Tags: Political Speech, Gregory vs Geithner, UK's Liberal Clegg vs Brown vs Cameron, Bond Crisis, CDOs, Credit Default Swaps, Goldman Sachs Problems, Investing, Candy Crowley, Tea Party, Fees and Bonuses Feeds Wall Street, Secrecy of Bond Trading, www.baselinescenario.com analyses markets, Bill Maher, McConnell vs Crowley,
I can't imagine anyone thinking anything tops politics for pure pleasure!
I enjoy the British political debates much better than what goes on in our broken system of government. "Broken Government" by John W. Dean.
The minority leader for the Republicans, Mitch McConnell (R-Kentucky), was interviewed today by Candy Crowley of CNN. She is turning out to be a much better host of a news program than I ever thought. She is seasoned so McConnell was not able to get away with rehearsed sound-bites. By the end of the interview, I saw sweat coming down his face even though he is a pretty good liar. Candy had to ask him the same question four times to answer a simple question. She gave up after that.
Gregory in Meet the Press gave Geithner pretty tough questions in a long interview. Every day I am getting more and more impressed with Geithner. He has not been polluted by Wall Street and knows everything inside-out. Even though Tim has received criticism for being too close to Wall Street, we need a person like him in charge because he is aware of all the tricks Wall Street is using to avoid regulation.
Don't forget the Wall Street Crisis was not a stock crisis, but a bond crisis. The problem with bond investing is that everything is done basically in secret so it is impossible for individuals to know if they are getting a fair value/price ratio. It is a game that individuals should not play and has to be done by mutual funds such as Vanguard whose fees are probably as low as any but I have not checked. PIMCO is very good, but you pay for their goodness.
Remember Wall Street makes its money from fees and bonuses. These are so big that a neighbor whom I considered of above average intelligence, not among the higher ranks made millions as a bond trader in the 1980s.
I would like all bonds to be traded openly just like stocks so everyone can follow them and the pricing would be more competitive. The derivatives that did us in were secretly un-traded bonds that were leveraged as high as 50:1 in the same ball park as commodities. I found it amusing when Simon Johnson www.baselinescenario.com and a professor at MIT try to explain to Bill Maher (HBO-Fridays) the CDOs and Credit Default Swaps. The first is just a lots of weak mortgages combined with some good ones and made the calculations so complex that the regulators could not rate them without the help of JP Morgan Chase and Goldman Sachs. This is better than a Fox guarding the open hen house.
Goldman Sachs is in trouble now because they allowed the hedge fund manager Paulson to combine the mortgages that were most likely to fail into a special "CDO" which Goldman Sachs knowingly sold to customers. Then Paulson knowing they will fail, picked up Credit Default Swaps which is just insurance just in case they failed.
The selling of Credit Default Swaps by AIG is what caused that company to essentially fail and is largely government owned. They could not pay off those like Goldman Sachs who bought their credit default swaps. They got the idea to issue these by Goldman Sachs and probably JP Morgan which were probably the only two firms that really understood them and I believe, JP Morgan invented them.
Left unsaid by the media and The Tea Party who got a lot of stuff from government such as good roads, lots of corporate welfare, and tax structures that allowed them to prosper. Now they don't want the minorities including Jews to prosper. I am afraid that if we are not careful, we may once again become a divided nation with one group against other groups.
The Tea Party affluent members had to cut back on their lifestyle and want to blame others for their sins. Based on their emotional reactions, I suspect that they sold and went into bonds which is what a large majority of the public did. So a good investment strategy is to not do what the crowd does. Sure there are lots of worries still, but I am staying in the market and am fully invested. Of course I tolerate risk much more now because I know a lot more than I did before I retired. To most investors, Wall Street is a Black Box. I like to think of individuals on Wall Street as those who Wear Black Hats as we saw in the Westerns.
The mutual fund managers are saying index funds are not the way to go. Go to index funds! Go Vanguard and assume you cannot predict the future. I know it is not that easy to pick which index funds to buy and how to allocate them. I wanted to re-balance my portfolio every quarter so I picked an advisor that could do this more efficiently. Things tend to change much more quickly now so I think worldwide index funds and reallocation every quarter is one strategy you might consider.
Beer, Music, and Lots of Cheers!
Jim Kawakami, April 18, 2010, http://jimboguy.blogspot.com
Jim,Re: British Verses American Political Speech
Many thanks for this. I did watch it or to be more precise, I recorded it and watched it later. Can't let stupid politics get in the way of "good music playing" and good drinking. Good friends are more important than politics.
My take out was that Clegg was impressive and it is worth remembering, as people will, that there was a recent debate between the prospective Finance Ministers, i.e. the Chancellor, Alistair Darling , George Osborne for the Conservatives and Vince Cable for the Lib dems. Vince Cable as ever was by far the most impressive as rather expected. But Clegg's performance last week was better than many expected and I suspect the other two will be laying traps for him in the next two debates. Some nasty Tory jibes about the Lib Dems making us subservient to Europe. All rather silly,.As for the other two, Cameron failed to convince me that he is Prime Minister material and included a few too many dog whistle elements especially on immigration and crime.Brown is not a natural in this sort of forum. He did not do badly and sounded competent although he and Clegg missed a chance to nail Cameron when he made a silly claim about how he had met 40 year old black peron who had spent 30 years in the Navy.Brown however does seem to lack spontinaity. And it showed when he made a slightly good joke (for him a supremely good joke) when he thanked the Conservatives doctoring a picture of him on hoardings to make him smile and then over-egged it with an unnecessary addition about Lord Ashcroft . OK, so we don't like Lord Ashcroft who lives off shore and uses his money to pour into marginal seats. Barely legal if that but the reference here rather spoiled things.But the debate in general was a little more biting and entertaining than we expected and that owed quite a lot to the moderator Alistair Stewart of ITV who stood for no nonsense. Will the others (on Sky News and the BBC) be as effective? I suspect the gloves will be off more as Brown and Cameron will not let Clegg have an early ride again.So there we are. A great innovation!! Except that they did it in the US 50 years agoCheers and beersJohnCJM