Subprime Fart Really Stinking Up Pretty Much Everything
Lisa Lisa
Braving the Subprime Storm
Tough to Avoid Trouble,
As More Parts of Market
Start to Move Together
By JUSTIN LAHART, ALISTAIR MACDONALD and JOANNA SLATER
August 6, 2007; Page C1
Diversification -- not putting all one's eggs in the same basket --
has long been a mainstay of investing safely. But it works only so
long as all the baskets don't tumble at once.
In recent weeks, assets around the world have fallen in lockstep.
Stocks, corporate bonds, emerging-market debt and a host of
derivatives backed by mortgages and other types of borrowing have been
hit hard. Even commodities such as gold and other metals, which
investors turn to precisely because their prices typically don't move
in sync with other assets, dropped along with everything else in late
July.
The result is that investors who spread their money across different
assets are finding they were less protected than they thought.
"It is becoming more difficult to find assets that aren't highly
correlated. Over short periods of time, property, commodities, equity
and bonds are all moving together in similar directions," said Andrew
Milligan, head of global strategy at Standard Life Investments in
Edinburgh which has about £140 billion, or $285 billion, under
management.
Concerns about risky bonds sent U.S. stocks tumbling Friday. The Dow
Jones Industrial Average fell 2.1% to 13181.91. Although still up 5.8%
this year, the Dow is now nearly 6% below its record close of 14000.41
on July 19, little more than two weeks ago.
The Standard & Poor's 500-stock index is down 7.7% from its record,
also hit July 19, raising the specter of a 10% decline that is
considered a correction to shake off speculative excess in a bull
market. The S&P is up just 1% this year.
Much of the boom that buoyed financial markets over the past few years
was aided by a belief among portfolio managers that by spreading their
cash across a myriad of investments they could take on substantially
more risk. Wall Street firms helped meet that demand by creating
investment vehicles that lump uncorrelated assets together.
Borrowing With Confidence
Because they believed they were safer with assets that don't move in
sync, hedge funds and other investors felt more comfortable investing
with borrowed money, amplifying the cash pouring into new investment
vehicles. As money poured in, pushing prices higher, stocks around the
world, corporate bonds, emerging-markets debt, mortgage-backed
securities and commodities began to trade more similarly. And when
they fell, and funds that had used borrowed money to invest needed to
sell assets to cover debts, the correlation grew even stronger.
When the Dow tumbled 311 points on July 27, gold fell $10.80 per troy
ounce to $662.50. Traditionally, investors have fled to gold in times
of uncertainty as a scarce and tangible asset that keeps its value.
Now, trading activity is so high that gold is being used as a source
of cash to cover losses in other markets.
"When you can't sell your assets that are going bad, you sell assets
that are good," says Kim Catechis, who manages $3.8 billion in
emerging-market stocks at Scottish Widows Investment Partnership.
"We've seen some evidence of that."
The drive toward uncorrelated assets picked up after the tech-stock
meltdown that began in 2000. Investors who had loaded up on tech
stocks suffered for it, but those that had spread their risk across
different asset classes escaped relatively unscathed.
Studies show that commodities historically performed differently than
stocks and bonds. This is partly because inflation usually hits
returns on bonds and stocks, but commodities are a component of
inflation, pushing it up when prices rise for oil and basic materials.
In 2005, Gary Gorton at the University of Pennsylvania's Wharton
School and K. Geert Rouwenhorst at Yale looked at the correlation of
commodities futures and the S&P 500 between 1959 and 2004. They found
that during the very worst performing months for stocks, 5% of their
sample, shares fell an average of 8.98% while commodity futures gained
1.03%. They also found a negative correlation between commodities and
bonds.
Aoifinn Devitt at Clontarf Capital in London, who advises family firms
and institutions on alternative investments, says most of the
commodities funds she sees marketed hail the benefits of not being
correlated to other markets. Many investors put money into commodities
precisely because they offer diversification. At the end of last year,
the California Public Employees' Retirement System, the nation's
largest pension fund with $245 billion in assets, set aside $500
million for investment in commodities.
