1 This is an outrage! You're out of line Gekko!

2 Junk Bonds have always been high risk gambles. Anyone who puts more than a token amount in them is crazy.

The same thing goes for "penny stocks". I knew one guy who always put 10% of his investments in penny stocks, the theory being that he had to hit one at some time.

He never did.

3 What a little ray of morning sunshine you are Purple Avenger. I think I'll enjoy a little cyanide with my tea today.

4 What's the downside? The Fed has their back.

5 The sex.  I was so hoping we could keep that.

6

the theory being that he had to hit one at some time.

One time I did a 3X on a penny stock decades ago and it made the down payment on my crib...but that was from being tight with the sleazy broker who already had the next wave of buyers victims already lined up and I was only in it for a couple of weeks. 

I never did another one, and some years later all the people who worked at that pink sheet brokerage and the guy who owned it were all led away in handcuffs

7

Silly Purple Avenger! Don't you know Gordon Gekko was the villain in Wall Street?  He said greed is good!  He's a big, mean, scary capitalist, so anything he said is immediately wrong!

(*shudder*  I hate channelling lefties.  I need a shower.)

8 Hedge funds aren't for normal people. I'm not especially worried about this; its like the Mets ownership being vinegar by Madoff

9 Nonexistent, not vinegar. Android fail!

10 I have found that there are two general types of common people in the stock market. There are the long term "investors" like me who buy solid stocks from companies they are very familiar with and hold those stocks long term as "investments".

Then there are the gamblers who buy and sell on a frequent basis trying to beat the system by literally guessing how the market is going to turn.

The first type like me never make a killing, but they rarely lose their ass. The second type lose their ass on a frequent basis because the system itself is rigged.

The insiders already know what is going to go down and they are in and out early. Occasional the regulators throw some sacrificial goat like Martha Stewart to the lions but they are just as corrupt as any of the others on Wall Street.

Government regulations NEVER do what they were intended to do or even what they are advertised to do.

11 What could possibly go wrong?

12

I have several friends from highschool is do this kinda stuff, work in hedge funds and derivatives. They're decent guys and fun to hang out with, but i think if people of their mentality are controlling wall street then we're all f*cked.

They have such short term thinking. Money now, regardless of the long term costs or the damage it does to this country.

13 You don't understand money my friend.

I buy these junk bonds at $1 a share and I sell them at 25 cents a share.

How do I make money on that?


"Volume", my friend, volume!

14 The best way to fix Wall Street is simple...  HIGH taxes on short term capital gains from investments, that decrease over time at roughly 2 x inflation...

This would really increase the value of long term investments ("investing") and decrease the value of short term investments ("gambling").

15

Well - look at it this way.  If the hedge funds go down (assuming they aren't bailed out) that will just be some wealth destruction in the top income bracket.  That destruction of value will be a further inflation sink, helping to offset the increase in money supply created be deficit spending.  If the rich want to risk some of their mad money, so be it. 

In the mean time, some viable companies who are having near-term credit issues may pull through, maintaining some of our productive infrastructure and employment. 

Wealth is concentrated in fewer hands than ever before.   I'm not saying that's a moral evil - but it does create certain problems.  Cash hordes desperately seeking yield should not be seen as a terrible thing, unless they are backed by the government, or being manipulated by bad government policy.  The rich don't go around spending all or most of their money in the real economy the way the middle and lower classes have to, so if their piles are dimished a bit, it's not that big a deal.

16 The best way to fix Wall Street is simple...  HIGH taxes on short term capital gains from investments, that decrease over time at roughly 2 x inflation...

The best way to fix Wall Street is the best way to fix everything. Get the government out of it entirely.

In addition, go to a flat 10% tax on all income, no exceptions and no deductions with an amendment that forces government to spend no more than the money taken in in taxes the previous year.

17 Do you think Bernankie and TIMMAY want some this action? That would be the only reason to play.

18 This junk bond thing sounds promising. I should get Fannie and Freddie, social security and medicare involved.

19 The best way to fix Wall Street is simple...  HIGH taxes on short term capital gains from investments, that decrease over time at roughly 2 x inflation...

Posted by: Wise mind... at March 09, 2011 08:56 AM (HqpV0)

Why does "gambling" need to be fixed?  I don't see short-term investing as a moral evil - taking steps to reduce it seems like the kind of "saving people from themselves" that we're so prone to these days.  What I DO see as an evil is that we allow naked short selling (and frankly, short selling of any kind).  It is by that means that viable companies can be rendered non-viable through market manipulation by the larger players. 

