FreeMktFailure

Absurd Inverse and Leveraged ETF Product Whining (Updated)

Wouldn't this be a smart regulation; Make it illegal for typical stock brokers and financial advisors to market these products to individual investors without informing them of all the points made in this article. They should not be allowed to sell triple leveraged inverse ETF's as a pure long-term strategic position. The position should have to be part of a defined, explainable hedging or trading strategy. Furthermore, there should be questions added to the series 7 and 63, I think those are the ones new brokers get, I don't have them, that test a broker's knowledge of the products and their uses. It should NOT be illegal for individual self-managed portfolios to do whatever they want cause noones selling them anything. Online wins? Tough, read another book and answer a couple of questions hot shot. Brokers get better, more rational markets and prices. And less people pissed off and up-in-arms cause they lost all their money.

The Case for California Defaulting

Paul Kedrosky, you need to write more than a paragraph more often.

California should be able to default on its bonds, it was a stupid state and bondholders should all get hurt and everyone feels it. But it feels like, even if we weren't FUBAR already, if California defaulted, not only would the direct effects of the default happen, but a string of CDS contracts and other weird derivatives and whatever else I don't know about would set off. Then eventually AIG defaults again, and so on.

Does that make what George Soros said true, that CDS's should be illegal, rather, would it set off another Lehman type blow up if California were to default on its debt? And if that is the case, how can a financial market operate with any sort of efficiency when there is a permanent systemic risk in the event of default?

Or not? And if not, then maybe they just should be told by somebody that they can't sell any more bonds, they sold enough already. It's like the U.S.'s financial market is injecting itself with heroin, but we can't make it stop doing heroin. But its not a person, it's a bunch of stupid state politicians who are as, if not more incompetent than a national politician, I don't even know what that means. Can't the federal governement just pass a law that says no more heroin? Let your kids try some heroin when they are young, you've had enough.

Then the state defaults and whatever. So it's either I don't really get it yet, they CAN'T default, or make those stupid, surfing, irresponsible hippies default.

China, Don't Believe Turbo Tax Tim

This site has become so boring and predictable. Oh really, you think we are spending too much and there will be inflation and a devaluation of the dollar? Tim Geithner is an a-hole? Wowwww. Wake me up when you think of something insightful.

Bill Gross: What?

"...the U.S. won't grow as fast as it used to. And, even though I'm one of the good guys, just a regular Joe voting for Obama and working a gov't job, I am so happy that my generation decided aspiring engineers and physicists were only good for one thing, derivatives. You can't imagine how fun it is to be so wealthy. It's a real shame that from now on nobody will get the chance to make so much money out of nothing. I love Pimco so much, and I will be talking down any economic recovery because I am buying treasuries."

Why Shouldn't Goldman Sachs Repay Their TARP Money?

Money set aside for future pay in 1Q, $4.7 billion. Money Goldman is planning on raising in the equity offering, $5 billion. Ouch, these guys are real a-holes. Good thing it was Goldman and their bets payed off with all the risk they were taking. Will be unfortunate when it is Bank of America and Citi and every other envious and inferior bank, and they blow up, again, with our money, again.

Oh those guys at Goldman are so smart! The government can't blatantly retain control of them, that'd be like socialism or something! It's probably better that we let their greed and hubris serve as an example for the rest of the banks, the ones who f'ed up last time. They always seem to be one step behind Goldman. Now they've got to race to get out of TARP, God help us all.

ABC: FBI and Prosecutors 'Closing In' on AIG's Cassano

A lot of people deserve to go to jail. He is definately one of them.

Fed, Treasury Propose the Dissolution of Capitalism

This is all true, but maybe the threat of the end of capitalism is needed. Moon, you have said that the real problem right now is the derivatives, just the incredible amount of toxic derivatives that plague the global economy. To think that given the opportunity, financial engineers would not create equally atomic means of amassing mountains of wealth, is naive.

The derivatives that are waiting to blow are (in my opinion) the equivalent of nuclear warheads within miles of and pointed straight at every major city in the world. If a country was not only developing nuclear technology, but had clearly amassed thousands of capable missles, should some authoritative body not have the right to seize complete control of the nation? In a perfect scenario we could completely enclose that nation, remove its people, and blow it to pieces, but collateral damage just can not be avoided so easily.