But over the past year commodities have increasingly moved in step
with other markets. The price of copper and aluminum, two of the most
widely traded metals, suffered near 5% declines in the week ended July
27, almost mirroring the 5.6% fall on the Dow Jones Stoxx 600, which
tracks Europe's 600 largest listed companies, and the S&P 500's 4.9%
decline.
Because many developing countries continue to show robust growth, many
investors believe that emerging-market stocks and bonds should be able
to weather the latest storm. But as the Dow Jones Industrial Average
fell 4.2% the last week in July, the MSCI Emerging Markets Index lost
3.8% in dollar terms and Merrill Lynch's index of emerging-market
sovereign and corporate debt fell 1.5%.
"On a fundamental basis, emerging markets are fine," says Uri
Landesman, a senior portfolio manager at ING Investment Management in
New York. But in the immediate future, he says, the question is what
investors will do. "Are people spooked? Are people pulling in their
risk reins?"
The increasing correlation of global markets is enough that regulators
are beginning to take note. Britain's Financial Services Authority,
which regulates the London markets, listed it as a potential risk for
2007 in its report Financial Risk Outlook.
Correlation "calls into question some of the benefits of geographic
diversification, either in an investment portfolio or within a group,"
the FSA said. With markets so interlinked, financial crises are less
likely to be contained in the area they originate in, spreading over
geographic areas and markets, the report said.
Collateralized-debt obligations holding bonds backed by subprime
mortgages illustrate how investments don't always perform as expected.
CDOs, as they are known, are pooled debt instruments cut into slices,
known as tranches. Higher-rated CDO tranches were considered
relatively safe because they were structured so they wouldn't get hit
until a large proportion of the debt held by the CDO suffers losses.
But losses among subprime-backed bonds held by CDOs were far more
correlated than expected, causing steep losses.
Dragging Down Quality, Too
In addition to subprime mortgages, loans to the riskiest borrowers,
some troubled CDOs also held bonds backed by better-quality household
mortgages, commercial mortgages and credit-card debt -- which had the
effect of making those instruments more highly correlated with
subprime mortgages.
"When you fund things with CDOs, they become correlated, because
they're all funded from a single place," says Christopher Mayer,
director of the Paul Milstein Center for Real Estate at Columbia
Business School.
Losses in CDOs also prompted investors to question the valuations of
other instruments that hold corporate debt -- among the reasons that
the corporate debt market, too, has run into trouble. Leveraged loans
-- bank loans to companies that have historically shown little
correlation to other financial markets -- had their worst month on
record in July, falling 3.35%, says S&P.
--Devon Maylie contributed to this article.
Write to Justin Lahart at justin...@wsj.com, Alistair MacDonald at
alistair....@wsj.com
Vid...@tcq.net
borrowed money to do this.
these are the so-called sophisticated investors.
that make up the backbone of the rugged individualism that is so
prized by wall street libertarians/conservatives.
all i heard from these rugged individuals over the enron debacle and
the poor employees that were suckered into putting all of their eggs
into one basket, was that they should have diversified.
my answer to the rugged individuals, was that these were only
employee's who were acting on advise given to them. they were not
sophisticated rugged individuals that know better.
i also pointed out to the rugged individuals, that they are the ones
who preach how inter-connected we are, yet they themselves preach/
parrot diversity without understanding how inter-connected we really
are.
the rugged individual preaches/parrots that if you do not like this
corporation,boycott it, and go to another one. that is how
rugged individuals do it without that pesky government interference.
but looky here, its all interconnected, its either coke or pepsi.
its looking more and more like another free market blowout, where the
rugged individual sinks us again. 1928 anyone?
Debbie Smythe
> That's the only way I know how to put it.
>
> Braving theSubprimeStorm
> Tough to Avoid Trouble,
> As More Parts of Market
> Start to Move Together
> By JUSTIN LAHART, ALISTAIR MACDONALD and JOANNA SLATER
> August 6, 2007; Page C1
>
> Diversification -- not putting all one's eggs in the same basket --
> has long been a mainstay of investing safely. But it works only so
> long as all the baskets don't tumble at once.