20 HIGH taxes on short term capital gains

Short term gains are already taxed punitively higher than long term.  Dividend income is the worst taxed since its taxed twice, as a corporate profit, and as an income for the person receiving it.

21 I'm always amazed at the ability of the financial wizards to create financial vehicles that are second-order or third-order derviatives of other securities which themselves are only stand-ins for the object of real-world value. These derivatives originated to allow an investor to lay off risk -- this is what futures contracts are for, for example. But now derivatives are simply tools for untrammeled speculation, allowing investors to leverage to many multiples of their own actual investment. It's just gambling, in other words. It's a pure-play "bet" that something is going to happen (or not happen). There's precious little research to it; no real method or design. CDS is always bought as a "hedge" against something, but the holders are mainly buying from *each other* (or from some chump who really doesn't know what risk they're taking on, as with AIG). The risk isn't being "hedged"; rather, it is being both amplified and diffused through the entire system. I've never much liked these kinds of derivatives because they are ripe for abuse, they don't function very well as risk-abatement tools, and they add precious little value to the economy. The are a positive harm, more often than not, diverting investment cash from more worthy investments. This fabulously Byzantine world that Wall Street has built on the backs of derivatives can't continue because it's mostly not based on anything real. Investment bankers think up complicated "vehicles" that are mainly just repackagings of existing vehicles; quants come up with fantastically complicated algos to handle them; and then the computers are let loose to trade them by the millions every second. Billions of dollars flow back and forth...but nothing is actually created. It's all smoke and mirrors. The money either burns up (as in the crash of 200 , or just slowly leaks away, like air out of a balloon.

22 and frankly, short selling of any kind

Short sellers keep things real.  Frequently they're the only sane ones in the crowd.  IMO, they provide a valuable feedback mechanism to management.  Insider short selling and downside options trading should be prohibited by the SEC though.  We shouldn't incentivize sleazebags to blow out a company for their own personal profit.

23 In addition, go to a flat 10% tax on all income, no exceptions and no deductions with an amendment that forces government to spend no more than the money taken in in taxes the previous year.

Posted by: Vic at March 09, 2011 08:58 AM (M9Ie6)

If we went to a flat 10% federal tax on all income, the deficits would soar to levels making today's seem like nothing.  Plus there would be a backlash as those of the working poor who are at the bare subsistence level would be crushed.  I'm not talking welfare queens - I'm talking people with low-wage work, often singles and people with kids.  (I don't, however, object to eliminating the negative income tax some of them enjoy).

As for the no-deficit amendment, some level of deficit spending is required, as government is the issuer of currency, and the currency supply has to grow as the economy grows.  I suggest that a better alternative would be to tie deficits to economic performance. 

24 Posted by: Reactionary at March 09, 2011 09:04 AM (xUM1Q)

I agree eliminate naked short selling but not shorting in its entirety.  The shorts do very effective research, if your company is strong, the shorts can't take you down.  they end up covering.  For years I watched them play with apple and overstock and baidu, those companies are still here, aren't they?  But enron, enron's not here, it it?  the shorts are effective in figuring out who is not on the up and up and important in the market.

25 Billions of dollars flow back and forth...but nothing is actually created.

This is a fundamental problem.  

For all of recorded history, civilization has advanced because people and enterprises created new shit; creation being the the "magic" that happens when raw materials and knowledge and labor are combine to generate value that didn't exist before.

If this "value add" didn't happen, we'd still be living in caves wearing bear skins.

26 As for the no-deficit amendment, some level of deficit spending is required, as government is the issuer of currency, and the currency supply has to grow as the economy grows. Nope. M1 and M2 grow *after* the economy grows, not before. You've got cause and effect reversed. (You're thinking like a Keynesian, in other words.) Wealth is not the same as money. All the government does by printing money to "goose" production is to create inflation. Why? Because no one really knows, accurately, what the GDP growth rate is. The Fed has been trying to figure it out for a century, and they keep fucking it up. Deficits are bad, "stimulus" spending is bad, and debt is bad when you don't have the savings to back it up.

27 If this "value add" didn't happen, we'd still be living in caves wearing bear skins.

Posted by: Purple Avenger at March 09, 2011 09:15 AM (PWt9p)

We're gonna get ya back there.....and soon.

