Sunday, February 28, 2010

Happy Purim Joah

Today is Purim. A Jewish holiday when we celebrate defeating Haman's plot, an evil guy, who was trying to kill the Jews in ancient times. A summary of this holiday is: we read the story from the Book of Esther, we rejoice with a Purim party, and now we eat Hamantaschen - a three cornered cookie filled with apricot or prune. My favorite part of any holiday is the eating. Naturally, if anyone wants to learn more about Purim, they can read about the holiday at Wikipedia for starters.

Stay tuned.

P.S. Joah is my grandson.

Saturday, February 27, 2010

The Way Things Don't Work

Ron Paul has be on MSNBC recently because he is up in the polls as the next Republican presidential hopeful. Unfortunately, while the people like what he says, when it comes to monetary policy and our central bank (which he believes we do not need) Ron Paul does not know what he is talking about. What's new?

In the 21st century, for the United States to close its central bank is unthinkable to me. If you think I am the only one thinking this, ask any economist that understands the role our central bank plays as part of the world financial system. Ron Paul, when it comes to central banking does not understand what his ideas would do to our economy or the world's economy.

I would like to see our central bank concern itself more with the integrity of our dollar and perhaps a little less concerned with economic growth. Economic growth, in my opinion, will happen faster and last longer on a level playing field. What am I talking about when I say "level playing field"? Let me explain.

What is the opposite of socialism? Capitalism? Well, we don't have free market capitalism in America. What is a monopoly? A monopoly is when a group of businesses, or, a single business dominates and controls the price structure of a whole industry. What is anti-trust? Take a look at the health care industry and tell me we have free market capitalism in health care. No, we don't have competition in health care because Congress has made them exempt from anti-trust. A health care provider can legally control more than 50% of the health care business in a state and there is nothing wrong with that - legally.

So, we don't have a level playing field in health care for the consumer, and because of special favors for other industries, we don't have a level playing field for the consumer in a number of other fields as well. What we have is a Government that gives special protection so certain people can make a living, a very good living, on the backs of those with little or no influence. That is the kind of economic system we have in America.

Now the Republican Party has convinced a number of Americans that they need to fear socialism because the Democrats want to make health care available and affordable for more Americans. If more Americans understood how they are being screwed over by the Republican Party, things would change pretty quickly. But, we are a country that looks at polls and we give the microphone to the guy with the ratings, and so we get to hear from a know nothing like Ron Paul.

Some day people will figure this out, but it may be a while.

Stay tuned.

Friday, February 26, 2010


Unfortunately, as things too often are, we kicked the gas can down the road rather than take steps to reduce our dependence, first on foreign oil, and now on oil from any location. Global warming is real, and all the idiots in public office that deny it will not change the scientific data.

Stay tuned.

UNITED STATES HOSTAGE 1973-1991 ENERGY POLICY, oil on paper, 1991 by F.D. Zigler. First exhibited May 1992, Carnegie Art Center, Covington, KY.

Thursday, February 25, 2010

Obama's Health Care Summit

Originally, I was planning to write about Ron Paul, the idea of a central bank (our Federal Reserve Bank) and monetary policy, and my thoughts about the trade off between monetary policy under a central bank system and the need for comprehensive financial regulation. But, because today is President Obama's Health Care Summit with members of Congress, I would like to say a word about that.

I watched Keith Olbermann's show last night, COUNTDOWN, and I listened to his plea that everyone going into the Health Care Summit should leave their egos at the door. Well Keith, I too hope they will, but I am not very hopeful that that will be the case. I think Congressman Anthony Weiner said it best, the Republican Party is a wholly owned subsidiary of the Insurance Industry!!!

Yes, I know, I am a socialist bordering on being a communist bed-wetter from the 1942 variety. I understand that governments around the world carve out niches for their friends to be able to make a living and the USA is no different in that respect. And yet, when health insurance companies want to call a cleft palate of a new born child a pre-existing condition, I say enough!! Health insurance company CEOs, you are dangerously close to your demise in my hierarchy of crimes against humanity. Yes, we need a public option and I hope this Congress can make it happen. There are too many people in this country without, and that needs to change.

Stay tuned.

