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Note to Jamie Dimon: Repetition Doesn't Create Truth

There is no reason why you can't have "Global" banks. Commercial banks, Credit Card Banks, Insurance companies, Private equity firms, Investment banks, and any other kind of institutions. They just can't be TBTF. We will never be able to control an organization that is TBTF by regulation or even caps.

And Bernanke Didn't Think Unemployment Would Reach 10%

Isn't a little scary the Bernanke didn't see the housing bubble coming and then didn't see the unemployment rising above 9%. I know he is in a position to hype the economy but sooner or later the fundamentals override the hype. Those of us that think Pres Obama and his staff can turn this economy around in 8 months are truly smoking something. Don't forget Mr. Paulson charging into congress with a one page document requesting 800 billion for the banks! At least he is out of the picture but the beat goes on with Bernanke.

People tend to solve problems with the skills they have learned. Bernanke probably knows more about depressions than anyone on the planet. He also knows the academic economic theory as to why it happened and the theory of how not to let it happen again. When he saw our severe downtown, he saw a
depression and applied his skills to implement the economic theory. So here we are! Let's hope the theory works but it's not going to easy to overcome poor oversite of the government and the behavior of our financial institutions. Not in 8 months.

The economists always think they understand the workings of the economy until another Black Swann comes flying by.

George Soros: The Guru Outlook

Because he is so smart!
You guys should stop yelling "liberal" every time you don't agree with a person's view. You gave up communist when the Wall came down. How about "not-conservative"


On Oct 29 09:29 AM p church wrote:

> If Soros is so smart, why is he a liberal?

But Cash Is Earning Zero

Jim Carey above got it right. Right now we are still experiencing deflation. The gvt. has poured lots of $$ in every corner to avoid a runaway deflation but stopping deflation, probably between 1% and 2% is presently the case. The gvt. will not raise short term interest rates for a long time because the experience has been that if you do raise prematurely then bad things happen and Bernacke knows this. So if you are holding cash although the interest rate is near zero the buying power of the savings are going up. Somewhere along the line prices will rise but not when the unemployment rate is rising towards 10%.

Economic Donkeys

Wonderful article!
It's almost 1 year since the meltdown of our credit system. Now what has been done about the problems? Nothing! Lots of possible solutions, lots of arguments about what should be done, lots of analysis of what caused it ( like this article), but nothing to help the situation. Does this tell you something?

What Can Stop This Market Rally?

If a company can increase prices as it's costs increase I don't think inflation will hurt that company. monopolies and oligopolies often have pricing powers. There are plenty of them out there. The two beer companies raised prices even in this depressed period!


On Aug 27 04:05 PM Shimmers wrote:

> Why is inflation bad for equities?

If energy trader Andrew Hall is worth the $100M Citigroup (C) might pay him, Yves Smith wonders why other big banks aren't trying to lure him away. And if Hall's contract is exempt from pay czar scrutiny, as Citi claims, why did the bank file documentation on Hall's pay?

If a trader can make a bank $1bill they will certainly pay him $100mil. Especially if he is trading with our money. He can probably get a job most anywhere except for the political heat.

The only way this compensation problem can be solved is to prevent banks/traders from keeping these outlandish profits doing stuff that do not help our economy. (liquidity rational is a lame justification).

How do we prevent them from keeping all the gains? We TAX them as suggested here several weeks ago by the former IBM CEO! We develop a tax schedule so that very short term trading profits are taxed at very high rates and of course stop giving the banks our money to trade with!

In Fed We Trust: Ben Bernanke’s War on the Great Panic, by David Wessel

Right on. The Banks have such power today that Bernanke and Geithner are being fought tooth and nail on any changes that would help the "too big to fail" problem. We should not allow any institution to form or exist that is "too big to fail".



On Aug 15 04:56 PM storm999 wrote:

> Whatever Bernanke's role, Greenspan was in charge and led the fed
> in its belief that deregulated markets and self-regulation were best.
> It was Greenspan who said the Fed could not oversee derivatives contracts.
> Now, he has said he was wrong and the banks beggared themselves.
> Bernanke et al. also know this.
>
> What concerns me is instead of reinstating Glass-Steagall and breaking
> up the big banks, they shuffle around ideas of how to created a super
> regulator to monitor these too big to fail insitutuions. It only
> took 8 years after the repeal of Glass-Steagall to wipe out our investment
> banking industry. If we don't put up firewalls, I think we will
> see another major universal banking crisis within ten years (assuming
> two years for complete recovery.) I say break 'em up.