28 What's the downside? The Fed has their back.

Posted by: Mr. Diddy Wah Diddy at March 09, 2011 08:21 AM (+6C/h)

 

Bingo. The government has all but taken risk out of the market for the big players on Wall Street

29 This is a fundamental problem. Yep. Most hedge funds are basically trading the same $1T or so pool of money back and forth, not generating any new wealth. It's basically a bunch of rich people playing Monopoly.

30 Short sellers keep things real.

They are absolutely essential for price discovery.

Things like the uptick rule and curbs on naked shorting are useful attempts at creating orderly markets, but an outright ban on short selling would be foolish. Plus, the eeeviiillll derivatives market can be put to use here anyway (1 short call + 1 long put = 100 shares of stock short).

31 The "fundamental" problem is the fed, or any kind of a central bank itself.  The government has created every finacial panic that has occurred since the central banks were created.

The banks were created as part of the corrupt "American System" that was designed to confer power on the federal government to tax the crap out of people who the government didn't like, borrow and print money, and then spend it on "improvements" that were being provided by their "friends, relatives, and buisness partners".

Nothing has changed since that system was put in place during the late unpleasantness. Andrew Jackson was able to hold it off for a while but the Whigs/Radical Republicans brought it back in full corrupt form.

32 Posted by: Monty at March 09, 2011 09:20 AM (4Pleu)

I'm not a tax person but don't you balance your loses against your gains?  so having a "little risk" that might fail and give you something to balance enormous gains might be a strategy here.   A couple of years ago I remember hearing that hedge funds were buying up farmland.  Never heard anything else.

"Citing a reluctance to be responsible to investors should another financial crisis erupt, Mr. Icahn said in a letter to investors on Tuesday that he would continue investing with his own money, as he has during most of his five decades on Wall Street."

33 O/T at HotAir: “It is with deep regret that I tell you that the NPR Board of Directors has accepted the resignation of Vivian Schiller as President and CEO of NPR, effective immediately.

34 O/T:  Joe pags on beck's radio show is saying that Walker is offering concessions.  He said a lady called his radio show and said "the union bosses got to walker" indicating it was "mafia style".

This is not a good sign.  No republicans can stand firm.  apparently there are emails from Walker's office which are incriminating.  Pags maintains that if Walker does this now he will have to do it each and every time.

35 33 O/T at HotAir: “It is with deep regret that I tell you that the NPR Board of Directors has accepted the resignation of Vivian Schiller as President and CEO of NPR, effective immediately.

Posted by: Y-not at March 09, 2011 09:30 AM (pW2o

What is the point though.  So one person is the sacrificial lamb but the system, the organic rot, will continue unabated.  Interesting that the guy caught in the scam still has his job.

36 I'm not a tax person but don't you balance your loses against your gains? Hence the passion for derivatives. Lots of hedgies (and their investors) are convinced that there's some secret formula to laying off all risk completely. There is no way, but that doesn't stop them from pouring money in. But when it comes right down to it, they're not creating any real wealth at all -- they're just trading the same pool of cash back and forth. It's malinvestment because that money a) tends to "evaporate" either gradually or suddenly during a crash; and b) the money is now not available for more worthwhile investments. Not all hedge funds are bad, of course, but there are way too many of them, and too many operate on voodoo principles that have nothing to do with actual economics.

37

This is a fundamental problem.

Yep. Most hedge funds are basically trading the same $1T or so pool of money back and forth, not generating any new wealth.

It's basically a bunch of rich people playing Monopoly.

Goldman Sachs is the racecar.

38 accepted the resignation of Vivian Schiller as President and CEO of NPR, effective immediately.

That means there's a LOT more damning shit on tape than O'Keefe released.  What was out there already could easily have been brazened through without too much blowback.

39 So in other words, derivatives bubble II. People who produce nothing making money by shuffling worthless paper from file A to file B and charging exorbitant fees for it.

Hedge funds are a financial group-home for retarded trust fund brats. And by that I mean the investors AND the fund managers. I hope these fuckers all die penniless and heartbroken in a pool of their own vomit and feces.

40 Who gives a shit? If you're not an accredited investor, you can't invest in hedge funds. If you ARE an accredited investor, then by definition you have enough income and net worth to innoculate you from the risk of losing your entire investment in the hedge fund. Haters gonna hate, but playaz gotta PLAY, baby!

