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We could not have allowed the big banks to fail since they are vital to the powerful, monied interests that control elections, special interest groups and media that enrich the status quo serve the needs of the common citizen

I recently posted a comment at HuffingtonPost in response to a Paul Begala article. The article was called Bring Back the Stocks. In summary, Paul Begala is complaining about Wall Street and railing against people who have harmed the country.

The comment I posted was responded to by a woman here. In her response she laid the blame at the feet of Ronald Reagan and other Republicans. To quickly debunk her point, I point out the following:

  • The writer mentions deregulation. She does not mention deregulation does not force anyone to buy complicated or “confusing” debt instruments. Furthermore, a structured finance product is, on its own, harmless. A high grade CDO can be a useful instrument for both buyer and seller, assuming the underlying collateral is suitable.
  • The writer makes no mention of rating agencies that called bad CDO’s “AAA”. Why not?
  • The writer praises Warren Buffet – A full-time investor, or, “greedy speculator”, depending on your view.
  • The writer blames tax cuts for “the rich”. However, tax cuts encourage individuals to open businesses and, more importantly, create jobs.
  • The writer praises Bill Gates and Oprah for giving money away. Both made their money in the free market.

The general theme of her response was defensiveness and “Us vs. Them”. She assumes Democrats are angels and Republicans are devils. I believe she is a lifelong Democrat and trying to protect her ego from accepting the truth that Democrats have as much of a role to play in this as Republicans.

She neglected to mention:

  • Tim Geithner will be appointed Treasury Secretary. He is a Keynesian (no change from status quo).
  • Wall Street gave far more money to Obama than McCain.
  • Robert Rubin’s “Rubinomics” instituted a policy of deregulation. Rubin was appointed by Bill Clinton, a Democrat.
  • Alan Greenspan, responsible for interest rate policies that created investment bubbles, was not removed during Clinton’s tenure.

This problem will not be solved until the problems are understood as systemic (overleveraged banks borrowing at below market rates at the Discount Window).

As I grow older, I am learning to refrain from trying to drive my point home by plugging a party or a person. I used to be smitten with Ron Paul, however, I have tempered my optimism and am now more interested in things like:

  • How exactly does the Fed work?
  • How can I profit from the Fed’s actions?
  • How can I help others raise their awareness of what the government is doing?

I’d like to think that those three actions are more beneficial to myself and others I care about rather than simply singing Ron Paul’s praises and beating my chest. It is more effective to seek out the truth and communicate the truth, rather than simply speaking/debating in generalities/stereotypes.

I am making a concerted effort when communicating my beliefs to not espouse an individual or an ideology, it is time for me to move beyond my ego and be more concerned about learning and understanding rather than winning a debate or argument.

With that thought in mind, I am doing what I can to increase my understandings of the fixed-income markets and will share useful information as best I can.

Thank you for reading.

To read more about choosing positive action, read here.