Thursday, October 09, 2008

They're Selling, Mortimer

What's happening right now should be of intellectual interest to anyone who appreciates the significance of witnessing seminal, historic events first-hand. If there's something good about this collapse, it's that it is taking place while most of those responsible are still in office. For years, the administration and its economic appointees did everything possible to prop things up until Inauguration Day 2009. Those failed efforts contributed to the scale of the current situation.

Confidence is obviously crucial right now. And it's not just confidence that a stock one buys won't be 25% lower in a few hours. I've posted before that any solution to the current mess depends on the public believing that the bad actors have been held to account, and that the system has fundamentally changed. That happened after the 1980's, and to a lesser extent after the tech bubble in the late 90's. When people read news reports of failed CEO's getting tens of millions for a few days of work, and executives at companies that are now wards of the state blowing hundreds of thousands at exclusive resorts, they're not putting their money into that system. Period.

When you see Alan Greenspan under the hot lights with a pitcher of water, that will be one sign the political establishment is waking up to the importance of public confidence. Related, there's going to have to be a raft of high-profile prosecutions of both private and public sector officials, for everything from disclosure issues to the uncanny buying of stock index futures at politically expedient times, especially in 2004 and 2006 (I believe the equity market's manifest backstop was an important part of the larger financial bubble). Watch the pardon list that Bush will sign with a pen he borrows from the movers. There might be some unexpected high-level names on it.

So what happens next? I've written several times (and many Dow points higher) that personal savings are not safe in this system. Remember, it's only been about a year since the real turmoil started. Think about all the measures the government's taken since then. Can you imagine what we'd see after another six months of this? Or a year, or five?

In terms of the domestic and international implications, you don't need an advanced degree in sociology or history to understand what angry, desperate nations are capable of. Maybe all you need are some tapes of the crowd at recent McCain and especially Palin campaign rallies. History might never repeat exactly, but the faces and the language -- and increasingly, I suspect, the uniforms -- never really change. Will November's losers be content to sit quietly in their unheated, half-priced homes for the next four or eight years?


Anonymous Anonymous said...

so what are you to do with one's current savings? buy stock? bonds?

10/09/2008 10:33 PM  
Anonymous Anonymous said...

You mean like this dude.

I'm always a little skeptical of these situations. Because we all found out in 2000, in Florida, a lot of them are paid, and/or their job relates to politics (i.e., aids). Most ordinary folks can't afford to do this, or are more humble. The parties aren't above hiring folks to do this. I find when you ask these rabid folks what they listen to, it's the usual scolds and demagogues: Fox, O'Reilly, Limbaugh...

But maybe that is why:

Is Posse Comitatus Dead? US Troops on US Streets

"In a barely noticed development, a US Army unit is now training for domestic operations under the control of US Army North, the Army service component of Northern Command."

New Documents Reveal “Effort to Create a Gitmo Inside the United States”

So do we hide gold bricks under our beds? Icks! If it's global, I don't see how foreign currency could help. Please don't say we should search out Ted Nugget in his wooden shack in the woods? %-|

10/09/2008 11:11 PM  
Anonymous KAIMU said...


Was there a problem with letting these large fraudulent banks fail? The FDIC is still there and we'd be bailing out depositors instead of CEOs! Let their derivatives implode ... The building will be left. Barcklays bought LEH for $1.35 bil and the Manhattan building was worth $960mil! The building was worth more than the "paper shuffling"!! You just move the old Harvard Skull Boys Club out and move the Austrians in!

Here is a US bank that did not participate in the derivative/subprime mess and after all the mayhem the past couple months its share price is still at the same level it was back in 2004 ... $45 per share! What bank? Bank Of Hawaii(BOH:NYSE) Voted the top five safest banks in the USA. How come this bank gets NO praise on CNBC and Warren buffet isn't throwing $5bil into Bank Of Hawaii? I guess Bank Of Hawaii just isn't fraudulent enough to be admired by the masses! We have lots of resorts here in Hawaii where the execs could go and spend $400,000 but the Bank Of Hawaii execs chose to stay at the office and work!