"The fact that any government institution should abridge the right for the legitimate holders of a company from controlling their assets unless insolvent is a complete dissolution of all capitalist fundamentals."

At what point would the legitamate holders of a company possibly admit that their institution is insolvent, and how far would they leverage and poison their assets in the hope of returning it to solvency? Might that company not make ever more dangerous dealings with nefarious counterparties, deepening the spiral, and inevitably creating a systemic failure?

I may not trust the government so much, I trust select people, certainly not the ubiquitous individual. Libertarian paternalism seems like the wave of the future, people need to be encouraged in the right direction, not given the choice, with no appropriate advice, to choose whatever they wish. That choice is more often than not the wrong one.

Let's Not Get Carried Away: It's Still a Bear Market

The stock market is nothing but an awesome gambling vehicle, and the fate of the world should depend no more on the Dow than it does on a roulette wheel at Harrah's.

Rally until friday and probably blow up on Monday after G20 clusterfcuk.

In Praise of Suze Orman

My mom loves suzie orman and my parents are a factory worker and teacher who own 3 houses, 2 of which they rent, and only 1 has a mortgage. Paid for me and my brother's college educations, buy cars with cash, and not often. They have little debt of any kind and are golden right now at 60. So if my mom likes her, she's alright with me.

Will Government Spending Work?

prudentinvestor, you remark that when you see the rapid advancements in countries that changed to capitalism, you know the answer as to which is preferable. Clearly that is not applicable to the predicament of the United States because... we were never socialist to begin with!

The free-market argument seems to completely and hypcritically ignore the fact that if we had really let the free-market work this whole mess out, from Bear to Lehman to AIG to Merrill to Citi to BofA to GE, GM, etc., there would not be 15% unemployment, there would be 50% unemployment. It is a load of bull. Almost everybody agrees that a paramount catalyst for the spiral we've gotten into was "letting Lehman fail." "How could we possibly let Lehman fail?" the hypocrits ask.

We need to use our damn brains and not stick to dogmas and ideologies. Capitalist ideas where and when capitalism is necessary, socialist ones when and where socialism is necessary. Of course there is a counter-point to every one of this articles comments, as there are counter-points to all of your comments. Every point has a counter-point. Things ebb and they flow. Just because capitalism worked for you, you likely had less to do with itthan you think. It is all based on the circumstances of where and when, randomness. So recognize today's circumstances and realize, they aren't what they were at any point in recent history.

The U.S. Risks Losing Its AAA Credit Rating

A few years now after behaviorial economists won the nobel prize, prospect theory, biases and heuristics, and the like are accepted by all "rational" thinkers, people should start paying attention.

Free-market pseudo-science, massive deregulation, much of classical economics, when applied to the world we live in, is a sham. A way for the rich to exploit the poor, with no accountability.

Our economy is ruined, I guess they'd like to say there was no other way, people made completely rational decisions. Way to go.

The Economics of Political Spin

Republicans are sick, our economy has gone to shit since Bush came to office, but obviously its not his fault. Why is Social Security and Medicare such a problem? Because these bozo's spent it all... Yeah they weren't the first to dip in, but they sure spent more than anyone else, by a long shot. Remember the complex derivatives instruments that have f'ed the credit markets, well thank Ronald Reagan for deregulating everything for those. Remember when republican and conservative meant a single thing? Ron Paul is a conservative, George Bush is an ATM card. Iraq will be a trillion dollar, politically and economically crippling disaster. But hey, just put it on our tab, what's a trillion when we are already several trillion in the hole? The government will send our troops die, but not Bear Stearns. Free-market capitalism... a pseudo-science passed along as a natural science... based on perfect knowledge and rational actors... except everybody is greedy, and we're headed towards a depression. And the Communists? Well all they've done is build China.

I.O.U.S.A. Movie Is Well-Done and Informative

How about giving illegal immigrants mortgages loans... I think that would be a few million hard-working, frugal households, with multiple workers, who have been saving money for a while now. That would help fill vacant home and create a bottom in the housing market. During which time they could contibute taxes to the economy, followed by their initiation as citizens, after paying another fine to the government. On the other hand, who would want to see formerly illegal immigrants walking into the front-door of their foreclosed home as they pack all their belongings into their soon-to-be repossesed bmw's, and were forced to compete and earn before they spend.