>
> In recent weeks, assets around the world have fallen in lockstep.
> Stocks, corporate bonds, emerging-market debt and a host of
> CDOs, as they are known, are pooled debt instruments cut into slices,
> known as tranches. Higher-rated CDO tranches were considered
> relatively safe because they were structured so they wouldn't get hit
> until a large proportion of the debt held by the CDO suffers losses.
> correlated than expected, causing steep losses.
>
> Dragging Down Quality, Too
>
> some troubled CDOs also held bonds backed by better-quality householdmortgages, commercialmortgagesand credit-card debt -- which had the
> effect of making those instruments more highly correlated withsubprimemortgages.
>
> "When you fund things with CDOs, they become correlated, because
> they're all funded from a single place," says Christopher Mayer,
> director of the Paul Milstein Center for Real Estate at Columbia
> Business School.
>
> Losses in CDOs also prompted investors to question the valuations of
> other instruments that hold corporate debt -- among the reasons that
> the corporate debt market, too, has run into trouble. Leveraged loans
> -- bank loans to companies that have historically shown little
> correlation to other financial markets -- had their worst month on
> record in July, falling 3.35%, says S&P.
>
> --Devon Maylie contributed to this article.
>
> alistair.macdon...@wsj.com
Debbie Smythe
Bryan Adrian saw it all five years ago.....
http://www.angelfire.com/planet/blacklisting_central/ducksunlimited.html
Global stock markets extend plunge due to Fannie Mae loans!
43 minutes ago AUGUST 10 2007 FRIDAY
LONDON (AFP) - World stock markets dived for a second day running on
Friday with European and Asian traders dumping shares on fears of a
widening economic crisis caused by the US subprime housing sector.
European markets opened about 2.0 percent lower, after Asian markets
had closed down by between 2.0 and 4.0 percent.
"It's that unnerving effect of the unknown which is spooking investors
at the moment," said analyst Henk Potts of Barclays Stockbrokers in
London.
Economists said investors were alarmed by signs that losses in the US
subprime mortgage market -- high-risk property loans to which many US
banks and investment funds are exposed -- was spreading to other
regions.
"Selling pressure was strong as the market fears more funds or
financial institutions may disclose problems related to US subprime
mortgages," said economist Conita Hung at Delta Asia Securities in
Hong Kong.
BNP Paribas, France's biggest bank, spooked the market on Thursday
when it said it had suspended three investment funds exposed to the US
housing market because it was unable to value the assets.
That led to heavy falls for banking stocks, which continued into
Friday.
"Investors don't know which banks have got exposure (to the credit
problems) and the extent to those potential losses," said Potts of
Barclays Stockbrokers.
News that the US, Eurozone, Japanese and other central banks had
pumped massive amounts of cash into the banking sector to forestall a
lack of liquidity appeared to add to the sense of nervousness on
global markets.
If the central banks' actions aimed to reassure investors, "they took
it the other way ... That is, that the problem is so big that the
central banks had to intervene," said Okasan Securities strategist
Hirokazu Fujiki.
In morning Europe trade, the FTSE 100 in London slumped 1.70 percent
to 6,180.70 points, in Frankfurt the DAX was down 1.29 percent at
7,357.58 points and the Paris CAC 40 shed 1.57 percent to 5,5538.30.
The overriding fear of investors is that banks will tighten their
borrowing terms in response to the subprime crisis to prevent further
exposure and cover losses already incurred.
If liquidity is limited to such an extent that companies and consumers
have inadequate access to credit, then this could drag on overall
economic growth.
"As private sector banks, in a time of uncertainty, set aside more
funds for their own funding needs, we are seeing a shortage of
liquidity in the money markets," said Societe Generale's chief Asia
economist, Glenn Maguire.
This was the reason the European Central Bank pumped a record 94.8
billion euros (130.2 billion dollars) into the eurozone banking sector
on Thursday to help lenders shaken by the US subprime mortgage crisis.