Hank Paulson and Bernanke's solution is to save the fraudulent banks that made horrendous mistakes in risk management but throw the baby out with the kitty litter and let banks like Bank Of Hawaii go it alone. Bank Of Hawaii is not begging for bailouts or over at the US FEDs discount window.

I say let the BIG BANKS FAIL and reward banks like Bank Of Hawaii and make them our CENTRAL BANK! Save the depositors ... get BOH better management ... get rid of the pond scum that has been infecting our monetary system for 95 years and we'll have a great base for moving forward, unless either OBAMA or McCAIN are elected.

Somehow Bank Of Hawaii survives and isn't even a member of the US FED insiders club? Why is that?

Now it might seem like I am some PR guy hired by Bank Of Hawaii but I am not! I do have my money there and I never worry about it!

Its 10PM ... Do you know where your money is?

10/10/2008 3:25 AM  
Anonymous Hairhead said...

Regardless of the fantasies of the elite and the wealthy, the system which they game to their advantage still depends upon the proles and the middle class believing that the system works, putting their money in the banks, using the credit cards the banks give them, and buying, buying, buying the offshore-produced materials the outsourcing corporations market to them.

To those outside the U.S. (like myself, a Canadian) it has been decidedly odd to watch about 50% of the American electorate consistently elect people who are fucking them up the ass right at the moment, will fuck them the ass in the future, and in fact promote the idea that as long as THEY can fuck the electorate up the ass, it means that a few of electorate may at some time get to fuck their neighbours up the ass.

Of course, the reality is that in the last forty years, the U.S. has gone from the most economically and socially mobile western society with the smallest gap between rich and poor to the LEAST mobile society with the GREATEST gap between the rich and the poor.

Remember the book "Megatrends"? The author said that it was incredibly simple to predict the political and economic stability of any country, simply by observing the ratio of rich to poor. And I thought America was in trouble THEN.

The fact is, the great unwashed American public is about to wash its hands of the fearmongering and the fantasies of the elite -- and it's going to be messy once the REAL costs (of which we dealing only with 10% or so) are counted up.

10/10/2008 1:18 PM  
Anonymous goldhorder said...

so what are you to do with one's current savings? buy stock? bonds?
hahahaha...dude what is your problem? How can you be so dumb. gold and sivler
Buy rural property
buy guns and ammo
sell your damn stocks...take the damn 10 percent penalty...get out. Get out now.

Man oh man...what does it take to wake you people up? I guess a a a sheep.

10/10/2008 2:41 PM  
Anonymous goldhorder said...

Look dude...since 1972 when we broke the gold standard you are better off buying gold the whole time during this period and burying it in the ground. That is the truth. The whole buy and hold nonsense was propaganda. You don't even have to pay taxes on selling...Unless you are stupid and report it as a capital gain...but it is a cash business.
You don't believe me? Look at the dow from 1972 to present...what went from 1000 to 8000 today....price of gold started at 35 an ounce...what is it today? A spot price of $838. Except for the fact that you can't actually buy gold for anything near that price unless it is a paper promise of owning gold. You can add 70 bucks to that price for the real price of gold...look online for junk can't even find any. It is insane out there. Anyways...can't blog now...gotta go out and buy me some gold and silver while there are still people selling it. LMAO...on my way home I'm going to buy some bullets so I can shot you starving beggers when you try and steal from me. This is what you get for allowing yourself to be a slave to our ivy league educated elites.

10/10/2008 2:49 PM  
Anonymous e. nonee moose said...

Will November's losers be content to sit quietly in their unheated, half-priced homes for the next four or eight years?

I'm already seeing signs of this at the office. I've got some angry co-workers with whom I dare not disucss politics or the economy. When Obama wins the election they are going go ballistic. I'm keeping a low profile.

10/10/2008 3:24 PM  
Anonymous Anonymous said...

