For the greater part of human history, leaders who were in a position to exercise power were accountable for their actions. The problem we are faced with today is that our political and (frequently) business leaders are not being held responsible for their actions. Thomas Sowell sums it up well: "It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong." Fortunately, there is an institution that exercises control over the academics at the Fed; it is called the 'real' market economy... and it has badly humbled the professors at the Fed.
David Stockman, author of The Great Deformation, summarizes the last quarter century thus: What has been growing is the wealth of the rich, the remit of the state, the girth of Wall Street, the debt burden of the people, the prosperity of the beltway and the sway of the three great branches of government - that is, the warfare state, the welfare state and the central bank...
What is flailing is the vast expanse of the Main Street economy where the great majority have experienced stagnant living standards, rising job insecurity, failure to accumulate material savings, rapidly approach old age and the certainty of a Hobbesian future where, inexorably, taxes will rise and social benefits will be cut...
He calls this condition "Sundown in America".
Be it BBQ judging, investing, picking out an outfit, or even choosing whether or not you’re going to show up for work tomorrow – ConvergEx's Nick Colas notes that there’s a decision making process occurring. Quite simply, decision making is the cognitive process resulting in the selection of a final choice among several alternative scenarios. Final choices can be opinions (as in “This brisket is an 8”) or actions (such as “I will invest in tech stocks”), and decisions are both conscious and unconscious. For investors, financial decisions and how we tend to arrive at them are of particular importance. The following is a cautionary tale of the 'Top 10' common biases that creep into the decision making process. Recognizing and eliminating these biases from your financial choices will make you a sharper and smarter investor... or BBQ judge... or whatever it is that you do.
- Mounting Wall Street fears of US default (FT)
- This is what the US government does when it is "shut down" - CIA ramping up covert training program for moderate Syrian rebels (WaPo)
- SEC Weighs Overhaul of Exchanges’ Self-Regulatory System (WSJ) - just let Goldman and JPM do all the policing; not like anyone cares anymore
- Reid Sets Tone for Democrats in Shutdown Fight (WSJ)
- No Movement in Shutdown Standoff (WSJ)
- Shutdown will not slow Fed nomination, says Obama (FT)
- Syrian Regime Chokes Off Food to Town That Was Gassed (WSJ)
- Tesla Says Car Fire Began in Battery (AP)
- China Services Index Increases in Sign of Sustained Rebound (BBG) or sustained data manipulation
This is The System Of The World. It lays out in logical frankness how the various layers of the facade we call “democracy” and “free markets” interoperate and together create a grotesque caricature of the ideals they purport to serve and keep us all enslaved. Join us on a trip through The System.
A decisive tipping point in the evolution of American capitalism and democracy - the triumph of crony capitalism - took place on October 3, 2008. That was the day of the forced march approval on Capitol Hill of the $700 billion TARP (Troubled Asset Relief Program) bill to bail out Wall Street. This spasm of financial market intervention, including multi-trillion-dollar support lines provided to the big banks and financial companies by the Federal Reserve, was but the latest brick in the foundation of a fundamentally anti-capitalist régime known as “Too Big to Fail” (TBTF). It had been under construction for many decades, but now there was no turning back. The Wall Street bailouts of 2008 shattered what little remained of the old-time fiscal rules. There was no longer any pretense that the free market should determine winners and losers and that tapping the public treasury requires proof of compelling societal benefit.
Five years after the collapse of Lehman Brothers triggered the largest global financial crisis since the Great Depression, outsize banking sectors have left economies shattered in Ireland, Iceland, and Cyprus. Banks in Italy, Spain, and elsewhere are not lending enough. China’s credit binge is turning into a bust. In short, the world’s financial system remains dangerous and dysfunctional. Worse, despite years of debate, no consensus about the nature of the financial system’s problems – much less how to fix them – has emerged. And that appears to reflect the banks’ political power. Unfortunately, despite the enormous harm from the financial crisis, little has changed in the politics of banking. Too many politicians and regulators put their own interests and those of “their” banks ahead of their duty to protect taxpayers and citizens. We must demand better.