The ECB announced another injection on Friday of an unspecified sum.
The US, Japanese and Australian central banks also provided funds to
the financial system in an effort to calm fears about a credit crunch.
Meanwhile on Asia's largest market in Tokyo, the benchmark Nikkei-225
index slumped by as much as three percent at one point on Friday
before ending down 2.37 percent at 16,764.09 points, the lowest
closing level for almost five months.
Seoul ended down 4.2 percent, Sydney slumped by 3.7 percent, Hong Kong
slid 2.88 percent, Mumbai was down 2.65, Singapore gave up 3.31
percent and Taipei lost 2.74.
Wall Street lost nearly three percent overnight. But Chinese share
prices edged only 0.10-percent lower Friday, boosted paradoxically by
gains to heavyweight banking stocks and after China's main index had
closed at record highs during the previous five sessions.
Maguire of Societe Generale noted that global stock markets had
already been rattled this year after the Shanghai stock market plunged
in February.
"The falls we've seen on Wall Street and Asia are consistent with what
we saw on February 27 when the Asian equity markets plummeted on the
back of China (problems) and we have seen markets recover from that,"
he said.
But he added: "We need to see confidence stabilise in the banking
sector and the financial markets first before we see things start to
improve."
The dollar gained Friday as it benefited from its status as a safe
haven in times of financial instability, although not against the yen,
which was also higher as players unwound risky carry trades funded by
selling the Japanese currency.
Elsewhere, oil prices continued to drop on the prospect of weaker
global demand for energy should the US subprime situation break out
into a wider economic crisis.
http://www.angelfire.com/planet/blacklisting_central/ducksunlimited.html
Rimbaud lives on
Goldman Sachs and the U.S. Treasury, Exim Bank, sold out U.S. citizens
to CHINA over ten years ago and NOW Yanks must pay.....
By Paul Craig Roberts
Early this morning China let the idiots in Washington, and on Wall
Street, know that it has them by the short hairs. Two senior spokesmen
for the Chinese government observed that China's considerable holdings
of US dollars and Treasury bonds "contributes a great deal to
maintaining the position of the dollar as a reserve currency."[China
threatens 'nuclear option' of dollar sales By Ambrose Evans-Pritchard,
London Telegraph, August 9, 2007]
Should the US proceed with sanctions intended to cause the Chinese
currency to appreciate, "the Chinese central bank will be forced to
sell dollars, which might lead to a mass depreciation of the dollar."
If Western financial markets are sufficiently intelligent to
comprehend the message, US interest rates will rise regardless of any
further action by China. At this point, China does not need to sell a
single bond. In an instant, China has made it clear that US interest
rates depend on China, not on the Federal Reserve.
The precarious position of the US dollar as reserve currency has been
thoroughly ignored and denied. The delusion that the US is "the
world's sole superpower," whose currency is desirable regardless of
its excess supply, reflects American hubris, not reality. This hubris
is so extreme that only 6 weeks ago McKinsey Global Institute
published a study that concluded that even a doubling of the US
current account deficit to $1.6 trillion would pose no problem.
Strategic thinkers, if any remain who have not been purged by neocons,
will quickly conclude that China's power over the value of the dollar
and US interest rates also gives China power over US foreign policy.
The US was able to attack Afghanistan and Iraq only because China
provided the largest part of the financing for Bush's wars.
If China ceased to buy US Treasuries, Bush's wars would end. The
savings rate of US consumers is essentially zero, and several million
are afflicted with mortgages that they cannot afford. With Bush's
budget in deficit and with no room in the US consumer's budget for a
tax increase, Bush's wars can only be financed by foreigners.
No country on earth, except for Israel, supports the Bush regimes'
desire to attack Iran. It is China's decision whether it calls in the
US ambassador, and delivers the message that there will be no attack
on Iran or further war unless the US is prepared to buy back $900
billion in US Treasury bonds and other dollar assets.
The US, of course, has no foreign reserves with which to make the
purchase. The impact of such a large sale on US interest rates would
wreck the US economy and effectively end Bush's war-making capability.
