Sep

10

Elizabeth Warren grills Timothy Geithner

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Beautiful.  Minutes 3 – 4 are the best.

Anytime you feel sympathy and/or hope for Obama, just remember he appointed this dirtbag and re-appointed Bernanke.

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.

Aug

25

Obama Reappoints Bernanke

Filed Under Intellectual Honesty | Leave a Comment

Obama reappointed Bernanke as Fed Chairman earlier today, effectively sealing their fates as men that will take us from a recession into the Greater Depression.

For those “economists” who’ve lately been singing his praises on CNBC, all I have to say is this…

It takes a special kind of system (government) to screw up this badly and still be resoundingly supported by its leader.

In his reappointment speech Obama also pledged support for the continued secrecy independence of the Federal Reserve.

How foolish of citizens to inquire where trillions of dollars are being spent… clearly we should trust the former bankers running the Federal Reserve that regulate the banking system. After all, they obviously know what they’re doing.

Instead of perpetuating the broken system financed by politically embedded financial organizations, Obama could have attempted any of the following:

Would that severely correct the housing and stock markets? Yes, probably. Can we continue on our current path? No. Will we eventually face unbearable consequences for our decisions? Yes.

Ironically, neither Bernanke nor Obama nor either political party seem to care about the following message:

It is not the responsibility of the Federal Reserve–nor would it be appropriate–to protect lenders and investors from the consequences of their financial decisions. – Ben Bernanke

So, Obama reappointing the guy who didn’t see any of this coming, who bailed out the irresponsible, who continues to provide cover for banks in the hopes that things will return to normal still makes Obama the “man of the people”? Why aren’t those who voted for Obama clamoring that this Bush appointee is more of the same? Why do horrible decisions not matter when *their* party is in charge?

The reappointment of Bernanke does have a silver lining. All the people that bought into the hope proffered in eloquent speeches that government can provide jobs, clean energy, healthcare, education and other goodies will eventually learn a valuable lesson. The love affair Americans have with celebrity, good looks and good speeches and a lack of discourse/intellectual honesty will finally meet its match against a tidal wave of financial reality.

We are witnessing firsthand government selling Hope while funding Grift.

A generation will learn that our government system, like all systems which redistribute power and wealth, is one that is relentlessly gamed and manipulated for the benefit of those in charge.

Takeaway: Strip away the external validation that media/family/friends give to people and institutions and think for yourself.

Aug

15

Why Did We Bail Out The Banks?

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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

Jun

25

Market rife with complacency, deceit

Filed Under Economics | 1 Comment

The market rallied in the face of some awful news today and my level of discomfort has never been higher.

A plethora of disturbing news:

In a nauseating display of government worship and corporate welfare, CNBC anchors act positively indignant that Bernanke could be fired over his handling of the Merrill Lynch/Bank of America (cough) merger.  Fast forward to 3:20 to hear the insanity.  Have they forgotten Bernanke’s record?

More auto fallout – Lear will soon file for bankruptcy protection.

California, eigth largest economy in the world, days away from bankruptcy is downgraded by Fitch, I have CNBC on all day at work and this was not mentioned even once.  I guess we are supposed to believe it wasn’t as important as the manipulated 7-year note auction (see below).

From Karl Denninger:  (paraphrased)  The sudden increase in demand by foreign buyers for Treasurys, hailed as proof that the world’s central banks are still willing to help absorb the avalanche of supply, mightn’t be all that it seems.  Iin a little-noticed switch on June 1, the Treasury changed the way it accounts for indirect bids, putting more buyers under that umbrella and boosting the portion of recent Treasury sales that the market perceived were being bought by foreigners…..  The change involves buyers who place orders through primary dealers. Those had been counted as direct buyers, but as of June 1 they were classified as indirect buyers, making that group larger than before.  Because investors view that group as being dominated by foreign buyers, they assumed foreign demand was higher.

My eyes and ears – The amount of people reliant on government aid is staggering.  I am all for helping the poor and underprivileged, but is free breakfast and lunch year round (courtesy of the Federal Gov’t, last paragraph) lifting people out of poverty or creating a serious dependency?

Valuations are through the roof with a puffy P/E ratio of 60, yet no one seems to care.

This sense of complacency, level of deceit and crumbling fundamentals are setting the stage for another crash.  I hope and pray that this dislocation in the market unwinds in an orderly fashion, rather than a painful drop which would lead to mass irrationality.

The only reason I am hopeful that Barack Obama is President is because he seems to be the only human on Earth eloquent enough and seemingly genuine enough to talk people through a crisis and deliver the truth to people, even if they don’t want to hear it.

So far, he’s shown no interest in changing things up from Bush, but maybe a crash will force his hand in the right direction.

Jan

24

John Thain, Liar Extraordinaire

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John Thain was in the news recently for being fired from Bank of America. He always intrigued me for a number of reasons.

  • 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.