Wednesday, February 24, 2010

My Brain, A Tree And One Old Humankind

I am now back in my little city just across the Ohio River from the Creationist Museum. While I was gone, my copy of the Smithsonian magazine came in the mail. This morning, after sleeping like a rock last night, I opened my new March 2010 copy and read about the new exhibition hall dedicated to the origins of humankind that opens this month at the Smithsonian National Museum of Natural History. I will have to make a trip to Washington, D.C. sometime this year and check out this new exhibition hall that explains our human origins and our ancestral tree.

You see, living just across the Ohio River from the Creationist Museum, and powerful Republican intellectuals like Senators Bunning and McConnell, has left my brain hanging somewhere in a tree. We don't think much of the scientific method around these parts. The Bible is all we need to explain where we came from to where we are going. Amen. The idea that humankind lived before the Bible said it did is a corruption of the good book, and we can't have that kind of intellectual stimulation. Therefore, we can't have economic stimulation either. In fact, stimuli of any kind is suspect.

I did come home with an idea for another of my political paintings, praise the Lord, and I will be putting it down on board very soon. I think I just needed to get out of town for a short while to clear my head and retrieve my brain from that tree that I left it in.

Stay tuned.

Monday, February 22, 2010

Chicago Is A Great City

Chicago is a great city if you love to walk and look at architecture. That is exactly what I and my friend Stert have been doing since we arrived. We walked down to the Chicago Art Institute on Sunday and walked around the museum a for a few hours checking out their collection of paintings. They have some of the best paintings in the world, and the price of admission in February is free. While I have been there several times, It is always nice to take it all in again. If you love seeing some of the great paintings of world, then you don't want to miss visiting the Chicago Art Institute.

Stay tuned.

Sunday, February 21, 2010

If Its Sunday, it Must Be Chicago

MONEYTHOUGHTS is on vacation for a few more days. Doing economic research in Chicago. Will be back for more comments and my opinions in the near future. I hope, unless I get snowed-in in Chicago this week.

Stay tuned.

Friday, February 19, 2010

If Fraud Is Something That Everyone But Bankers Can Commit Than We Are All In For More Rough Times

The Federal Reserve Bank raised the discount rate a quarter of one percent. This is what is referred to as 25 basis points. 100 basis points equal one whole percent. The Fed wants to signal to the banks and more importantly the economy that, in their opinion, it is no longer necessary to keep this one interest rate so low. In other words, the banks are in much better shape than they were 18 months ago, and this is a good thing. This is more for show, in my opinion, because the really big levers that the Fed has are still available should credit get tight.

Let us just review a little. The Fed can put reserves into the banking system through its Open Market Operations. That simply means that the Fed can buy US Treasuries from primary dealers and in that way put reserves back into the system. If they want to slow the growth of the money supply and in turn the economy, they can then sell US Treasuries back to the primary dealers and take reserves out of the system. The big tool is the reserve requirement, and that they will use if they believe the economy is getting too hot. This I don't think we will have to worry about for a while as our domestic economy isn't going anywhere too fast.

We all are still waiting to see what kind of new regulations are going to come out of Congress. I am expecting I think like most, to be disappointed. The bank lobbyists have first, second, third and last shot at our Congressional representatives, so, I don't expect that we will see the kind of regulations we really need. If fraud is still something that everyone but bankers can commit than we are all in for more rough times.

Stay tuned.

Thursday, February 18, 2010

Level Playing Field No. 3

Don't have time to write today, so here is a painting you can look at.

Stay tuned.

Level Playing Field No. 3, oil on wood board, 1995.

Wednesday, February 17, 2010

The Future Does Not Look Very Bright

Last night, one of my brothers called to tell me to watch FRONTLINE on one of the PBS channels at 9 pm. The name of the program was THE WARNING. Not only did I watch the program at 9, but I watched it again at 10 because there was so much information and I wanted to process it all.

The program was about a woman lawyer by the name of Brooksley Born, who President Clinton had appointed to chair the Commodity Futures Trading Commission (CFTC). For the next hour, I watched how Fed Chairman Alan Greenspan, Treasury Secretary Robert Rubin and economic adviser Larry Summers worked to stop her from advising of the coming disaster in the derivative market and ultimately to shut her down as the Chairperson of the CFTC. When Congress shut her down, she resigned. President Clinton, as smart as they say he is, did not understand what was happening in the derivatives market and went along with his money advisers. This disaster really got started under the idiot savant Alan Greenspan.