41 //ot

Scratch One Moonbat

head of NPR "resigns".....

42

What is the point though.  So one person is the sacrificial lamb but the system, the organic rot, will continue unabated.  Interesting that the guy caught in the scam still has his job.

Posted by: curious at March 09, 2011 09:32 AM (k1rwm)

I'm fairly sure that he's resigned, too, effective immediately.  He was scheduled to leave in May anyway, so he's skipping out early.

43 This sounds so bad, I wish I had some idea what you are talking about.  Thank goodness I am broke already.

44 Goldman Sachs is the racecar.

More like casino owners taking a percentage of all the Hold'em pots played.

45

What is the point though.  So one person is the sacrificial lamb but the system, the organic rot, will continue unabated.  Interesting that the guy caught in the scam still has his job.

Posted by: curious at March 09, 2011 09:32 AM (k1rwm)

He had already given his notice but left early  He's going to the Aspen Institute.

46 /damn sock

47 What is the point though.  So one person is the sacrificial lamb but the system, the organic rot, will continue unabated.  Interesting that the guy caught in the scam still has his job.
Posted by: curious at March 09, 2011 09:32 AM (k1rwm)

Knowing O'Keefe, he's probably got hundreds of hours of tape with every bigwig at NPR on tape saying the same thing as Schiller. The great thing about him is he's a student of Alinski and he's better at it than the lefties at it.

48 45 Enviro-whacko,

yeah well I am sure the other Schiller ie the CEO who just "resigned" was also planning on it right?

49

Goldman Sachs is the racecar.

More like casino owners taking a percentage of all the Hold'em pots played.

also they are all stocked up on get of of jail free cards

50

That means there's a LOT more damning shit on tape than O'Keefe released.

Heh, heh, heh. This should be fun.

 

51

NPR statement:

“It is with deep regret that I tell you that the NPR Board of Directors has accepted the resignation of Vivian Schiller as President and CEO of NPR, effective immediately.

“The Board accepted her resignation with understanding, genuine regret, and great respect for her leadership of NPR these past two years.

“Vivian brought vision and energy to this organization. She led NPR back from the enormous economic challenges of the previous two years. She was passionately committed to NPR’s mission, and to stations and NPR working collaboratively as a local-national news network.

“According to a CEO succession plan adopted by the Board in 2009, Joyce Slocum, SVP of Legal Affairs and General Counsel, has been appointed to the position of Interim CEO. The Board will immediately establish an Executive Transition Committee that will develop a timeframe and process for the recruitment and selection of new leadership.

“I recognize the magnitude of this news – and that it comes on top of what has been a traumatic period for NPR and the larger public radio community. The Board is committed to supporting NPR through this interim period and has confidence in NPR’s leadership team.”

52 This sounds so bad, I wish I had some idea what you are talking about.  Thank goodness I am broke already.

Posted by: csm at March 09, 2011 09:35 AM (Gw4Kc)

It's actually pretty easy to understand.  Problem is, it does challenge your beliefs about money and the economy.

53 Another problem with many kinds of derivatives is that they don't require the holder to *also* hold the underlying security. One of the reasons for the subprime meltdown in 2008 was that *anybody* could buy CDS on a Collateralized Debt Obligation (CDO). You didn't need to hold the CDO yourself, so instead of a hedge against risk, a CDO became a way to "short" a bond -- to attack it or to speculate against it. And there was no functional limit on the amount of CDS that could be written -- rather than capping it at 100% of the book value of the security, CDS was sold at many multiples the value of the underlying security (which turned out to be vastly overpriced itself). Everybody thought they were very risk-hedged and safe, without considering that all that CDS posed a systemic risk that *no one* had the ability to pay off in the event of an actual emergency. In other words, there was no risk-hedge *at all*; in fact, CDS exacerbated the problem immeasurably. It was the exact opposite of what the CDS was intended to do.

54 Tonio KÂ…how awesome! I thought I was the only one who had even heard of him! Now where did I put that albumÂ…

55 OK, I'm confused.... should I start buying now, Gordon?

56

Derivatives are the financial equivalent of Bob SegarÂ’s “Old Time Rock and Roll.”  

57 No problems here folks, time to jump in while the gettin' is fantastic!  Ben will have your backs in any case, DON'T FIGHT THE FED!!!