Moreover, other governments would likely follow the Chinese lead, as
the main support for the US dollar has been China's willingness to
accumulate them. If the largest holder dumped the dollar, other
countries would dump dollars, too.
The value and purchasing power of the US dollar would fall. When hard-
pressed Americans went to Wal-Mart to make their purchases, the new
prices would make them think they had wandered into Nieman Marcus.
Americans would not be able to maintain their current living standard.
Simultaneously, Americans would be hit either with tax increases in
order to close a budget deficit that foreigners will no longer finance
or with large cuts in income security programs. The only other source
of budgetary finance would be for the government to print money to pay
its bills. In this event, Americans would experience inflation in
addition to higher prices from dollar devaluation.
This is a grim outlook. We got in this position because our leaders
are ignorant fools. So are our economists, many of whom are paid
shills for some interest group. So are our corporate leaders whose
greed gave China power over the US by offshoring the US production of
goods and services to China. It was the corporate fat cats who turned
US Gross Domestic Product into Chinese imports, and it was the "free
trade, free market economists" who egged it on.
How did a people as stupid as Americans get so full of hubris?
http://www.angelfire.com/planet/blacklisting_central/ducksunlimited.html
Paul Craig Roberts [email him] was Assistant Secretary of the Treasury
in the Reagan Administration. He is the author of Supply-Side
Revolution : An Insider's Account of Policymaking in Washington;
Alienation and the Soviet Economy and Meltdown: Inside the Soviet
Economy, and is the co-author with Lawrence M. Stratton of The Tyranny
of Good Intentions : How Prosecutors and Bureaucrats Are Trampling the
Constitution in the Name of Justice. Click here for Peter Brimelow's
Forbes Magazine interview with Roberts about the recent epidemic of
prosecutorial misconduct.
http://www.angelfire.com/planet/blacklisting_central/ducksunlimited.html
Vid...@tcq.net
wrote:
free trade is simply treason. there is no other way to look at it.
this is what we get for turning america over to market oriented
people.
greedy people think they know sustainable equitable economics because
they are greedy. what they actually know is just greed.
BrunoR
Who will continue to elect them? We fools, of course!
"a people as stupid as Americans get" Why don't we leave it at that. ;->
P.S. Save your prose because politics will never change.
Rimbaud lives on wrote:
> http://www.angelfire.com/planet/blacklisting_central/ducksunlimited.html
star...@yahoo.com
> these rugged individual investors are stupid. because they even
> borrowed money to do this.
The whole system is screwed. Because those stocks were leveraged on
debt which was leveraged on debt which was leveraged on debt which was
(continue about 100X or so)...
> that make up the backbone of the rugged individualism that is so
> prized by wall street libertarians/conservatives.
Given that the "American Dream" is dead, you've now seen stuff like
the "Rich Dad, Poor Dad" syndrome where you basically buy properties
on teaser mortgages and either use the rents on the properties to pay
off the mortgages or as a means to fix up the properties and "turn
them" to make a profit before too many payments come due.
And all that is going to crash HARD too.
> all i heard from these rugged individuals over the enron debacle and
> the poor employees that were suckered into putting all of their eggs
> into one basket, was that they should have diversified.
As the article said, though, that only works if the whole thing
doesn't come down.
And that's what we have now. The last few days have crossed a serious
threshhold -- consider that, with at least 4 manipulative "infusions",
the Fed has had to prop this market up to the tune of $60B so as not
to cause a complete blowout of the mess.
Because we all know what happens when this market normalizes as far as
it has to now.
> my answer to the rugged individuals, was that these were only
> employee's who were acting on advise given to them. they were not
> sophisticated rugged individuals that know better.
Right. Or just following the lemmings in front of them straight off
the cliff.
> its looking more and more like another free market blowout, where the
> rugged individual sinks us again. 1928 anyone?
We're well into 1929, I'm afraid.
Mike (I think a lot of people don't realize that a lot of the "it
doesn't happen instantaneously" phase has already happened...)
com...@webtv.net
isn't 1929 after all....
