ply carpet in various regional banks. But this goes against conventionalist wisdom--if you take in account that if the monetary systems fails, ultimately the Large Hedge Funds and the Elite of the 2% of the worlds wealth loses too. I hope that this will limit the egg-splash to the first two rows, but certainly there is going to be some breakage. Here's hoping one of the wrestlers doesn't teeter over into the spectators.

    Members of the chattering class in Washington, D.C. and New York City have bandied about the term "market" often of late. It is a "catch-phrase" for libertarians who put all their faith in unregulated markets and for liberals who want government to control the markets. What both sides fail to recognize is that the "market" is nothing more than the sum of individual human transactions in the marketplace.

    The responsibility for our current economic meltdown does not lie with some amorphous "market system" or a few obscure, but powerful, CEOs. No, the real responsibility lies with the myriad transactions of the millions of people who make up our economy.

    It time to take the market back from the likes of the elite. Elite like Mr. George Soros, Paulson and the rest of the group. Time to take back the original functions of the lending machines of what we call our banks. By backing and shoring up the financial banking systems within reason, their survival, but under stricter guidelines then what are in-place at this current moment.

    The banks and other institutions should be under a tougher policy of guidelines working to correct the wrongful actions with home-modification and other programs to buoy the housing sector. The banks and their schemes have come to roost and effect a world. Possible, we can come to a common ground too finally ensure the Banks as well as the individual homeowners can sustain and recover from a full world adjusted bailout.

    Bailouts taking ones from behind the curtains, the ones called the "Elite's" trying to erode the ethics and level of moralities of our modern societies we have assisted them to decay and destroy. The message is clearly sounding the alerts for all astute investors to gather and circle their wagons. Circle the wagons to defend themselves from these very few rich and powerful elite investors and hedge funds. Time for cancellation of the hedge-funds trying to crash the American Economy and the other G-4 participants left at the worlds poker table.

    Would it be bad to continue a policy for the banks to bail out the poor homeowners that had been duped? We can approve of this recovery of an American economy under true Home-modification efforts or laws passed by the governments to extend also COBRA and other benefit programs with the unemployment benefits. It could signal for the first time, a price tag of extension of benefits to be charged back towards the corporate world that has profited from their ability to dislocate millions of workers off their payrolls, at the cost of the taxpayers' expense to date. Taken together, these transactions involve buying, selling, and trading.

    Each individual transaction is fraught will moral implications. All parties to a transaction have a moral responsibility to deal fairly and honestly with each other. The failure to live up to this responsibility on a massive scale has led to the crisis that had befuddled past Secretary Paulson and now Mr. Geithner as it threatens to be America's economic undoing. It is easy to be bogged down in the complex details of possible "fix it" plans, but the root of our economic troubles is clear: People are selfish and greedy-they often ignore the good of their fellow man in pursuit of their own economic gain. Old-fashioned dishonesty in business gave birth to our current disaster.
    We should not be surprised by rampant selfishness and dishonesty. The Founders were well aware of human corruption when they were establishing our political system. James Madison understood the nature of man, declaring, "If men were angels, no government would be necessary.""Since men are quite obviously not angels, they require the help of government in maintaining justice and fairness. But no economic or political system can produce justice if the culture as a whole ceases to care about these virtues.

    No system can be superimposed on culture , which will magically produce justice out of corruption. If the hearts of the people turn from justice and they refuse to embrace the Golden Rule, no governmental system can check or balance that corruption. Once the broad-based cultural rot of individualism and moral relativism sets in, justice and honesty will crumble and our markets will not be the only thing to suffer.

    The best check on injustice is to be found in the shared values of local society. When the people who make up communities generally agree on proper standards of conduct, the few who would violate those standards feel the opprobrium of the entire community.

    Often the force of shame itself can restrain avarice. As the sense of local, shared morality degenerates, however, the external force of government becomes necessary to fill the void. When selfishness and relativism tear apart our social fabric, chaos ensues. And since people will not live in chaos, they inevitably look to the government to reestablish order. The late theologian Harold O.J. Brown understood this point well when he wrote, "We may say quite simply, the greater the individual responsibility shown, the less the need for government controls.

    Where responsibility fades into nothingness, controls become absolute. To the extent that citizens assume responsibility in society, the government can leave them free from elaborate controls." People need order, and that order will come from either within or without .For too long in our Republic, too many Americans accepted unrestrained, laissez-fairer business dealings.

    They refused to regulate themselves. "Let the buyer beware" became the mantra, and we are seeing the fallout from dishonesty and selfishness. Now those same people are crying for the government to save them. Financial players like Secretary Paulson, who once touted absolute deregulation, now want to impose stringent controls. People like Paulson seem to be without guiding moral principles. They drift like a ship without a rudder.

    In the end, their only goal is their own self-preservation. A truly free market requires honesty and transparency on all sides of any transaction. Unwritten cultural rules are the bastion and preserver of freedom. Self-regulation by the participants is the best way to preserve a free market. However, when community standards disappear, government inevitably steps in to quell the chaos.

    Investor and professor, Harry Dent developed an outlook for all to take notice:

    Neither markets nor people can truly be free unless they govern themselves. To the extent, they fail to do so, government will have to do it for them" (Curtis Bowman).Honestly, I wouldn't want to be shorting the banks and the efforts of a movement of the Tea Party and others on the move. On the move to get the likes of the big fishes to be on the wrong, side of the bet this time around.

    The Oligarch may find themselves this time--on the other side of the coin called silver and gold, not to mention a dollar that will return to keep it's value by the will of the American Spirit as One Nation under God.

    Disclosure: No Positions

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  • Oldtime_Trader
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    One of the best articles I read today. It also could be an article forr the times exposing the true beast of who is the puppet masters.


    Great article post.
    17 Nov 2010, 02:00 PM Reply Like
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