- Hedge Funds Cut Back on Fees (WSJ) as we predicted would happen in May
- Syria's Assad denies chemical weapons use; U.S. presses case for strike (Reuters)
- Unemployment Falling for Wrong Reason Creates Fed Predicament (BBG)
- U.S. tapped into networks of Google, Petrobras, others (Reuters)
- Chinese Zombies Emerging After Years of Solar Subsidies (BBG)
- Monte Paschi doubles planned capital hike to 2.5 billion euros (Reuters)
- Loan Size to Be Cut for Fannie, Freddie (WSJ)
- Japan Growth Revision Opens Door to Sales Tax Rise (FT)
- Inside the End of the U.S. Bid to Punish Lehman Executives (NYT)
- Financial Crisis: Lessons of the Rescue, A Drama in Five Acts (WSJ)
- Time Warner Joins IBM in Health Shift for Retirees (WSJ)
- Mideast Derails Key Issues in Congress (WSJ)
As previewed extensively previosuly, Javier Martin-Artajo, one of the two JPMorgan scapewhales resulting from the London CIO prop-trading fiasco in which JPM used some $400 billion in deposit funding to corner the HY and IG CDS markets and then proceed to liberally redefine what a mid-market mark means, has been arrested.
In Part 1 of this article we documented the insane remedies prescribed by the mad banker scientists presiding over this preposterous fiat experiment since they blew up the lab in 2008. In Part 2 we tried to articulate why the country has allowed itself to be brought to the brink of catastrophe. There is no turning back time. The choices we’ve made and avoided making over the last one hundred years are going to come home to roost over the next fifteen years. We are in the midst of a great Crisis that will not be resolved until the mid-2020s. The appearance of stability is illusory, as the civic fabric of the country continues to tear asunder. Record high stock markets do not trickle down. The masters of propaganda seem baffled that their standard operating procedures are not generating the expected response from the serfs. They have failed to take into account the generational mood changes that occur; propaganda loses its effectiveness in proportion to the pain and distress being experienced by the citizenry.
"Military Intervention In Syria", US Training "Rebels" Since 2011 And The Complete Grand Plan - The March 2012 LeakSubmitted by Tyler Durden on 08/25/2013 13:47 -0400
INSIGHT - military intervention in Syria, post withdrawal status of forces
Released on 2012-03-06 07:00 GMT
There are all sorts of candidates for the root cause of the systemic global financial crisis, but if we separate the wheat from the chaff we're left with risk and moral hazard. Pointing to human greed and cupidity as the cause doesn't identify anything useful about this era's crisis, as human greed, self-interest and opportunism are default settings. Programs that backstop banks and social insurance systems like Medicare are not like fire or life insurance because they are effectively open-ended in terms of costs and in exposure to risk. A system which pools risk without distributing it to the participants and eliminates the causal connection between risk and consequence introduces moral hazard on a grand scale.
For the past five years Greece, stuck in its worst depression in history with two-thirds of work eligible youths unemployed, has been actively blaming all of its problems on "(f)auxterity" even as we said all along that the Greek problems have nothing to do with how much money its government spends and everything to do with corrupt, complicit and frequently criminal politicians. Today we got the latest confirmation that we were correct after the Greek finance minister Stournaras asked for the resignation of the Greek privatisation agency chief, Stavridis, following a newspaper report that he traveled on the private plane of a businessman who just bought a state company with Stavridis' blessings.
This insane world was created through decades of bad decisions, believing in false prophets, choosing current consumption over sustainable long-term savings based growth, electing corruptible men who promised voters entitlements that were mathematically impossible to deliver, the disintegration of a sense of civic and community obligation and a gradual degradation of the national intelligence and character. There is a common denominator in all the bubbles created over the last century – Wall Street bankers and their puppets at the Federal Reserve. Fractional reserve banking, control of a fiat currency by a privately owned central bank, and an economy dependent upon ever increasing levels of debt are nothing more than ingredients of a Ponzi scheme that will ultimately implode and destroy the worldwide financial system. Since 1913 we have been enduring the largest fraud and embezzlement scheme in world history, but the law of diminishing returns is revealing the plot and illuminating the culprits. Bernanke and his cronies have proven themselves to be highly educated one trick pony protectors of the status quo. Bernanke will eventually roll craps. When he does, the collapse will be epic and 2008 will seem like a walk in the park.
Those who follow the mainstream media’s “all Federal Reserve, all the time” coverage of financial news naturally conclude that Senator Chuck Schumer neatly summarized reality last year when he declared that the Federal Reserve “is the only game in town.” This lemming-like belief in the power of the Federal Reserve generates its own psychological force field, of course; the actual power of the Fed is superseded by the belief in its power. The widespread belief in the Fed’s omnipotence is the source of the Fed’s power to move markets. We can thus anticipate widespread disbelief at the discovery that the Fed is either irrelevant or an impediment to the non-asset-bubble parts of the economy. There is much we, as individuals, can do to ignore the Emperor's clothes (or lack thereof) and focus on how to pursue our own prosperity and happiness irrespective of the meddling of central planners. The real power is in our hands, should we choose to believe it.