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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (96415)	4/13/2009 4:49:45 AM
From: Sea Otter	Read Replies (2) \| Respond to of 116555

great post, but the financial oligarchs now control the US government. breaking up those firms is of course the right thing to do, but IMO it won't happen. they've become too powerful and entrenched. we have the best democracy that money can buy.

To: mishedlo who wrote (96415)	4/13/2009 10:00:58 AM
From: Bill on the Hill	5 Recommendations Respond to of 116555

Karl Denninger jumps on your bait with a post about GS and Mike Morgan. market-ticker.org!.html ************************************************************ Here Fishy Fishy by Karl Denninger I've never been one to ignore a blatant piece of bait, even if it has a hook in it.... I hope Karl Denninger at The Market Ticker, Yves at Naked Capitalism, and Barry Ritholtz at the Big Picture Blog all chime in on both aspects of this post: 1) The potential for improprieties at the Broker Dealers and Bank Holding Companies. 2) The ridiculousness of Goldman's lawsuit against Mike Morgan and various (equally ridiculous) lawsuits against Aaron Krowne at Mortgage Lender Implode-O-Meter. Please see Scrappy Mortgage Blogger Fights Bad Court Ruling as well as New Hampshire Court Tramples on Constitution for details. Ok, I'll bite. Let's talk about #1 first. I have long held (and said) that whenever one of these broker-dealers comes out with some sort of public recommendation it is best ignored, and the intrepid should consider fading it. Why? Because history is replete with examples where that's been exactly the right thing to do. Is this due to being stupid or something more sinister? I don't know. Do I care? Not really. Goldman's $200 oil call is the most outrageous in recent memory; that was issued right at the top of the market, shortly followed by an all-on collapse. But this is not a new issue; does anyone remember the calls during the late 90s market by everyone and their brother, including the infamous Jim Cramer "buy list" that turned out just a few years later to be full of zeros, along with Abby Cohen's pronouncements? Only a few people were ever really investigated and punished for what looked to me at the time (and still does) like obvious conflict of interest. One has to remember that these folks are not in the business of "helping investors" figure out what's up. Ever. They're salesmen, and guess what - they sell stocks! To you. Is it ever a bad time to buy a car? Well, yes. But if you ask a car dealer will you ever be told that it's a bad time to buy? Will a Realtor ever tell you it's a bad time to buy a house? Will a stockbroker ever tell you it's a bad time to buy stocks? Think folks. That's all that's really required. The outrage here isn't that there are salesman selling their wares. That's what salesmen (and saleswomen) DO. It's that these firms are in the markets trading with money that literally is not theirs. As regulated banks these firms are trading, effectively, with funds that you and I guarantee through our taxes, exercising the privilege of government-granted monopolies that has a legitimate foundation - the utility function of fractional reserve banking - and leveraging it into the public equity and credit markets. That's outrageous and it is what Glass-Steagall was intended to and did prevent, because this sort of nonsense leads directly to public losses (as we have now seen to the tune of many trillions of dollars.) I speculate daily in the markets. I see nothing wrong with it. But I speculate with my money, not yours, and there is something VERY WRONG with people being able to speculate with YOUR MONEY that you have not intentionally and explicitly put at risk. It is therefore my position that we must: Re-impose Glass-Steagall in its entirety. Ban public firms from speculating in the markets. If you want to speculate, do so as a partnership, as Wall Street firms used to do. This keeps the risk with the people making the bets, and that is a natural damper on risk, as the partners have their own money on the line. We simply must remove banks from making "trading profits"; banks exist to serve a utility function in the market without which our economy is hobbled. That utility function exists as a function of government privilege extended to these entities, in that they are allowed to "fan money"; that's all well and good, but along with this these firms must not be allowed to bet against the taxpayer, which is exactly what they're doing today. This sort of conflict of interest is inseparable from a public firm with a banking charter operating in the credit, equity and commodity markets and it must be banned as a matter of law. Yes, this means breaking up all these firms. It is particularly outrageous that our government allowed the issue of banking charters and bank holding company status to these firms last year. That decision must be reversed - right now! When it comes to the second point Mish raises, I have a somewhat different perspective. I've been operating in the public "Internet" sphere going back to the early 1980s, when bits were moved over phone lines with 300 baud modems, and have been writing and operating computer conferencing systems since the days of the TRS-80 Model III. I support the right of people to speak anonymously. I do not support the demand that someone else pay for the cost of such speech. And make no mistake - anonymous speech comes with costs as well as benefits. When I ran MCSNet we did not permit our equipment to be used for "cloaked" speech, and I don't support it on Tickerforum either. I believe that those who wish to speak anonymously should do so with their own resources, accepting both the risks and rewards of doing so. Therefore, while I understand the Implode-O-Meter issues, I have over the years made the decision to take a different approach: If you post on my systems whatever I have on you is discoverable through legitimate legal process. If I'm going to use "confidential sources" in something I write personally, I will make that decision on my own and accept both the costs and benefits, just as does any "traditional news" organization that publishes a "deep throat-sourced" report. I consider the idea of people leveraging someone else's property and resources to spray their speech in a "cloaked" fashion without the explicit editorial control of the person owning that resource to be ridiculous at best and exploitive at worst. The Mike Morgan situation is different. There is a long history of "sucks" domains, including some appellate decisions in courtrooms, which are nice, solid precedent. Whether the "666" domain name is close enough to "sucks" domains (which is where these cases have been litigated, in the main, in the past) is a question for a judge. I suspect the answer is "yes", but the easier and safer approach would have been to register "Goldmansachssucks.com." Goldman appears to this non-lawyer (but someone well-versed in intellectual property issues on The Internet as a former Internet CEO) to be hanging it's hat in this matter on the only peg it could find - a claim of trademark infringement. When all you have is a hammer.... I'm also well-aware that threatening letters are a $100 proposition; anyone can send one. Whether there is really any bite behind that bark is a different matter; in some cases there is no only no bite but there can be an inverted bite in that some jurisdictions have what is called "anti-SLAPP" legislation. Go ask PADI (the diving organization) about that; they learned about anti-SLAPP laws the hard way.