I don't believe Bush administration created 9/11. But what I do believe, they created an environment (with their attitude about government, regulation, transparency, pay-to-play cronyism) that allowed it to happen. I don't believe Bush and the Republicans created the global financial meltdown. But I do believe, they created an environment that allowed it to happen. If we had a different leader (and all the people they bring with them), we would have had different results. Their ideology trumped stability. It doesn't help that Bush is an example of the Peter Principle. Some people would vote for Bush all over again, even if it meant world disaster. How sad. Even David Brooks said, what Obama does well is surround himself with intelligent, good, capable people. What did Bush surround himself with? What does McCain surround himself with?

My older neighbor was in tears this morning because of a news story she saw on TV where kids in a school in Georgia were singing about Obama. She said its like Germany and Hitler. I said to her, where have you been the last 8 years. She never heard about kids singing to cutouts of Bush. How about everyone stop singing and praising. Our president is not god, not an "elected king", no matter what he does. Our Constitution does not allow it. They are a civilian, who runs for public office. They work for us and live in our house. Making them more than that is part of the problem.

It seems odd, that the right goes ballistic over Obama and Pelosi. And evidently they don't have a problem with Bush in the WH now. They don't have a problem that they lied us into a preemptive war and the cost. They lied about the cost of the Medicare Drug Program. They fired people who disagreed with them. They were secretive and abusing power. Today, the right still has enough to block. The last 28 years have been dominated by Republican control, President and Congress. Look at what Reagan really did, Bush I, Gingrich, Frist, Delay, Cheney, Rumsfeld, Cunningham, Perle.

I'm not defending liberals. But I thought during the Clinton blow-job trials that the Right would bring the country to its knees rather than fix problems that impact all of us. What a HUGE waste of time and money! Perhaps we could have focused on more important legislation and issues.

At this moment in time, I don't care if it is a Martian, but if they have the temperament and education to do the job, go for it. These are serious times and they require serious mature adult leadership.

10/10/2008 4:29 PM  
Anonymous Anonymous said...

David Gergen, Former McCain Strategist Warns Against "Angry Mob"

What was that saying McCain used, "Country First". Hhhhmmmm.... Prove it McCain.

10/10/2008 4:50 PM  
Anonymous Ghidorah said...

Anonymous @ 4:29:

You don't believe the Bush Administration "created" 9/11, just the atmosphere for it? Bush had been in office less than 9 months when it happened. Is that enough time to completely change the environment? I'm not sure. But it is enough time to give the green light to a black-ops team to put their plan into motion.

That is what makes me the most curious about the outcome of this election. Regardless of who wins, those perpetrators are still out there. So where does that leave the next president if he really wants to change our direction?

I know what you're thinking. Oh man, another "truther". If bin Laden were really to blame, don't you think we would have been interested in catching him? Wouldn't it have been, and remained, job #1? Barely 6 months after the attack Bush said he was not that concerned about him. How is that at all reasonable, even for a man as callow as Bush? No one would say that about the man they knew was responsible for such a horrific crime. No, he knows something we don't.

As far as the rest of the GOP goes, they are the same as they have been for almost 30 years; just turned up a few notches. They are a bunch of rich guys who ride herd on a resentment-fueled mob. A lack of introspection and self-awareness combined with a sense of victimization and a fear of the other are a dynamite combination. Soon to be literally. They do not see their hypocrisy because they do not care to look.

In one of the recently posted videos of a McCain/Palin rally showed a man (A black man no less. How a black man can support the GOP is beyond me.) stood up and said he didn't understand how Obama could be so far ahead in the polls. Of course he doesn't understand! His worldview has been so warped by lies and propaganda that it can't account for such an outcome.

10/10/2008 5:58 PM  
Anonymous goldhorder. said...

