Reform You Don't Need the Government to Implement
I don't mean to pick on Business Week. It is a fine magazine.
In its April 7, 2008 issue, it ran a piece entitled: Don't Be Leery Of Lehman. The article cited some Wall Street "pros" who were recommending the purchase of the stock. A financial services analyst at Goldman Sachs opined that "[T]he fears surrounding the firm's funding and liquidity position have been overstated." Another "expert" noted that Lehman's management was "...the best in the business." This observation may have been correct, but that is another story.
In its December 14, 2007 issue, Fortune Magazine made its recommendations for "the best stocks for 2008." Among the recommendations was Merrill Lynch. The article called the response of the market to Merrill's $8 billion asset writedown an "overreaction." It went on to explain its reasons why it was "so confident that the mortgage debacle won't bleed into 2008." Among them was the due diligence that Merrill's new CEO did before he took the job and "financial panics are almost always overblown."
Gawker collected other examples of financial prognostications gone wild. It is available here.
These views (and others) were repeated in countless broker's offices throughout the country.
Sometimes they are right. Sometimes they are wrong. That misses the point.
Why are you making investment decisions based on a faux expertise?
The current system is set up to separate investors from their money. At least in that respect, it is working admirably well. The players are the financial media and advisors who peddle their stock picking, market timing and manager picking "skills."
If we have learned anything in these past tumultuous weeks, it is that this system is fundamentally flawed--at least from the investors' perspective.
If there is a silver lining it is that investors will change the way they invest. This sea change will involve ignoring the prognostications of the financial media, and recognizing that its value is to entertain, not to inform.
As for the securities industry, I can only hope that investors will abandon them in droves, and finally recognize them as emperors with no clothes.
Fortunately, the alternative is not only simple and intelligent, but easy to execute. I set forth the details in a previous blog.
This is reform you don't need the government to implement.
The views set forth in this blog are the opinions of the author alone and may not represent the views of any firm or entity with whom he is affiliated. The data, information, and content on this blog are for information, education, and non-commercial purposes only. Returns from index funds do not represent the performance of any investment advisory firm. The information on this blog does not involve the rendering of personalized investment advice and is limited to the dissemination of opinions on investing. No reader should construe these opinions as an offer of advisory services. Readers who require investment advice should retain the services of a competent investment professional. The information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell any securities or class of securities mentioned herein.
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EQUITY in Banks for CASH
This is the TRICKYiest Mortgage of all!
They want use to borrow money from China and others and give it to them with no EQUITY in return.
This is the last great Haul of this administration.
INSIST on EQUITY IN THE BANKS!
We need EQUITY for the CASH!
This is the TRICKYiest Mortgage of all!
They want use to borrow money from China and others and give it to them with no EQUITY in return.
This is the last great Haul of this coruuupt administration.
INSIST on EQUITY IN THE BANKS!
It's so absolutely and unequivocally true! Why do we rely so heavily on the government to tell us what we should do? It's so very easy to scapegoat the fat cats on Wall Street, but none of this would be possible if not for the complicity of masses of Americans who were trying to get something for nothing. This real estate bubble is not just the result if irresponsible lending, but irresponsible borrowing. No one in foreclosure was forced into a mortgage. I am so sick of hearing about "innocent homeowners." We shouldn't rally to their side any faster than we clamor to support "innocent victims of credit card companies" -- living beyond your means is stupid and short sighted, but is apparently now the American way of life. No one did this to us, we did it to ourselves. Blaming the banks or the government is infantile. Capitalism needs to evolve -- go to www.HyperCapitalism.org to find out how we can make it evolve -- no government regulation required!
You know the biggest ripoff in this economy was when we got sold the bill of goods about the 401ks... We are all supposed to be our own expert investor, our own doctor, our own whatever...
If the Titans of Wall Street who have been doing this for EONs, now need a bailout, when in the heck are the rest of us going to get our bailout....
And these are the same people who wanted SOCIAL SECURITY and MEDICARE PRIVATIZATION... WE have made ourselves the LAUGHING STOCK OF THE WORLD and are becoming a banana republic.
I think it is very very funny that the collapse of the entire financial system of the United States of America is being blamed on poor and middle class people! "Trying to get something for nothing" Are you kidding?? The banks love the real estate bubble because the higher the mortgage, the more money they make. The brokers went about devising devious ways to sell these house -- no money down, ARMs, etc. Then, packaging and selling these risky mortgages to others -- with a phony AAA rating. Come on! Read Michael Hudson: http://www.counterpunch.org
But I'm still amazed that someone can actually blame this meltdown -- on poor people! Wow, I never knew POOR people had so much power!
I am sure this will be yet another talk, talk, talk, capitulate moment. We should all know the routine by now.
IMHO, the money would only DELAY the inevitable until Obama is president. I say let it happen NOW on Bush's watch. I've written my reps to not give them the money. There needs to be a reckoning to bring about true economic equilibrium. Bring the pain!
Why do dem. believe anything bush says..They never learn do they..
The Bush Administration is desperate to get this "deal" done because if Obama is elected, there may be a bailout, but it will favor the taxpayers, not AIG, Lehman, etc.
Bingo!!!
There are a lot of things I could say but you know there are plenty of people who will be saying it for me so there is no need to iterate. It is an interesting mess. Profoundly troubling, but a situation which will call out some unusual creativity. One thing is certain and that is the credibility of our financial foundations will be questioned. During this questioning period investment monies will not flow as they had in the past and this leads to a sludge economy. There is no way out of this one and it will take time to put the pieces back together. Wall St. has become totally toxic.
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