Cash for Clunkers May Cost Up to $45,354 Per Vehicle

3 men go into a hotel and ask for a room. The desk clerk says that will be $30 please. Each man gives him $10.00. They go up to the room when the clerk realizes he overcharged and the room was only $27. He runs upstairs and gives a $1.00 to each man and keeps $2.00 for himself. 3x$9.00=$27.00 + $2.00 for the clerk ($27+$2=$29). What happened to the other $1.00????

Logic and assumptions must be carefully examined. $45,000 per car is and example

Goldman's Success: Put Down Those Pitchforks

Now we want to solve our problems by stepping up on some more regulation. There are plenty of regulations that were ignored by the people in place because... ?

If a bank is too big to fail then it certainly should be made smaller-isn't that a good idea- that hasn't been addressed? Regulation doesn't work but apparently size counts.

Last time I looked banks report by the businesses and franchises they operate. In many cases they insist it is necessary that one business does not communicate with any other under their roof because of conflicts. So they build "Chinese walls".

How about splitting the banks up based on these various businesses such as Credit cards, brokerage, trading, investment banking, underwriting etc. Then if one is in trouble so what?

This will never happen - too much power already in the hands of these large banks.

We were warned about the military-industrial complex by Ike and he was so right. It's too big to fail also. This power has led us into numerous wars and excessive useless armaments and will never stop!

Now we have a Financial Government Complex that will continue until we lose our "free capitalistic system".

Six Signs Economy Is Turning the Corner

These are really lame signs of recovery.

You must discount the banks "earnings". They depend upon how much to reserve for their endangered loans. If unemployment continues to rise even Jamie doesn't know! They must show profits to sell some more shares if things continue to deteriorate.

IBM's Gerstner Favors Taxing Short Term Capital Gains

Wasn't the stock market organized to provide capital for companies who would then use the money to produce products that were desired or needed by our society? The market allowed ordinary people to participate in our capitalistic system. The trading of shares allows people to exit or enter these investments. I don't think it was organized to bet every day on the price movements or to form pools to drive stocks up and down. How many of today's regulations such as prospectuses, uptick rules, etc. etc. were instituted to control the casino mentality that has become the rule rather than the exception in our markets. Banks used to be simple businesses run by average people getting paid average salaries. Now with program trading, bundling mortgages, trading default swaps, etc. we have to pay bankers millions of dollars and then use tax payers money to bail them out when they are wrong. We no longer have capital markets we have a capital casino.
What's wrong with a market that's not so "liquid"?

Former IBM CEO Louis Gerstner urges regulators to shut down the Wall Street casino by taxing daytrading gains by 80%. Six-months later, it should be 60%. And five-year gains should be tax free, he says. (via) That's one way to bring back buy-and-hold in a hurry.

Wasn't the stock market organized to provide capital for companies who would then use the money to produce products that were desired or needed by our society? The market allowed ordinary people to participate in our capitalistic system. The trading of shares allows people to exit or enter these investments. I don't think it was organized to bet every day on the price movements or to form pools to drive stocks up and down. How many of today's regulations such as prospectuses, uptick rules, etc. etc. were instituted to control the casino mentality that has become the rule rather than the exception in our markets. Banks used to be simple businesses run by average people getting paid average salaries. Now with program trading, bundling mortgages, trading default swaps, etc. we have to pay bankers millions of dollars and then use tax payers money to bail them out when they are wrong. We no longer have capital markets we have a capital casino.
What's wrong with a market that's not so "liquid"?

Thoughts on Free Market Economics

Perhaps one of the great distortions of our system is the introduction of "to big to fail" (TBTF). Once you accept this the playing field becomes extremely distorted. The concept of "creative destruction" is no longer in play, a very important part of our capitalistic . The recent plan put forward by Mr. Geithner try's to correct this anomaly by instituting more regulation.

The article in the 6/21 NYT Week in Review, Pg 2 "If It's To Big To Fail, Is It To Big To Exist" summarizes our problem. The financial regulators come out of the "To Big" companies and are setting up the rules for their friends once again.

The financial companies that are TBTF report by divisions. In fact, many claim that many of the divisions do not know what the other divisions are doing. It would be a conflict of interest if they did. So why can't we split off some of these divisions and begin to work on eliminating financial institutions that are TBTF?

This was a great article!

S&P Still Considers This Market Cheap

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I don't know whether the market is undervalued but if you use a dividend discount model with short term rates at their current levels then any company with "solid" dividends are worth a heck of a lot more than their current prices.

The actions of the govt. manipulating the interests rates to such a great extent has made valuations extremely difficult- the big question is how long will the govt. hold down the rates and not let them seek the market levels. And now the dollar is beginning to tank!