The Democrats have contributed to this. All you have to do is look at Naomi Klein dissing the Chicago School. This is what liberals do. They try to convince the powerful how wonderful their ideas are and have absolutley no real dialog with the unwashed masses. This is what liberal politics in the US are all about. It is way they became the minority party. Kevin Phillips actually predicted the religious right before it ever happened. He saw the left turning into a bunch of atheist intellectuals and knew that they would lose the base of their support. The liberals have done nothing but kid themselves about how they lost their majority because of racism or whatever is all a lie. They lost their support because they became a bunch of elitist snobs. Robert Fisk on giving speech tours in the US remarked on the same thing. He was confronted by these angry poor right wingers every place he went...but had no problem pulling them to the side afterwards and talking to them. It is nuts how pathetic the left wing has become in this country. By the is impossible to get a price any where near spot price on precious metals. It is nuts out there. The spot price is nothing put an illusion.

10/11/2008 12:26 AM  
Anonymous Anonymous said...

What was that saying McCain used, "Country First". Hhhhmmmm.... Prove it McCain.

You don't understand. "Country First" is the equivalent of "Deutschland Ueber Alles".

10/11/2008 2:06 AM  
Blogger Mrs Panstreppon said...

I notice Goldman Sachs is no longer listed as a major stockholder of Cenveo (CVO).

No one at Goldman Sachs or Fidelity appears to have done any research on Cenveo CFO, Mark Hiltwein.

Hiltwein was let go at Moore Wallace for forging a document during an investigation. Surely no one on Wall Street would want Hiltwein running another publicly traded company after he committed fraud.

Or did Wall Street encourage Cenveo CEO, Bob Burton, to bring Hiltwein back to help Burton hide his BIG mistakes?

Lehman Brothers, Goldman Sachs...the usual cast of characters.

My guess is that Hiltwein misses working at the Newark trucking company. With a little prompting, I am sure the Feds could get Hiltwein to sing like a canary about the crooks on Wall Stret.

10/11/2008 2:30 AM  
Anonymous judyo said...

Mark Hiltwein sounds just like the kind of person the GOP would run for the Presidency.

Here, in WA State, the Republican running for Governor, Dino Rossi, does not use the word Republican (too toxic, I'm assuming). He's Dino Rossi, GOP !! He's also a lot like Mark Hiltwein.

10/11/2008 11:26 AM  
Anonymous goldhorder said...

I'm in Washington right now. I've seen Rossi and all his ads. Boy that dude is a slick character. Real Estate salesman ...old...tan...always smiling. He gives me the friggin creeps every time I see his mug. Not that I think too much of the Dem incumbent but at least if I stayed over at her house I think I could probably leave my wallet out without worrying about it. That guy has corruption written all over his face.

10/11/2008 12:34 PM  
Anonymous goldhorder said...

Karen at the lew rockwell site. Good stuff...she explains why you are screwed.

Your 401k Plan - Breach of Fiduciary Duty?
Posted by Karen DeCoster at October 11, 2008 06:24 AM

Some friends and family have asked me to advise them on their choice of investments because they are down - an obvious point - in their 401k plans. A bit late, and there's not much you can do anyways. But ...prior to the meltdown, so few people were really willing to understand and believe that there was a financial storm in their future.

The other day, someone sent me the login to their company 401k through Wachovia, and asked me to shift any investment monies as I deemed suitable. This individual, like most people, knows absolutely nothing about the investment options available to her. This is typical for most hard-working people with company-match 401k plans. She had put her money in a "stable value" fund, because the words "stable" and "lower-risk" gave the fund the appearance of being the most appropriate option for her. She makes $30k per year, and her 401k went from $38 to $25k in the last six months, in a "stable value" fund that is anything but stable (the underlying investments are wrap contract with financial services companies). This stable value fund was invested almost 20% in AIG wraps.

While snooping around, I immediately noticed something in this Wachovia plan that is epidemic nowadays. There is absolutely no option to invest in something that is low in risk. Typically, if you are predicting that the market will go South (as I have been for years), you'd look for a 100% US T-Bill option in your 401k, even if you only park it there in the short term. However, this person's plan had absolutely no low-risk option whatsoever.