After watching this program, and giving it some thought, I don't believe we are going to see any meaningful change in the way the investment banking and investment securities industry is going to conduct their business. As I have stated before, we are all headed back down that same road again, and it is going to lead to another financial crisis. There is just too much power and money on Wall Street and Washington for me to believe that the necessary changes, with regards to regulations of derivative trading, are going to be implemented for the good of our whole economy.

At this point in time, I do not think President Obama knows enough to fight his advisers like Geithner and Summers with regards to the needed regulations on Wall Street and the trading of derivatives. They were around when Brooksley Born was bashed for her attempts to save us all from the financial crisis that this nation came to absorb, and I do not believe they, President Obama's advisers, are the right people to stand up to Wall Street.

I am afraid that we will see much worse before things will get better, and there is the chance that the greed on Wall Street and Washington will bring this country down. In the end, it will be the enemy within, not an external enemy that will bring this country down.

Stay tuned.

Tuesday, February 16, 2010

Call Them Out For What They Are

You know, it doesn't take very much to make me paranoid. When my BMW caught fire a few minutes after leaving an interview with a US prosecutor in May, 2007, I thought the Republicans in Ohio were behind it. But I am sure that was just my imagination. This morning Google made me jump through hoops to get on my blog and I am wondering why after two years of blogging they would give me such a hard time? Well, I am on now, and that part is behind me.

Let me switch gears today and go back to talking about why, in my opinion, the Republicans in Congress will not work with our first black president. Last night, I was watching Keith Olbermann on COUNTDOWN and listened as he tiptoed around this very issue. I realize Keith can't say what he thinks, as that might get NBC in trouble with people they may need down the road. Yet, I agree with Keith that the first of anything does not mean the end of prejudice. The first black baseball player in the modern era, Jackie Robinson, had to endure a lot of mean crap from both fans and other players his first year and perhaps even later in his playing days. But, I thought Keith fell short of sticking it to the Republicans and their Southern Strategy that they pursued for so many years with much success. Call them out on it on national TV? Well, we aren't there yet, but hopefully we are getting close. Just a few more really stupid reasons why they, Congressional Republicans, can't work with this black president like the size of the room, or how many chairs are there going to be around the table, or the color of the walls in the room, or what paintings are going to be hung on the walls in the room, and stuff like that, and I think we should be ready to call them out for what they are!

Stay tuned.

Monday, February 15, 2010

Goldman Sachs Equals Financial Cancer

Metastasize - transfer of disease from one organ or part of the body to another not directly connected with it, all malignant tumors are capable of metastasizing.

Goldman Sachs is a cancer on the economy of the United States and now it has metastasized and become a cancer to Greece as well. This corporation has no ethical compass. Its only purpose is to make money for itself and its principals. They have infected the government of the United States and now that malignancy is spreading around the world.

In the Sunday New York Times of February 14, 2010, is a well written article about how Goldman Sachs advised the government of Greece to go deeper in debt while keeping the debt off their balance sheet. This kind of stuff is not rocket science. Any asshole can suggest that a country part with future revenue streams from fees that would be needed to pay existing debt service. And, that folks is exactly what Goldman Sachs did. Now Greece is looking at going belly up because it can not meet the interest payments on its existing debt. Is this the way a financial adviser advices a client nation?

It sure will be interesting to see how much will change as a result of the new regulations that are coming out of Congress. Given the amount of influence that the Wall Street firms have with our politicians, it will be interesting to see if there will be a meaningful change. If there is no meaningful change and the games continue, we will be headed back down that same road to the next financial crisis. Too big to fail and too big in influence will eventually bury us as a nation. The world will not play our game of financial cancer forever.

Stay tuned.

Saturday, February 13, 2010

This Saturday Is Different

I have been reading TOO BIG TO FAIL by Andrew Sorkin for the last several days. As those of you who have been reading my blog for a while know, I worked in the field of investment securities and portfolio management for many years. Either, Sorkin is writing about something that is over his head, or, there really were no experts when it came to dealing with the financial crisis on Wall Street, in either the banks or the law firms that were advising the banks, or, the people in Washington that were trying to find solutions to the current problems. What there was was just so many clowns crawling out of the same little car as you would see in the circus, and then not knowing which way to go.