" Children should be treated as ambassadors from a higher culture "
Vid...@tcq.net
> On Aug 6, 12:27 pm, Vide...@tcq.net wrote:
>
> > these rugged individual investors are stupid. because they even
> > borrowed money to do this.
>
> The whole system is screwed. Because those stocks were leveraged on
> debt which was leveraged on debt which was leveraged on debt which was
> (continue about 100X or so)...
>
bingo, they used debt as money. the simply sold worthless i.o.u.'s
backed by nothing. the gullible who bought them, now realize it, and
are running for the doors.
> > that make up the backbone of the rugged individualism that is so
> > prized by wall street libertarians/conservatives.
>
> Given that the "American Dream" is dead, you've now seen stuff like
> the "Rich Dad, Poor Dad" syndrome where you basically buy properties
> on teaser mortgages and either use the rents on the properties to pay
> off the mortgages or as a means to fix up the properties and "turn
> them" to make a profit before too many payments come due.
>
since we trashed the new deal, and went the to the brave new/old
world financial raw deal, we make nothing. the world knows it. so we
trade paper.
here is what america has become,
just a few excellent points of view i have picked up from others, then
there are the not so well written ones by me. but you will get the
point.
"Economics will never be a genuine
science until those who serve the interests of the undeserving rich
at
the expense of the search for truth are drummed from the profession.
Professional academic economics in the u.s.a. is
essentially a game whose payoffs are proportional to the energy with
which one chants the lies that favor the interests of the rich.
all free trade has done is forced many innovative, hard working
americans, into go no where part time menial jobs. forcing them to go
deep into debt, to borrow money back that used to be ours, to buy the
goods and services we used to make.
globalization is not a super natural event, it is a man made policy,
and can be reversed by man made polices.
the new people to people economy approach.
See, here's a way to increase the GDP as much as you want: Make
two columns of unemployed people. Give each person a shovel. One
column digs a hole and each person in that column is paid $1
million by the corresponding person in the other column. Members
of the other column each fill in one hole and is paid $1 million
by the person in the other column. Repeat as often as necessary.
Ya see, all transactions are counted, even those having no net
benefit.
"
we are fairly free. but there is nothing in the constitution,
preamble, the declaration of independence, and lots of writings of the
founders that suggest that america be run by a economic system that
favors a economic aristocracy. and that their rights come first, and
they have no responsibilities to their country.
with freedom comes responsibilities.
the economic aristocracy has deeply indebted america. why should we
be forced to pay for their abuse.
the economic aristocracy has turned large major portions of the
american workforce into debtors, and their offspring will almost
surely be in poverty.
the economic aristocracy has driven us into depression more than
once. which in turn has led to civil unrest.
the job of our government is to regulate and promote the general
welfare of its citizens.
not to promote the excess's of a aristocracy.
the aristocracy has taken away the rights and freedoms of americans
to be innovative, work with their hands, and harvest the just rewards
of their hard work.
there is no way to fix free trade.
allowing unions at walmart, universal health care, better education,
will not fix the unfixable.
who says the production will stay here. it did not happen before, so
why believe silly liars when they say ramp up the schools to innovate.
the ipod, and the compact florescent bulb were invented here, and
produced over there.
besides most innovations happen on the factory floor.
take the factory floor away from innovative hard working americans
and you gut the american way of life, and social mobility.
our schools as well as our share of the worlds patents has
deteriorated as trade has become freer.
we simply cannot pay others for everything we consume, its
impossible.
i for one do not want to be drivin into poverty so that a 1%
aristocracy gains all of the benefits.
free market economics is simply a economic system, not a political
system of democracy.
you cannot replace one with another, and expect a democratic
equitable society which the founders sought and fought for.
they fought to be free of great britons free market, corporate
driven government.
free trade is anti-democratic. it is the enemy of all freedom loving
people.
it is the friend of all totalitarian loving people.
A society is allowed to protect itself and it's values with taxation
policies, import and export policies, tariffs, etc.
