* A spokesperson for JPMorgan Chase says that the reason the company pulled its own money from Madoff last year was because they got suspicious about the Ponzi scheme the dude was putting on. But she says, “we did not have the right to disclose those our concerns” to their own clients who had money with Madoff. I guess now they want to create more laws to protect you from being protected? Regulations often lull people into a false sense of security. As evidenced by the fact that Wall Street and Washington, the two most heavily regulated industries in this country, are so corrupt and have destroyed your savings and retirements despite all those regulations. Rather than pretend some idiot bureaucrats can actually stop nefarious geniuses from lying and stealing from you…how about we PUNISH those nefarious geniuses like Vikram Pandit, Dick Fuld, and Ken Lewis when we catch them. Instead, those crooks convince their cronies who were SUPPOSED TO BE REGULATING THEM to instead give them welfare in the form or TARP and bad debt guarantees and so on.
We should be fighting for harsh punishment for lying and stealing and not for illusory pre-emptive regulation. No?
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* Brutal day, brutal week, brutal month for the markets, eh? Coming on top of a brutal year. You notice that the main catalyst for the markets each and every day are simply the words coming out of press conferences in Washington, DC? As I noted in yesterday’s column and again below — it comes to figure that the market will be back in bull mode when things like profit reports matter. That said, Amazon’s report was stellar and the shorts were killed in that name today. Why not focus on shorting horrible companies in bad sectors rather than great companies like Amazon in bad sectors like retail? Seems rather straightforward when you think about it actually…buying great companies in good sectors and shorting bad companies in struggling sectors is probably not a bad pair-trade strategy.
All that said, with the market once again around the 8,000 mark, I wouldn’t be much of a trader or an investor just yet. If the playbook says we’re rangebound between about 7000 and 9500 then 8000 is sorta no-man’s land once again. Patience ain’t always exciting. But investing and trading isn’t supposed to be about excitement, you know?
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* I’m going to repeat this — It’s the magnitude of both the dollars and the magnitude of the disruption of the rule of law that this new political paradigm we’ve entered that really has the markets worried. Trillions of dollars of capital that used to work its way through the system chasing profits will now be chasing politics. In case you were wondering, profits — not politics — make stocks go up.
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*Also, here’s my best John Madden imitation to to explain how your money went to the Cerberus Illuminati connections. Must be nice to be able to call up your friend Obama and Bush and get tens of billions in welfare when you realize that your GMAC and Chrysler investments are insolvent. Fight the power!
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* The politicians and talking heads are lying to you to get your money when they say things like “if we don’t do TARP and the bad debt guarantees, the banking sector will collapse!”. Look, we have laws in this country that are already wildly favorable to the banking sector (tell me again why it’s so necessary to devalue my parent’s hard earned savings by artificially lowering the FED interest rate EVER? Much less to put it at 0% which will guarantee the destruction of the value of their money for anybody who saves their cash). We don’t need to prop up the people who were rich enough and foolish enough to buy equity in a bank or who were wealthy enough and stupid enough to lend those banks money when it was obvious that those banks were levering up that money and lending it to people who were buying property at bubbled levels without any background checks. Come on, people — it’s simple:
Take over each and every insolvent bank in this country. Completely wipe out their shareholders. Make their debt holders feel oodles of pain and get cents on their dollar at best. I suppose we’ll hear that we’ll use welfare dollars to keep depositors whole. That said, even ensuring bank savings deposits is a form or redistributing wealth from those who researched their banks before depositing the money they were rich enough to deposit…
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* I’m not much of a huge sports fan these days (still like to play sports though), but I am a big Kurt Warner fan…the dude worked groceries and played in scrub leagues til he persevered long enough to become an NFL season and Super Bowl MVP. Go Cards.
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And with that, I’ll thank you for reading this week and see you Monday.
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robin trehan
there is only one solution for the bank problems. 1. Take over the big banks by government. Managing those bad loans and later on selling it, when market picks up. Resolution trust company. is one of the best way of doing it. 2. “Bad bank” is a bad idea. Mark to market value of the assets will be pennies to dollar. Bank will value them on yield to maturity, which will be totally unfair to the tax payers, as it will be 60 to 70 cent to a dollars. That the reason TARP did not work out in phase one and that is the reason it will not work in second phase. Bad bank is a bad idea. Robin Trehan
Pamela
Bottom line: WHAT IS THE TOTAL COST OF BOTH BAILOUTS PER TAXPAYING HOUSEHOLD??? Cost/person means nothing since kids are included and cost/adult means nothing since half of them don't pay taxes and aren't going to get stuck helping to pay for this. I understand my household budget and it seems to me that I basically was just forced to purchase a home better than my own for a deadbeat and will be paying both mortgages for the next 20 years. Am I far off?
Linda Rogers
This package is really taxation without representation. The old saying is "those who control the purse stings - control you. I mean and cannot state strong enough, that this is all about "control". Make no mistake about that. Just think about it - not just for the here and now, but what all this will mean in law and regulations in the days,weeks,months,years to come. In your life this very day- the people you owe money to for whatever debt - have a certain amount of control over you. Even if you pay them on time - they can and do report your transactions to credit bureau. This record of your purchases on your charge card - track you lifestyle - in total. These are the people that are getting all this money. Are they responsible-honest-concerned-ethical-have a real sense of right and wrong? Their records speaks for itself. My what a problem we have.
Listening in Texas
Cody, I have a question that maybe you can find the answer to. If the Government is stating that TARP money is being used to purchase the "toxic" loans from lenders and such; then what happens to that debt when the banks who originated the trade line are paid by the government for those debts? Example, if someone had a credit card account at Bank of America and it went bad; BOA puts that in their "bad debt" structure to get money from the Government through the bailout programs; is BOA then PAID in full on that account? Then would the American people who have these TOXIC accounts at the banks that have received TARP money have their debt "forgiven"? This would go a LONG way to helping those who are hurting financially to get their credit rating back so they could then PURCHASE something else to STIMULATE the economy -- correct? Or is the bank like BOA taking the TARP money; then selling the account to a debt collector to then be paid TWICE for the same account? From what I can tell; the banks are having their cake and eating it too! They receive money for toxic loans; then continue to go after whose accounts that are delinquent. If this is the case; then should the banks keep track of those accounts and reduce the amount they have recovered on the bad accounts? So, what is the REAL story on all that? Is this a way for those who lost their jobs to benefit from the bailout and have a way to benefit from all these bailouts like TARP?
robin trehan
The 6 C's of Credit, Character, Cash Flow, Collateral, Conditions and Capital, and customer all are missing from the big banks. 1- Credit - There is none. Tax payers are bailing out without even there consent! 2- Character- it is matter of laugh on wall street. 3- Cash Flow- Based on what assets the banks and other financial institutions have it will be a joke too. Most assets are illiquid to hill. 4- Collateral- For underwriting and worried about collateral. Any appraisal for any bank! 5- Capital- Tax payers capital going in drain! 6- Customer- God help here. All shareholders have been eaten by greed. Now customers paying for management salaries and bonuses. All big financial institutions should be nationalized. Robin Trehan