Let us begin with two rhetorical questions, statements which do not really require an answer because it is implicit in the question. Is there anyone out there with access to any rudimentary form of news – mainstream or otherwise – who did not expect Mr Sarkozy to be beaten by Mr Hollande in the second round of the French elections on May 6? Is there anyone out there who did not expect the Greek elections to result in political chaos with no party or viable coalition of parties able to form a government? Read more…
“I tried to figure out what made a public company different.
Here is what I came up with — the central bankers of the world, all acolytes of Keynes, have decided that it is the P in PE that brings wealth when we all know, as business people, in a normal environment it is the E.
This has created such an intense group of booms and busts that executives and boards see themselves as Bubble Riders, searching the capital horizon for the next bit of Animal Spirits- driven speculation to send their stock skyward. This seems easier than creating a good and sustainable business that offers a return to shareholders, regardless of the current PE the market offers. Why create a business where there is a cost of capital when you can create one where capital is as free as hot air?”
Aram Fuchs of Fertilemind Capital in NYC sent me his annual letter to shareholders. What a great read. Rare are the fund managers (and business owners, and CEOs, and investors) who actually look at business “the old fashioned way” – as a way to earn sustainable profits over time (as opposed to looking for fast buck liquidation events and growth at any cost strategies).
The first thing about modern markets, the thing that must never be forgotten, is that most of the “trading” which goes on in them is untouched by human hands – or brains. To an overwhelming extent, modern markets are “automated”. By “automated” we mean that at least eight out of ten (some estimates put the ratio higher) of all transactions are controlled exclusively by means of computers and the programs built into them. The numbers – sourced from government departments or from the central bank – are plugged into the programs and the programmed “actions” are taken.
Yesterday I received my copy of Vincent R. Locascio’s “Special Priviledge: How the Monetary Elite Benefit…At Your Expense“. It was published in 2001 by the Foundation for the Advancement of Monetary Education (FAME) and I hope they don’t mind my quoting vast tracts of it here.
This book predates Locascio’s “The Monetary Elite vs. Gold’s Honest Discipline” by a few years. In May 2005, a copy of this latter book arrived out-of-the-blue to my attention at the easyDNS offices. The inside cover was signed “Mark, I look forward to your feedback” and signed by the author, and there was an additional note saying “I hope you can help spread the word to your readers”. He was under the erroneous assumption that my personal blog, (where I sometimes ranted about sound money and crony crapitalism), had readers.
I’m one of those people who underlines passages in books, highlights paragraphs and makes notes in the margins. His book was one of those books that was almost completely underlined by the time I finished it.
This morning I started reading “Special Privilege”, and it looks like the same thing will happen here.
We have all heard of “moral hazard”. It is something that was said to have kept Treasury Secretary Hank Paulson awake at night when he was agonizing over how to thaw out the frozen inter-bank credit system in mid-late 2008. Moral hazard is defined as the risk that the monetary powers that be take when they create “money” out of thin air for the express purpose of bailing out banks and corporations whose failure would drag the entire economy down with them. In 2008, it loomed large in the US.
The problem is that economic “booms” and “busts” are an inherent part of any economic system where prices and interest rates are NOT set by the markets but by those in power to control them. Those in power love to take credit for the booms but they don’t want to be faced by any busts. Thus, every time that a credit-based economy “falters”, the temptation to spice the punch bowl with another dollop of credit money is irresistible. From there it becomes orthodox “policy”. And from there it becomes “politically impossible” to do otherwise. Mr Paulson couldn’t stand up against that orthodoxy. That is not surprising. Read more…
Tags: Hank Paulson, Paul Vockler, too big to fail
Some people like, to make all the rules and tell others what to do.
They make it their way, so they always win, and the others always lose.
Street gangs and madmen How they wage their private wars
In bankers clothes their hearts are froze and
Their wives hold hands with whores– Airbourne: Too Much, Too Young, Too Fast
There is a lot of “empirical data” coming out in reputable information channels (like Facebook and Twitter) that the 1% are over-represented in the corridors of power, have more than their fair share of wealth and are basically to blame to for mess the world is in right now.
I saw post from a friend on facebook: Read more…
Tags: Occupy Wall Street, OWS, The 1%
Get some Wealth in your mailbox
Loading...
Our Monthly Commentary on These Interesting Times..
Recent Articles
Recent Comments