I have a 401k through my employer, as well. It's with Fidelity, and it sucks. The only reason I have this traditional 401k is because the company offers a top-flight match (free money), and so I do the best I can with the options I have. I've lost too, but not nearly as much as most people I know who are in these plans. My plan is with Fidelity, and I'm working for a Fortune 500 company that should have some good leverage in opening up options for their employees, but I also have no option to move my money to T-bills. No safe haven. Nothing but bull-market trash. I think this is criminal.

Several years ago, there was always an option - in nearly every 401k plan - to invest in a safe haven. That is quickly disappearing since the emergence of the perpetual bull market created by the Feds. They force our hands to play the riskiest moves, and the bias of Wall Street - which works to separate you from your money - is overwhelmingly working against regular folks who don't want to ride the bull train to hell. So they manage to shut down your options and force you into roller-coaster funds.

As a like-minded friend and I agreed (he chairs his company's 401k committee), this is due to a bias towards unacceptable risk-taking in the stock market. Bull this, bull that, and don't you dare diss the bull rush. I told this individual she was screwed, and moving her investments was hardly going to matter. She has no conservative or bearish options. Every option she has is offering a -20% or worse year-to-date rate of return. It's a trick and a monstrosity that these companies are selling the government's agenda, which is to consistently push up the Dow and tell Americans that stock prices can go nowhere but "up" in the "long term." I wonder, is this perhaps a breach of fiduciary duty? As to Wachovia, Fidelity, and others, don't they owe their clients a low-return option that excludes them from putting their money in the line of fire when the market drops? Those options exist, but only some 401 plans offer them. My friend mentioned above said he had to *fight* to get the t-bill option included in his company's plan.

The bias to bullishness has permeated the 401k plans of average folks who want nothing to do with Wall Street's irrationally exuberant bullmania, and now it is bleeding them dry.

10/11/2008 1:12 PM  
Anonymous goldhorder said...

By the way...finally found someplace honest in Washington to buy Gold on Friday...sheesh its nuts out there. Northwest territorial mint. I'm hanging out at my cottage retreat until the smoke clears. hahaha.

10/11/2008 1:17 PM  
Blogger Mrs Panstreppon said...

Thanks, GH. Another crisis looming on the horizon is the state and local pension fund mess. As governor, Sarah Palin authorized a $5 billion pension obligation bond issue, according to a 4/11/08article at Alaska is not the only state issuing bonds to cover a pension shortfall but the bond issue is the largest of its kind to date. Apparently, the local Alaskan municipalities wouldn't raise taxes to cover their shortfalls. When Palin was mayor of Wasilla, e.g., Wasilla's unfunded pension obligation increased by a $1 million in 2002 without new employees. I suspect half of Wasilla is on the city's pension rolls. Florida is also a mess. Jeb Bush became a Lehman consultant when left office and the state pension fund not only bought into Lehman investment projects, it bought a boatload of Lehman stock. In NY, H. Carl McCall and Alan Hevesi actually did a pretty good job managing the state pension fund but I don't want to even think about what has happened since the state legislature put in an unqualified comptroller. Yikes!

10/11/2008 5:34 PM  
Anonymous Anonymous said...

Trading Places. A good movie. They have been showing Wall Street. But I still like Boiler Room. "ABC: Always be closing", "Don't Pitch to the .." Oops. Totally void of a conscience and any descent human values. :-(

The Duke brothers made a cameo in Coming to America. They are homeless and living in the streets.

For 8 years we have heard from the Evangelicals (ie., Jesus Camp, Terri Schiavo, Bush couldn't win without them). Where are they now? Isn't a financial meltdown the ultimate family-value issue? The number one reason people get divorced is over money. Families are losing their homes. Such an odd time for them to disappear, something that really matters and could make a difference.

10/11/2008 10:45 PM  
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Well, I don't actually believe this may work.

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