If ever there was an argument for better and more comprehensive regulations of banking, investment banking, and the capital markets, this book, and I am sure others I have not read yet, provide all the reasons why, unless something is done that is meaningful in the way of better regulations, we are all headed back down that same road to the next financial crisis again. I guarantee that.

I have written this more than once, shit, whether in a brown paper bag or a silk purse with gold trim is still shit. The credit rating agencies are responsible for the mortgage bubble and you don't have to be an Einstein to figure that out. Unless steps are taken to regulate the credit rating agencies and hold their feet to the fire, the tinder is just sitting there waiting to be lit to start the next financial crisis and bond market meltdown. This is not rocket surgery. But, unfortunately it is a lot of politics. Keep your money in cash if you're going to need it, and say your prayers that someone somewhere will be able to open up some eyes and minds to what is waiting for us down the road if we do not change the way we do business. And, you can throw the Federal Reserve Bank in there too.

Stay tuned.

Federal Home Loan Bank Commemorative Stamp, oil on paper, first exhibited May, 1992, Covington, KY.

Friday, February 12, 2010

Mother & Child: An American Icon by F.D. Zigler

This week has been a snow filled week for much of the country and I am tired of all this snow. I am going to take it easy today, as I try to take it easy everyday, and recharge my batteries. The football season is over and baseball isn't quite here, and I don't feel like writing about the political-economy today. I am going to post a painting today and leave it at that.

Stay tuned.

Mother & Child: An American Icon, oil on board, 72"x48", wood frame w/gold metal leaf, first exhibited May, 1992, Covington, KY.

Thursday, February 11, 2010

The Old Republican Party Is Dead

I read. I read books. I read magazines. I read the Sunday New York Times, and I read what is on the Internet, but I should stop watching TV news. Watching these guys and gals is getting to be the most frustrating part of my day. Yesterday, I caught myself talking to the TV screen. Those idiots are making an idiot out of me.

Every American has their own perspective of the political-economic events that unfold in Washington, D.C., and I am no exception. I have written my opinions concerning President Obama's attempts to work with the Republicans in Congress. I have my opinions, and while they are grounded in my experience of living in this country for 67 years, I realize that others can have viewed the same events and come away with a totally different picture.

But, I am not changing my mind on this one. You can throw my NFL black quarterback analogy out the window, but I am staying with it. The talking heads may not be able to call it as they see it, but I am not on TV and I don't make a dime from writing this blog. I write what I think. They, the talking heads, may bring the civil rights issue into the picture by way of the higher percentage of black unemployment in the United States, but they will not hit the nail on the head until they start talking about the fact that there are no black Republicans in Congress and that essentially the Republican Party, and the direction it is going, is more exclusionary and white than it has ever been in its long history.

Where are the Liberal Republicans? The answer is: they are all dead. Where are the moderate Republicans? The answer: On there way to being dead figuratively and literally. The Republican Party that adopted the Southern Strategy is not the Republican Party of Jacob Javits and Nelson Rockefeller. That Republican Party is dead.

Stay tuned.

Wednesday, February 10, 2010

Looking For Answers ???

I just finished reading an article about how Standard & Poor's (S&P) is letting too big to fail (TBTF) institutions (banks) that the Federal Government is no longer going to guarantee their debt, assume a new level of risk. Mention was made of the 18 largest banks receiving Federal backing, backstopping their debt during the recent financial crisis. The article goes on to say in so many words that the holders of their debt instruments, notes and bonds, will have to take a haircut if the banks find themselves in the position they found themselves in during the last financial crisis. My question is: do not all equity holders go to zero before any debt holders take less than 100 cents on the dollar? How can the law be rewritten to preserve shareholder equity at the cost of debt holders first claim? I realize that Congress can do anything, even stupid things, but someone is going to have to explain to me how this new system is going to work. Naturally if the Federal guarantee is taken away for the debt of TBTF institutions, their cost of capital must increase. This will cause all consumer interest rates to shift upward.

