Ransome

Replace Ben Bernanke with Paul Volcker

I'm thinking the deposit banks are not up for paying more interest on deposits. This may be a poor reason to hold rates down but it could push them over the edge. The flow of money is chasing short term returns instead of long term investment. Goldman is going gangbusters because they can borrow short and invest short. Deposit banks can not do that. If interest rates climb and the deposit banks don't respond, money will flow like a river out of the banks. This is a big experiment in financial capitalism where moving money for short term gains becomes 40% of GDP, replacing industrial capitalism which is now less than 10% and agriculture which is 1%. The Fed is captured.

Look at the stock market, we no longer value companies, we play the pricing spread, the asymmetric information spread, not the value spread. Everyone is a crook because there is so much money to be made the fast way. It is almost beyond regulation. Besides, this money generated by financial capitalism is kept from the so called "productive forces" that make a society and a national economy strong. People seeking Alpha don't want to hear this, but the productive forces are so weak, you can't even give money away. Without productive forces, money becomes valueless, hence the move into gold. You don't need burning inflation to destroy the value of money. I'm sure we will muddle through until the next collapse because financial capitalism is not sustainable by itself.

We fueled the productive forces in Asia, weakened the productive forces at home, while fueling the speculators at home. The bailout further damaged the weakened productive forces at home and bailed out the speculators. This is why we need Volcker, Bair and Warren. I think they understand.

The monetarists and the Chicago School must be banned from the economy and take Harvard while you are at it as they are a big promoter of financial capitalism, the economic Nosferatu that drains energy from the productive forces. Warren must have been considered an Alien from Outer Space at Harvard as she did not support borrow and spend nor debt till you drop.

Profiting from Foreclosures?

Some people may feel there is no safe haven for paper currency. Gold is the option. I met a gold bug. They don't use banks or credit and they pay their taxes. It was a family legacy. Gold bugs trade and lend amongst themselves. Perhaps it is economic conditions, perhaps it is the Swiss that have generated a new interest in a tradition.

Where the Big Money Is Betting Big

Big money is dumb money. A market is made by smart money. It is projected that this new and rising market will hit $200 a barrel by the end of the year. Dumb money moves in. Near the plateau, smart money moves out while momentum defies gravity for a while longer.

Small molecule development is vastly different than large molecule development which has approximately four or more major hurdles to conquer not found in small molecule development.

Mergers are a sign of weakness, especially in the pharmaceutical sector. Guarantees 5 years of internal turmoil.

Gold is an inflation hedge. Did we add to the money supply or did we replace bad securities with good money, a zero sum game. Any chance the debt encumbered consumer will increase demand?

Real estate: Buying five houses and managing the rentals is a way for seniors to survive. The price of admission is still dropping and they are still making people that need a place to live. Fewer will qualify for a mortgage.

Bernanke Seems Clueless About the Real State of the Economy

I am proposing a thought. The situation that we are experiencing is different than before. Using leverage, bad judgment and fraud (buy now or you will never be able to afford it), the financial sector blinded by profits created a great deal of securities with counterfeit value, protected them with companies leveraged 100 to 1, and then bet on them. A borrower signs a note that is impossible to re-pay, that note is sold to an investor who uses it to assess his net worth. The note is the same as holding counterfeit money.

There are trillions in counterfeit value out there because at this point the parties can't honor their leveraged debt. The securities are not money good. It was all put together assuming Sally pays Robert pays Jenny pays Joe pays Sally. The US can dump $50 billion into AIG, the money honors contracts and the money circulates until it runs out. Then the financial sector waits for the next infusion. The banking system is holding the governments hostage until all the counterfeits are honored. It is not clear how many of these securities are actually backed by some kind of depreciating asset(s). One might just look at cash flow but it is seldom that simple. All of this must be sorted out, with the taxpayer picking up the tab for all of it, as we are doing, or call it all due and clear everything with the losers losing.

Bernanke thought you just needed to re-capitalize the banks. No one predicted the trillions in IOUs. The interesting part is that much is predicated on the housing bust, but no one in the financial sectors is much interested in stopping the bust. It is only the government. The CDS folks said money is moved back and forth, it all evens out. Perhaps not.