Through the Looking Glass: Actions Speak Louder Than Words

http://www.minyanville.com/businessmarkets/articles/todd-harrison-stock-market-economy-financial/12/8/2010/id/31559

Actions do speak louder than words,
It's time to end the game.
For the sake of all of our children

With that said, the DNA of global financial markets has changed. While the stateside averages are higher, the measuring stick (greenback) is lower, a fact not lost on foreign holders of dollar denominated assets. While they're swallowing austerity measures and digesting upward taxation, they look across the pond to see more "extend and pretend" by our elected leaders. And you wonder why social mood is shifting so quickly? (See: Will QE2 Trigger War Games?)

At the end of the day, we must ask ourselves an honest question: If the capital markets need an IV drip from the government to stay afloat -- or if the financial industry remains one FASB 187 accounting change away from technical insolvency -- how will that dormant toxicity and ever-expanding largesse manifest as we edge ahead?

We can only assess the forward spectrum and proactively position for what’s to come.

Conventional Wisdom: The Financial Crisis Is Over

http://www.minyanville.com/businessmarkets/articles/todd-harrison-financial-crisis-headlines-stock/12/3/2010/id/31484

Point received, on a touchdown pass!

Old School Minyans know we don’t “do” acrimony in these parts. As my grandfather used to say, “Take the high road; it’s less crowded and has a better view.” Still, once in a while an item screams across our screens and it merits attention. Yesterday afternoon, one of those moments arrived.

Banking analyst Dick Bove openly offered that the financial crisis is “officially” over. While he correctly qualified his remarks by saying that “the only entity that needs this money any longer is the United States Government
,” the headline was too juicy to let slide by.

Insider's Take on the Insider Trading Scandal

http://www.minyanville.com/businessmarkets/articles/insider-trading-todd-harrison-wall-street/11/23/2010/id/31300

I hear what Todd is saying, BUT and it's a big but to.
The world's taxpayers is continuously having to sign on the dotted line for the repayment responsibility for all the woes of Wall Street.
Do you know how you rid of termites?
You tent the house and fumigate it.
So we either shut the markets down and clean house properly in every nook and cranny or we deal with the riot.
I realise your profession of trade would be on hold, for as long as it takes to flush the fraud, but hey as far as an outsider can see regarding the picture that's come to light, there are no corners and no boundaries of borders, for the entire financial system.
As your so fond of saying, as well as a spiritual lesson of my own, learned long ago,
One must look at both sides of the coin.
Perspective is an interesting thing, as well the many degrees there are of it.
Have you yourself taken sustenance from the taxpayer's table, as an uninvited guest?


The easiest thing in the world to do is say "Wall Street
is evil" and throw every hedge fund under the bus.

I’ve read a lot of news reports overnight and virtually every one of them adopted the same populist cry. I even saw Inspector Kemp interviewed on this topic, where he said, and I quote, “A riot is an ungly thing... undt, I tink, that it is chust about time ve had vun!”

Earth to Matilda -- not all hedge funds are evil. The majority of the industry is comprised of good people making honest livings, or at least they were considered honest when free market capitalism had a positive connotation.

Don’t get me wrong; if someone crossed a legal line, throw the book at them and demand restitution but let's not try the industry in the court of public opinion and assume they’re all criminals. That's misplaced anger and endemic of a broader shift in social mood

Ideas worth spreading

http://www.minyanville.com/dailyfeed/perhaps-we-should-stop-spending/


Tim Jackson, a sustainability expert who studies sociology and economics, talks about how the economical cycle is locked to a social system in which status is represented by things. And because we naturally seek status, we have an insatiable appetite for material goods.

He points out that Adam Smith talked about "Living a life without shame," which for Smith meant climbing out of poverty. For us it has meant accumulating cars, clothes, electronics, etc., even when we can't afford them. And now

Beware of the unintended consequences of Wall Street reform

http://finance.yahoo.com/tech-ticker/


Sometimes "The Cancer" has to be cut out, because just taking "the drugs" won't fix it.
In the case of Wall Street, "The drugs" are only effective in mildly retarding "The Cancers" growth.
"The Cancer" lives and still grows because of the corrupt system that houses it.
It lives within the bone marrow of the world's governments, hidden by the skin, that only shows the Corporate melanoma.
Right now, whats happening with reform, will only serve as Chemo to eradicate the "skin cancer", without a complete "bone marrow transplant" in "completely sterile conditions" "the Cancer" no matter what we do, will continue to thrive.