BUY! BUY! BUY! Before you're PRICED OUT !!!11!!!

58 a CDO became a way to "short" a bond That is, a CDS became a way to short a bond. The CDO is the security; a CDS is a way ("insurance") to hedge against a loss of value in the underlying security.

59 also they are all stocked up on get of of jail free cards

Nice country you got there...be a real shame if something was to happen to it.

60

PA, you've hit the nail on the head with your observation that we need to make things to create wealth. I'm pretty illiterate when it comes to financial stuff, I just know the basics, and it seems like we're getting further away from them as time goes on.

61 Why do connnnnns hate Barney? 

62

“I recognize the magnitude of this news – and that it comes on top of what has been a traumatic period for NPR and the larger public radio community. The Board is committed to supporting NPR through this interim period and has confidence in NPR’s leadership team.”

Posted by: Tami at March 09, 2011 09:41 AM (VuLos)

Fuck you and your "traumatic," NPR Board of Directors.  To all your pansy leftist contributors and sycophantic listeners, accidentally getting whole milk instead of 1%  in your vente latte frappucino is fucking "traumatic."  Go fall into a hole somewhere and don't come back.

63 If anything happens, I can always bail em out with my stash.

64 Another worry is they are buying commodities and taking possession.   Like leaving oil out there on ships until the time is right.

65 I was a big fan of Zero Hedge, but it looks like they've added Lefties and Troofers to their roster of writers

Kind of kicks the shit out of their entire credibility

66

It is with deep regret that I tell you that the NPR Board of Directors has accepted the resignation of Vivian Schiller as President and CEO of NPR, effective immediately.

 

And once the NPR loons get shown the door and no longer have their cushy overpaid jobs I'd like to see them all go full metal Charlie Sheen.

67

If we went to a flat 10% federal tax on all income, the deficits would soar to levels making today's seem like nothing.  Plus there would be a backlash as those of the working poor who are at the bare subsistence level would be crushed.  I'm not talking welfare queens - I'm talking people with low-wage work, often singles and people with kids.  (I don't, however, object to eliminating the negative income tax some of them enjoy).

Posted by: Reactionary at March 09, 2011 09:10 AM (xUM1Q)

Under the current tax system, the feds are only taking in about 13% of national income, and only from half of the people that earn a paycheck.  I don't think the deficits would be as bad as you think, and getting the 'working poor' to put at least a little skin into the game might clarify their minds as to the proper priorities of government spending.  Of course, that last part may be wishful thinking.

68 Posted by: kbdabear at March 09, 2011 09:48 AM (vdfwz)

It's sort of concerning.  Makes you wonder why they did that.  Now you really have to vet the information.  but from the beginning they were the only beacon of light besides banks implode

69 The financial press is terrible when it comes to understanding anything other than a long stock position.  There is one rather large difference between the CDX.NA.HY (and its European sibling, iTraxx Crossover) derivatives and mortgage derivatives, which of course the CNBC guy fails to note (although he does, at least, note that they are fully transparent and standardized).  Namely: they do not have a bullshit credit rating applied to them like the CDOs and the mortgage derivatives that screwed so many "sophisticated" investors during the crash.  People thought they were buying AAA-rated instruments because that's what Moody's, S&P, and Fitch told them they were getting, and the stated yields weren't enough to make up for the default losses they incurred due to that incorrect rating.  With high yield, the whole point is that you are taking more risk.  Everyone knows that up front, and that's why the bonds in question pay such high yields - to offset the potential future losses from default. 

The nice thing about the CDX is that you take positions in 100 bonds simultaneously.  If you buy the CDX you are betting there will be defaults, and if you sell it you are betting against defaults.  The default rate on high yield has ranged from low single digits to 16% or so during the Great Depression and 14% during the most recent crisis (Community Reinvestment Act Crisis?).

On the other hand... if demand for synthetic high yield bond positions is picking up... that's just a combination of Treasury Bonds and short CDX.NA.HY... that makes me feel like I should be buying the CDXs.

Finally... if net notional exposure is $5.9 billion in all tranches, that's not a lot of money, folks, given the number of banks making markets in these and the amount of capital behind them.  The only thing I get out of this story is "buy CDX" and "reduce your high yield positions."

70

I was a big fan of Zero Hedge, but it looks like they've added Lefties and Troofers to their roster of writers

Kind of kicks the shit out of their entire credibility

Yeah, i understand like 1 in every 3 articles on that site, but I have noticed a creeping Alex Jones type feel to the place.

