Thursday, October 16, 2008

Guest Blogger #1

The following concise comments come from friend Jim Menges, fellow ex-patriate, accomplished international businessman, and skilled artist. Within a few phrases he captures the rant of rants regarding the econo-mess we are in the midst of. His short piece comes complete with profane yet suitable adjectives for greedy AIG execs and the naked short sellers cum Lehman Brothers' killers. He also touches on the extraordinary deflation of confidence (which is the true root of our problem and an unwelcome gift of Bush's regulatory breakdown, the incessant free market mantra. Finally, the reader of the following should not regard his closing sentence as a case of being glib. For certain he has not been any more glib then Paulson has been with his mid-stream switch of horses in the construction of the so-called recovery program. I have little doubt that the treasury, the fed, and all the other King's horses are a necessary evil. However, if we are to regain any level of sustainable confidence, we are going to need systemic changes in our antiquated financial system. In other words, we better learn how to use necessary tools (like "laws") to practice what we preach.

We have arguably redirected the course of the good ship America in a way that is irreversible. To what extent the rush to government succor in this crisis sets us in the direction of our European cousins we cannot yet know. We can only know that the more we see unfolding, the more we lose confidence. We can also know that much of Europe lives with extraordinarily high taxes, suppressed creativity, lost entrepreneurialism, a nearly non-existent meritocracy, and a severely declining lifestyle. I hope we survive the onslaught and emerge whole again. Somewhere in between opening the doors to the Gordon Gecko-ish (greed is good) bastards via unchecked financial "innovation", a complete breakdown in the regulatory system, and now a newly socialized banking industry, there must emerge a balance somewhere that preserves what Mr. Menges writes it..."once the only remaining superpower". Then again, maybe there is not a mid ground. Maybe its all too little and too late. If so we may as well all learn how to call a grilled cheese sandwich a "croque monsieur" and wear jackets draped over our shoulders. - Simplifried

Nota Bene:

Market volatility will still be the action du jour for a while - possibly until the end of the year. First and last hour of trading is going to be excessive and dramatic - up or down. Right now there is a lot of forced selling from hedge fund redemption's as billions of dollars are pulled out of the market - which could continue for another 2 months. Since mutual find redemption's are done at the end of trading, I believe it is what is making the last hour move so much. Possibly some good bargains to get if you can stomach the volatility - oil dropping down below $70 per barrel projects a doomed economy, while giving a bigger tax cut to Americans than all of Obama's and McCain's proposals put together. Mixed blessings for an already confused market. Next week I think AIG is suppose to pay off the cock sucking scum-bag naked short seller's Credit Default Swaps that were used in part to destroy Lehman Brothers - those crooks who destroyed the bank will get their hefty insurance payoff, which may be as much as $100B...(add that to the already ridiculous amout the gov paid to bail out AIG and pay for thier crooked management's bonus and spa hot tub holidays.) Not sure how it will impact the market, but when the story gets out, it will cause sentiment anxiety and more frustration to an already pissed off public. Public sentiment seems to be crashing lower and lower each day, as people grasp what has happened to their 401K accounts, see mortgage interest rates continue to go up as the banks get their capital base rebuilt, and foreclosures continue to out pace any other housing statistic...the worst Xmas expected in 20 years (unless "Face Lift" Pelosi rallies the Dem Congress for a year end stimulus package of more welfare checks for America - Merry Socialist Christmas) as the sun sets on what was once the only remaining super power. Have a nice day. - Jim Menges, Oct 16, 2008


Don said...

Hi Gary and Jim,

It is my hope, as it is others I'm sure, that all the villains in this meltdown of our system be fully investigated, and if found guilty, that they end up serving hard time for the crime. This will never stop greed, but it sure will feel good to see them become someone's bitch in the federal pen!

"Simplifried" said...

Don, you wrote: "It is my hope, as it is others I'm sure, that all the villains in this meltdown of our system be fully investigated, and if found guilty, that they end up serving hard time for the crime."

I think one of the problems is determining where the villainy begins and ends. To what extent were excessive borrowers villainous? To what extent was the entire government villainous (through regulatory laxity for example). If we think about it when we start the blame game, and if we apply broad enough thinking, there was at east massive complicity in all levels of society.
I think if they find criminal behavior they should prosecute it. If I were investigating I would start with AIG, Fannie, The SEC, and perhaps some Wall Street bankers. I would then see where that massive investigative work took me. I would take extra care to make sure all procedures in that investigation and subsequent legal actions were within constitutional guidelines. Considering the scope of the work and the importance of understanding the findings it may take a long time. I would hope the findings would be studied carefully for lessons on how to go forward.