In light of last week's 'flash crash', the European debt crisis, and the ongoing battle over U.S. financial regulation reform, policymakers around the world have found no shortage of ‘solutions’ for fixing the market and global capitalism.

“I'm concerned about free market capitalism, continuing to be free market capitalism, if we can even say that still exists anymore,” says Todd Harrison, CEO and founder of Minyanville.com.

Money vs. Wealth

http://www.minyanville.com/articles/NYX-SPY-GSPC/index/a/23402


Over time people have become confused between money and wealth. This is precisely what central bankers have had to do to convince consumers to borrow and spend recklessly. If any part of the US government/ Federal Reserve/ banking system is operating well, it's their public relations/ advertising/ media division.

At any period, there's a certain amount of wealth in the US economy, yet government has created much more "money" over very short periods to intermediate that wealth. Thus wealth per "dollar" has been diluted vastly.

How have they done this? By lowering the cost of debt both to the lender and the borrower and increasing leverage in the system through the fractional banking system. In our credit-based system, money equals debt: We've been spending credit, not wealth.

Recognizing the fact that economies more and more are influenced by central banks that attempt to stimulate economies (consumption) by creating debt many years ago, I began physically moving my assets around the world, shifting my wealth from time to time to the country I felt would devalue its currency the least: When a central bank creates debt, it essentially creates more of its currency, and thus devalues that currency.

Inflation is the creation of superfluous debt that chases unproductive assets (assets that produce little or no income for the risk undertaken). It devalues currency and drives up prices -- especially

Power Writes History

http://www.minyanville.com/articles/C-bac-ms-economy-banks-wfc/index/a/23189/from/home

The government's white paper describing the causes and effects of the financial crises provides the rationale for President Obama's proposals for reform. Conveniently, nowhere does the paper mention the actual primary causes:

1. The Federal Reserve kept real interest rates negative for nearly five years. Negative interest rates are an abomination, a radiation to proper pricing of risk:they encourage if
not force excessive risk-taking.

2. The Federal Reserve kept margin requirements at banks too low for too long.

3. The shoddy monitoring of off-balance sheet leverage and derivatives, both of which accelerated leverage to unparalleled levels.

4. The Congressional creation and support of the GSEs, which guaranteed and bought debt that would otherwise never been made because of its quality.

Of course the banking industry played along. Unfortunately, the private market will always take advantage of shoddy government regulation. But the private market never would have had the fuel or the risky inclinations if not for the above.

But the above wasn't mentioned, because the paper was written by those culpable.

Now we are about to give the very institution, a private bank with its own shareholders and where only half its board members are appointed by the government, undefined powers. Ron Paul has nearly half of Congress willing to support a bill to audit the Fed. It can't come soon enough. We know a lot more about the operations of the CIA than we do about the operations of the Fed, whose operations that always devalue our currency.

We will rue the day that we gave this power to the Fed. The power is undefined; they have carte blanche. We should by now all realize the destruction for which the Fed is already responsible.

Risk is high.

Five Things: What Really Caused the Debt Crisis

http://www.minyanville.com/articles/.../index/a/23157

Very well worth the read, Silver buffs will love the second page

1) What Really Caused the Debt Crisis

Yesterday I ran across a recent interview with the Financial Times' Gillian Tett which appeared in Newsweek. Tett has a new book out that looks interesting, "Fool's Gold: How the Bold Dream of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe."

In the interview, Tett was asked, Once things started to go bad, there were a lot of mistakes made by managers but also by policymakers on both sides of the Atlantic. What, in your mind, were some of the crucial ones?
"One of the biggest policy mistakes was made by the American officials who repeatedly said that the subprime problem was contained and that there was no reason to worry about it at all. That represented a considerable misunderstanding of how the financial system had changed. They failed to calculate the enormous quantity of derivatives written … nobody knew how big they were."

Her response leads to a point I've been trying to make in Five Things with respect to Socionomics and herding behavior. Consider this point: "one of the biggest policy mistakes was made by the American officials who repeatedly said that the subprime problem was contained and that there was no reason to worry about it at all." Well, that's not really a policy mistake so much as an observational mistake