As usual, the Congress of the United States, in their effort to do something, and not being able to do the right thing - which is proper regulations and bringing back Glass-Steagal, they come up with something I don't understand. Perhaps, I will eventually read the answer to my questions.

Stay tuned.

Tuesday, February 9, 2010

President Obama: It Ain't Going to Happen

We are having snow today and it is snowing right now. How much snow? Who knows? The weather report on TV says just a few inches, but this snowfall just keeps coming. It sure looks pretty.

Turning our attention to Washington, and President Obama's desire to work with Republicans in Congress on the Health Care Bill, I find it to be just so much nonsense. Nonsense in that the Republicans are not going to work with President Obama on anything. I admire President Obama for trying, but my gut says that the Republican Party, a political party largely built on the Southern Strategy that came out of the Civil Rights era, will not work with a black president. Name one black Republican in Congress. There aren't any. People might point to Michael Steel, the head of the Republican National Committee and say see, there is a black Republican. Yes, there are black Republicans, but there are none in Congress that are in the Republican Party. And, for me that speaks volumes about just what the Republican Party is all about. Cooperating with a black president is not in their playbook. People will say that this is because of policy issues, and I say, my foot. It is about race and nothing more. President Obama can not acknowledge this, nor can any members of his administration. At least not now, perhaps some day when they write a book, they will give their frank opinion.

Democrats will have to do it by themselves if they want to get anything done. And, unfortunately, I think too many Democrats are hearing footsteps. With the economy and the stock market and some European countries having serious trouble economically, I don't see much of anything getting done in this Congress.

Stay tuned.

Monday, February 8, 2010

Greed & Poor Judgment Go Together like Peas In A Pod

First, Congrats to the New Orleans Saints on their come from behind win of Super Bowl 44 (XLIV). I like seeing a "new" team win as I believe the NFL is set up as a better professional sport's league than Major League Baseball (MLB). The owners of MLB need to take a closer look at the success of the NFL and simply copy some of its better features. Anyone, with an ounce of sense, knows that MLB is running themselves into the ground. Not having a salary cap in MLB is a tremendous mistake, and the selfish owners of the large market teams, like the New York Yankees, will continue to hurt the future fortunes of MLB. Smaller market teams can not compete with the almost unlimited wealth of some of the owners in the larger markets. The NFL, by having a salary cap, is the wiser professional league. Baseball owners of MLB, the secret of the NFL's success is not a classified secret.

And, to the politicians in Washington and the Obama administration, regulations and enforcement of banking and the securities markets is not a classified secret either. Throwing away the blue print that served this country so well for so many years and then just dumping it because Wall Street greed could go unchecked, if enough dollars were put in the pockets of enough politicians, is not patriotism. Such behavior is treason, economic and financial treason, and it should be punished like any other treasonable offense.

Stay tuned.

Sunday, February 7, 2010

Super Bowl Sunday: February 7, 2010

Today is Super Bowl Sunday. They say 100 million people will watch the game. I remember the very early games before it grew into the big deal that it is today. There was a time when the football game itself was the main attraction. As the Super Bowl has evolved, the half-time show, the commercials and the pre-pre game talk have taken on lives of their own. The football game, which once was the purpose of it all, has almost been lost. Is this how religions evolve? They start out with a simple message and before you know it, the main message is all but lost.

I have no strong choice for today's Super Bowl. I am a fan of the AFC, formerly the AFL (American Football League), as the Cincinnati Bengals are in the AFC. The Colts have a fine team and are favored to win this game. I think, I like a lot Americans, feel that it would be nice if the City of New Orleans had something nice happen after the devastation of Katrina. I also like to see new teams win and the Saints have never been to a Super Bowl much less won. Perhaps most of all, I hope to see a good clean game with no serious injuries. As they say, let the game begin!

Stay tuned.

Saturday, February 6, 2010

Saturday Is For Art

In "honor" of the National Tea Party Convention in Nashville, TN this weekend, I am posting a painting I first exhibited in May 1992, titled STRICT CONSTRUCTIONIST. Back then I painted in oils. Instead of buying acrylics for painting on paper, I simply covered both sides of the paper with gesso and used the oil paints I was comfortable using. This commemorative postage stamp shows the three views of an object that is used as a blueprint. Simple objects can be built with a front, top and side view. Everyone thinks they know what the Constitution says, and that they know what the Founding Fathers that wrote the Constitution meant when they wrote it. But, for me the beauty of the Constitution is that it has to be interpreted in light of the changes in our country, if only for the new technologies that requires that what is constitutional be interpreted as we move forward.