71 Fuck you and your "traumatic," NPR Board of Directors.  To all your pansy leftist contributors and sycophantic listeners, accidentally getting whole milk instead of 1%  in your vente latte frappucino is fucking "traumatic."  Go fall into a hole somewhere and don't come back. CLAP CLAP CLAP CLAP CLAP CLAPCLAPCLAPCLAPCLAPCLAPCLAP!!!

72 Kind of kicks the shit out of their entire credibility Well...ZH is fun, but they're kind of like Debka in the sense that I read them more for entertainment than actual information. They've got the wild-and-wooly fringes of libertarian and conspiracy-theory fringe thought over there. Karl Denninger's Market-Ticker is in kind of the same boat; Denninger is very much a Paulian in a lot of ways. ZH sometimes gets the good stuff, though, and lots of finance-industry folks read and post there. (DealBreaker is another fun "tabloid" site that sometimes gets some pretty interesting stuff.)

73

As long as everybody's here who understands this subject, where could I find some introductory material if I wanted to do some investing?

I have a job interview today and am giddy with the prospect of getting back to work after three years in the monetary wilderness.

74 Posted by: Monty at March 09, 2011 09:53 AM (4Pleu)

I've been reading a lot of these sites for a long time.  I almost feel as though they have to appear like they've gone off the deep end so they aren't perused deeply and censored.

75 Heh.  Schiller follows Schiller out the door.   NPR must really really want to keep that sweet sweet taxpayer cash.

76

I have a job interview today and am giddy with the prospect of getting back to work after three years in the monetary wilderness.

Posted by: BackwardsBoy at March 09, 2011 09:54 AM (d0Tfm)

Good luck!!

77 Schiller looks like a coke whore.

78

I've been hearing more commercials on the radio lately that advertise "risk-free municipal bonds"!

They're bonds!  They're risk-free!  They're insured!  You can't lose!

What could possibly go wrong?

 

79 CLAP

CLAP

CLAP

CLAP CLAP CLAPCLAPCLAPCLAPCLAPCLAPCLAP!!!

Posted by: Empire of Jeffat March 09, 2011 09:51 AM (OW0nw)

I received applause from EoJ?

O_O

I can now die happy.

74thanks

Posted by: cheap newports cigarettesat March 09, 2011 09:54 AM (sRZJ4)

You're welcome.

80 Time to set a per bushel of grain tariff to the oil spot.

81

I've been hearing more commercials on the radio lately that advertise "risk-free municipal bonds"!

They're bonds!  They're risk-free!  They're insured!  You can't lose!

What could possibly go wrong?

 The only thing that would top that off is if they were offered with Extended Warranties.

82 GOOD LUCK, BackwardsBoy!  We're pulling for you!

83 As long as everybody's here who understands this subject, where could I find some introductory material if I wanted to do some investing? Hie thyself to a financial advisor. Don't take advice from The Internet People (except when they advise you to seek out a financial advisor).

84 53.  If  by " it does challenge your beliefs about money and the economy" you mean I don't trust anyone anymore, I will agree. 

85 80 Schiller looks like a tranny coke whore. 

Posted by: FlaviusJulius at March 09, 2011 09:56 AM (qIHlG)

FIFY

86

Thanks, everybody. You like me, you really like me. ^*sniff*

So Monty, are you saying that, as a novice investor, this is best learned face to face?

87

OT:  More fun courtesy of socialized medicine!

Ontario woman's tumour caught too early to be Treated

Rationing?  What is this RATIONING of which you speak?

88 PA, you've hit the nail on the head with your observation that we need to make things to create wealth.

Once man got past hunter/gatherer and developed more complicated social systems, there always existed what I'd term a "parasitic class" (nobility, chiefs, religious functionaries, and in more modern times, national governments) and their drain on a productivity and wealth was generally considered acceptable during the good times.  

Hard times, (and external pressures) traditionally put significant stressors on a populace's willingness to accept high numbers in the parasitic class (ex. the Jacobin's proclivity for feeding French aristocracy into the guillotine by the truckload)

At this point in time, the percentage of general population membership in the parasitic classes is probably at an all time high, and with the advent of the welfare state, the parasitic classes now include membership at the economic bottom as well as top. 

I'm just saying...

