When discussing financial matters, the “financial media” represented by “Establishment” type reporters and bloggers, just like the financial “regulators”, is woefully behind the curve.

Watching pretty faces like Brian Williams, Anderson Cooper and Charlie Gibson fade into oblivion is a delight; the fewer adults watching these powerpoint presentations of repetitive Democrat vs. Republican nonsense, sound-bite reporting and oversimplifications, the better.

Jaywalking is a good representation of the effects of 12+ years of schooling and “news” on our culture.

Takeaway:  Your mind is the most powerful “muscle” in your body.  Keep it in shape by reading and conversing with those you disagree with and those that challenge your existing views.  Watching 22.5 minutes of political gossip and sponsor-approved stories will rot your brain.

Here are some gems just from the last week alone:

1. Perot Systems FrontRunning – ZeroHedge.
2. Blatant reinflation of housing bubble – Denninger.
3. Corruption at HUD – Karl Denninger.

The SEC was not able to catch a ponzi scheme even after Harry Markopolos delivered it to them on a silver platter. 

Paulson and Bernanke have been incredibly incorrect on their assessment of the health of the US economy.

Choose your sources of information/facts/news very carefully.  Stick with those that are honest enough to state their opinions openly and publish their predictions.

Read what you disagree with before drawing your conclusions.

There is a difference between loyalty and blind loyalty.  Blind loyalty to anything (religion, government, ideology, spouse) is deadly.

Takeaway:  Perpetual reliance on someone else’s seal of approval will rot your brain.  Complacency kills.

Amazing how Mr. Hope and Change is opposed to auditing the Fed and fully supports those who fed us a massive spoonful of corporate welfare.

Takeaway:  Governments are power structures which are abused/manipulated.  Giving up power/money to the government to fix our economy, environment, schools or anything is a mistake.  Audit the Fed.

Two “answers” which speak volumes of our leaders:

• At 1:12, Jon Stewart asks “Are we broke?”, Goolsbee replies “No”.

Bizarre.  It seems that a country running trillion dollar deficits and unable to function without borrowing money could be classified as “broke”, but not to our leaders.

• At 4:20, Goolsbee says:  “When you’re looking in the face of the next Great Depression that’s not the time to tighten the belt”

Indeed, when has there *ever* been a time when either party thought it would be a good idea to tighten the belt and stop borrowing?  Heaven forbid we curtail spending on military/”the children”/retirees/politically connected segments of the population.

Takeaway:  Leaders will do what it takes (lie, obfuscate, deceive) to accrue political capital.  It is not in their interest to be honest with us, especially when our borrowing/spending based economy relies on confidence that “everything will be ok”.  A system heading over a cliff due to instability cannot be solved with more of the same pathetic ideas (reliance on debt, policy tweaks) that got us here.

Fast forward to five hours, eighteen minutes of this clip.

Do you know what the Secretary of the Treasury and Chairman Bernanke told us that famous meeting or several meetings that we had?

That we’re 24 hours away from total meltdown of the American economy and 72 hours away from total meltdown of the world economy.  That it would take us back several hundred years.

That we did not have even the security to feed America if it happened.  I could go on to other scary things but I’m not about to do it now.

Amazing.  Whenever Bernanke or Paulson was in front of a TV or in front of cameras last Fall they gave the same copacetic assessment about how the economy was stable and everything was fine.  However, to those that have power and influence, he tells a much different story.

The American people can remain confident in the soundness and the resilience of our financial system. – Hank Paulson, 9/21/2008

We often discover leaks in the Matrix.  We can all remember seeing our parents do things for the first time that let us know they were human and not perfect.  Likewise, our government is not perfect and instead of romanticizing the political process or “parties”, it is more beneficial to focus on safeguarding ourselves from the inevitable economic problems we will encounter.

I’ll be sitting down this weekend and mentally trying to imagine how I would respond to various different stress scenarios and what the outcomes would be.  It never hurts to check.  Better safe than sorry.

Takeaway: This video clip contains a startling admission.  It demonstrates the contempt that Washington has for its own citizens.  Instead of falling for the celebrity reality-show “Inside the Obama White House”, turn off the TV and do some thinking about what could happen if our “leaders” get it totally wrong.

Unbelievably, Tim Geithner knew about these bonuses but remained mum throughout all the finger-pointing and grandstanding.  According to the NY Times:

Interviews with senior Federal Reserve and Treasury officials, as well as members of Congress, leave little doubt that the bonus program was a disaster hiding in plain sight. Mr. Geithner is not the only one who appears not to have understood the populist fury the bonuses would set off.

So, the Fed and Treasury orchestrated the multiple AIG bailouts, knew about these bonuses and said nothing until it blew up in their faces?  That’s pretty dishonest.  Why is Geithner not in serious jeopardy of losing his job?

Take it away, Ron…

For more on the AIG bonuses, read here

• He has been methodical in advancing his career and his reputation.
• He has an enormous ego.
• He knows exactly how to play the game of banking.

I remember reading about John Thain in 2003 when he was CFO of Goldman Sachs. I used to subscribe to the Financial Times and I would be enamored reading about him. After he made the move from Goldman to be Chairman of the NYSE, it was clear that he knew how to self-promote and advance himself. When he took the Merrill job, it seemed like the next logical step for him.

Like a lot of people who are very career driven, he obviously has a huge ego. Within months of taking over the CEO role at Merrill, he spent over $1 million refurbishing his office. Highlights include dropping over $1,000 for a wastepaper basket and an $87,000 rug.

It seems to me that when someone indulges in such a fashion, it becomes hard to take their “social responsibility” pleas very seriously.

Like I mentioned in a post late last year, John Thain has been a master of talking tough while scrambling frantically to do everything he could to keep Merrill solvent. Mish covered this point brilliantly last July.

All of this brings me to my final point: John Thain was successful because he knew how to play the game of banking and finance. He easily lied to CNBC, institutional and retail investors, and Bank of America, before he was finally removed. He effortlessly talked his book while raising capital to avoid a liquidity crisis. He succeed in one of the most difficult business environments in recent history by effectively deceiving the world about Merrill’s liquidity, solvency and risk management. This Friday it finally caught up to him.

John Thain is a very intelligent, ambitious man. It is a shame that in our current economic system, a man like him is part of the FIRE (finance, insurance, real estate) economy and not employing others in new life-improving technologies. As global deleveraging continues, I hope that many brilliant and savvy thinkers find their way back to productive jobs which help compound and increase the world’s wealth.

As people become more conscious of the fact that Merrill received TARP funds and had access to the discount window and could borrow at 2.5% while using enormous leverage, only then will they will start groping around for solutions. Rather than the usual scapegoat of “the rich”, hopefully citizens will realize that a debt-based economy, fractional reserve banking and government management of interest rates cannot possibly succeed in the long run. Only then will people be open to solutions not espoused by the investment banking beneficiaries.

UPDATE (1/26):  John Thain read my blog and has capitulated!

To read more about deceitful CEOs, click here.