The Tea Baggers, in my opinion, are so far removed from where I am, and I hope the majority of fair minded Americans, that as they find their momentum through hate, that they will reduce themselves in number as they attempt to find their "Holy Grail". Amen.

Stay tuned.

Friday, February 5, 2010

Tea Baggers Unite You Have Nothing to Lose But Your Cups

Today is the Start of the Tea Party Convention in Nashville, TN. This is something to watch because more dangerous things have started with unhappy people. I don't have a problem with a third political party, but the Tea Baggers, as they are known, don't seem to have a whole lot that they are for. These people seem to have a lot that they are against. It is easier to be against that which exists than to create a positive political platform. Hate is a dangerous emotion. And, from what I have seen, there is a lot of hate among the Tea Baggers. It will be interesting to see what former VP candidate and former Governor Palin has to say to this group as she is receiving a $100,000 fee to give a speech. Nice work if you can get it. Well, I am going to just relax and watch and listen. I want to give these people a fair hearing even though I believe that they would not listen or give a fair hearing to a rebuttal.

Stay tuned.

Thursday, February 4, 2010

Republican Nonsense Is Not Going To Change My Mind

Taking a break today from talking about the economy and the financial markets, as the noise outside my front door has disengaged my brain. After sawing concrete and laying pipe down the center of the sidewalk the last several days, the crew is back sawing again and my mind can't handle the noise from a concrete saw and think at the same time.

But, I would like to make a few comments about the talk on TV with regards to Homeland Security. Why so much misinformation by Republican politicians? It is so bad that even the talking heads are correcting the politicians' lack of facts in discussing the prosecution of terrorists. This is so disappointing to me, and I am sure to many others that see and hear this nonsense. The safety of the country from terrorists, I would think, would require that we come together on the hard facts of past events and not play games with peoples' emotions. Trying to portray the Obama administration as weak on terrorism, when they have followed the same laws and procedures of the last Bush administration, brings no greater security for any of us. How bad off are the Republican politicians that they have to lie about factual events of our most recent past with regards to the handling of terrorists? I don't live in the bubble of Washington, but I can't believe that mouthing such nonsense can score any points with fair minded people. Perhaps they live in a world I can not comprehend, and if that is the case, I am prepared to leave it at that. But, their nonsense is not going to change my mind.

Stay tuned.

Wednesday, February 3, 2010

Live By The Sword And Die By The Sword

Here is something I wrote to a friend the other day about TOO BIG TO FAIL.

Well, I have been reading this book and while I think Andrew Sorkin knows his stuff, or, should I say, I hope he does. The simple, the very simple, at times, goes unexplained. Leverage is another word for borrowing money. A corporation that is highly leveraged makes big money, or more precisely their return on equity is a bigger number, than a corporation that isn't so highly leveraged. You see, once you pay the "rent" on the money known as interest you borrow to make more money, the rest is pure profit after the corporation's expenses. So, if you borrow a lot and have a 30:1 ratio of borrowed cash to cash you own, you can make lots of money. But, what happens if you borrow a lot of money and you buy ice cream and your refrig goes bad and your ice cream melts? Now you have borrowed a lot of money and no ice cream to sell to pay the borrowed money back. Now substitute mortgage-backed bonds or real estate holdings for ice cream and instead of the ice cream melting, the bond market has a meltdown because no one knows what the bonds are worth because they ain't worth the triple-A credit rating they were given by the credit rating agency that rated them, or the real estate is not worth what the investment bankers paid for it. This shit is not complicated, but if you don't work in the field, it seems very complex. This complex bullshit is what the people on Wall Street want everyone to think.

The other big problem for investment bankers and their publicly traded corporations is short sellers. Those that live by the sword die by the sword. The firms make nice money when other corporations are being shorted by their hedge fund manager clients that trade with them, but when the shorts are directed at them, they cry foul. Well, you can't have it both ways. Either stand up for reform of the shorting of equities with the up tick rule, or, remain silent and await your turn to be stabbed in the back.