It does not have to enable people who seek to dismantle it or do it
harm for their own profit.
It's quite simple. Tariffs and tax policy. Remove and diminish the
incentives. I am amazed how thoroughly brainwashed the public has
become in the free trade rhetoric. That an intelligent person could
even say "I don't see any practical way" to combat it when those ways
worked for generations.
today's modern quality of business involves a
money harvesting strategy of working in the gray areas, exploit
loopholes,
tricky-slicky-cheaty procedures (the CEOs and rich people just love
this)
and who gets the shaft? As usual, the underlings!
When was the US economy at its peak relative to the rest of
the world? What was it's trade policy at that time. Did it have more
tariffs or free trade than today? When was worker income increasing
at the longest strongest rate?
"when nixon cut the high tax rate, carter deregulated, followed by ray-
gun who did all of the above, and then lots more damage. it allowed
the rent seekers to finally be able to form a true modern aristocracy.
they are swimming in so much money now that most central banks are
irrelevant.
they are so under regulated that they have almost become governments
onto themselves.
all free market economics is is the freeing up of the wolves to
devour the sheep.
of course that only works for so long, then you run out of sheep. but
then again wolves have no sense of history. only a ferocious
appetite."
Should weathly people have more rights than poor
people? Maximizing liberty means placing some restrictions on the
use of wealth.
I've yet to see a libertarian that does not hold
some special form of entitlement he (or extremely uncommonly she)
calls rights.
Political power that is an extention of the will of the people is
preferable to the power of money.
Tools are neither good nor evil, they are just tools.
Wealth is just another form of power. Libertarians tend to be wealthy
or dream of being wealthy in a way that lets them exercise their power
to control the lives of others.
Power is as power does. Of course the wealthy will try accumulate
more
by any means possible.
A free market allows harm and robbery (though it is couched in the
language
of "free trade".) The maximization of liberty means certain
restrictions
on trade. You cannot legally buy and sell slaves. In the USA you
cannot
legally buy or sell human organs. In the USA you cannot legally make
contracts
to kill third parties.
Restrictions on liberty are what make a society work.
Democracy does not fail; the voters do. The better the voter, the
better
the results from democracy.
it is so well said.
> And all that is going to crash HARD too.
>
could be. but i never rule out the cleverness of the silver spoon
crowd, nor the gullibility of those who think bailing them out helps
us.
> > all i heard from these rugged individuals over the enron debacle and
> > the poor employees that were suckered into putting all of their eggs
> > into one basket, was that they should have diversified.
>
> As the article said, though, that only works if the whole thing
> doesn't come down.
>
true, but remember, they preach inter-connectivity, they just think
it does not apply to them.
> And that's what we have now. The last few days have crossed a serious
> threshhold -- consider that, with at least 4 manipulative "infusions",
> the Fed has had to prop this market up to the tune of $60B so as not
> to cause a complete blowout of the mess.
>
and i wonder how much money other central banks are pouring into
american ponzi schemes secretly.
> Because we all know what happens when this market normalizes as far as
> it has to now.
>
what is the true value of the dow? 3-5000?
> > my answer to the rugged individuals, was that these were only
> > employee's who were acting on advise given to them. they were not
> > sophisticated rugged individuals that know better.
>
> Right. Or just following the lemmings in front of them straight off
> the cliff.
>
the markets are for those who can afford to lose.
the rest should stay away, so as to not get sheered by the wolves.
the market is not a bank, it is a rather poor place to save.
there are those that are good at it, or the insider aristocracy. the
rest of us are their fodder.
> > its looking more and more like another free market blowout, where the
> > rugged individual sinks us again. 1928 anyone?
>
> We're well into 1929, I'm afraid.
>
you could be right. things are moving fast.
> Mike (I think a lot of people don't realize that a lot of the "it
> doesn't happen instantaneously" phase has already happened...)
true, many are still living yesterday. many believe, or have faith,
or paint us as conspiracy nuts, or that we are ignorant of how the
financial world works.
when in reality, its they who do not know.