The other big problem for a publicly traded investment bank is the practice of mark to market. In the Super Bowl this Sunday, when a team commits a foul the yardage is walked off. Yes, you screw up and the ref walks off 5, 10 or 15 yards and now you have further to go for a first down and a touchdown. Simple. On Wall Street, mark to market of real estate or bonds that have no buyers is a ticklish thing. No one wants the yardage walked off against them. They want to commit capital to a "bad play" and not have to receive any penalty. Here is where the short sellers come in. They, the short sellers like a hedge fund, don't believe the books that the investment bank puts forward to reflect the financial condition of the corporation. And, before you know it, everyone is joining the party and selling that corporation's stock down to oblivion. At this point, the lights on the pinball machine go crazy and the hedge funds make lots of money. Game over.

Just for one second can you imagine, what a Super Bowl would look like if only say one ref took the field to call the game? What do you think the game would look like? I was watching an NFL game this past season one evening and I saw former Fed Chairman Alan Greenspan sitting in a box eating and watching the Washington Redskins. I wonder if he ever gave a thought to what football would look like if we took the refs off the field and let the teams "self-regulate" the game? I have already written my feelings about Mr. Greenspan's intellectual abilities more than a few times. Yes, I hope he enjoys soaking in his tub.

Stay tuned.

Tuesday, February 2, 2010

You're Never Too Big To Screw Up

I have been reading TOO BIG TO FAIL for the last few days now, and while I could easily use my vocabulary of four-letter words to describe the people and events that I have been reading about, it is not really necessary. I wish every member of Congress would take the time to read this book, but I know that is too much to ask for. Sorkin is telling a tale of how some very smart and talented people made some very stupid mistakes.

But, for me, the real bad guys in this whole story are those that think the field of money and banking, investment banking and securities trading do not need rules and regulations. Greed motivated a lot of the bad moves the players made, but in a climate where the wiser and older officials were married to an ideology that could not stand up to reason, made the eventual downfall all but guaranteed.

Alan Greenspan and Phil Gramm, and a few others, would be put on trial under my Alice in Wonderland World for economic and financial treason to the State. Whether they were just plain stupid or doing someone else's bidding, the final results were just the same. As the Queen said, "off with their heads!" No, I guess that is a bit of an over reaction. Let us make sure they are comfortable in their old age. Why should they be out anything because they were responsible for so many to be out the little they had?

You see, the game is not that complicated. In fact, when you strip away the fancy words like leverage and balance sheet, you begin to see how simple this game really is. A bag of shit is a bag of shit whether it is in a brown paper bag or a bag made out of silk and gold trim. Assets on the balance sheet that can not be sold, such as marketable securities, become crap. When the balance sheet fills up with crap, and that crap can not be converted into cash, the corporation is up shit's creek. It is that simple.

Once upon a time, cash was trash, but in a heart beat, cash can become king. If I have lost you at this point, don't worry about it. Pitchers and catchers report for spring training in a few days.

Stay tuned.

Monday, February 1, 2010

Best Is Not Always What We Get

February first, the month the pitchers and catchers report for spring training. Baseball and warmer weather are only 2 months away.

This morning Duke Energy is ripping up my sidewalk to put down new gas lines. The noise is loud and close as I live only a few feet from my sidewalk where the backhoe is grabbing concrete and digging a trench down the street.

I don't feel like I have anything new to add here this morning. I, like many of you, watch to see if anything really significant is going to take place in the world of banking and securities regulation. From my recent readings, it has become clear that Larry Summers is an advocate of deregulation and a believer that markets are self correcting. This, in my opinion, makes as much sense as to say we do not need air traffic controllers at any of the major airports of the world. Just let the pilots in the air work it out among themselves to see who lands and takes off and what runways to use. Some times even very smart people have blind spots, or, they know on what side their bread is buttered and don't make waves. Take your pick, at this point in time, it will be interesting to me to see how tough the Obama administration is going to push for tougher regulations on Wall Street. Yes, the American economy needs a healthy financial sector, but should the players that caused the financial crisis be the ones that set the rules? Common sense would say that more enforcement and more comprehensive regulations would serve our economy best. But, best is not always what we get.

Stay tuned.