89 Posted by: BackwardsBoy at March 09, 2011 09:54 AM (d0Tfm)

Pick up Cramer's first couple of books.  they aren't dry and give you a feel for things.

congrats on the job interview.

btw, liesman said this morning that the 16 -19 group took the biggest hit in job losses and their jobs aren't coming back.  Seems women over 55 have taken those jobs while hubby stays at home if he's lost his job.  Guess they feel it's ok for the wife to work a "menial" job but would hurt hubby's resume if he does.

90 Hie thyself to a financial advisor. Don't take advice from The Internet People (except when they advise you to seek out a financial advisor).

I don't think that's right Monty, although generally good advice, talking to a financial advisor without knowing basic financial terms will hurt if they come across a bad financial advisor.  Library has plenty of books or the motley fool website if they are still around can get somebody a basic education.  Learn the terms so you can recognize bs and don't invest in something you don't understand.

91 So Monty, are you saying that, as a novice investor, this is best learned face to face? Yep. Don't fuck around with your money. If you wouldn't buy a car off of Craigslist, why in God's name would you take financial advice from some random internet dude? (And that includes me.) You can *research* stuff on the internet, but you've no doubt discovered that many very intelligent people have completely contrary opinions as to what is "good financial advice". Remember the term "fiduciary duty". If you pay a financial advisor for his services, he is legally obligated to do his best for you. It doesn't mean he'll be right, but if he screws you, you have legal recourse. If you just take random advice off of some message board...well, your options for recourse are limited.

92 Posted by: Monty at March 09, 2011 09:58 AM (4Pleu)

Yes and no.  Hire yourself a financial advisor who doesn't get commissions on what you invest in.

A friend from work was encouraged to "save" for her kid's education by taking an inheritance and putting it into a life insurance policy.   the financial planner encouraged her to do this.  I said to her "go ask him how much of a first year commission he is making on your purchase of this policy and when you find that out, just get up and leave, do not scream at him"

she screamed.

93 where could I find some introductory material if I wanted to do some investing?

Grow lights and high grade dope seeds.  Even in the hardest times people won't give up their vices. 

94

GOOD LUCK, BackwardsBoy!  We're pulling for you!

Yes, just picture all of us standing behind you with big smiles that aren't at all creepy. That should really help.

95 It has to be good luck to have a job interview on ash wednesday.  Hey if you are Catholic and have ashes and think like a lib, if you don't get the job you can sue cause you can say they didn't hire you cause you were a Catholic.

remember, this is thinking like a lib....

96 Personally, this is just me and as Monty said, grains of salt from internet people, but I think financial advisors are a scam.  I talked to one many years ago before I educated myself and even then he knew less than me, he just wanted his monthly management fee.

97 BB: Just go to the bookstore, and pick up "A Random Walk Down Wall Street", and "Investments for Dummies" (or some such) if you want to learn about the market.

98

Cramer who? See, I said I was illiterate. Thanks for the advice, and for wearing pants.

Grow lights and high grade dope seeds.  Even in the hardest times people won't give up their vices.

"Dope will get you through times of no money better than money will get you through times of no dope."

The Fabulous Furry Freak Brothers

Words to live by...

99 66 I was a big fan of Zero Hedge, but it looks like they've added Lefties and Troofers to their roster of writers

Kind of kicks the shit out of their entire credibility

Posted by: kbdabear at March 09, 2011 09:48 AM (vdfwz)

Don't forget the Paulbots.  They are just ruining the place. You can learn nothing from the comments.  Like cats in a blender. Just gross.

100 Don't forget the Paulbots. This is a perennial problem with zealous "Libertarians". Like people who take Ayn Rand too seriously, they are absolutists where absolutism is actually counterproductive. (Foreign policy being one of their traditional blind spots.) I am a libertarian-ish guy, especially financially and even socially (I favor legalization of most drugs and prostitution, for example). But I find the neo-isolationist leanings of a lot of modern libertarians hard to take, and what's more completely fiscally unsound. (World trade is here to stay whether you like it or not, in other words. Deal.)

101 Posted by: Monty at March 09, 2011 10:30 AM (4Pleu)

It's a truism, but "a foolish consistency is the hobgoblin of little minds."

Emerson had it exactly correct.

102 Apparently people believe that investing in a bushel full of rotten fruit is somehow safer than investing in one particular fetid fruit - the theory being they can't ALL go bad on you and you'll continue to reap a phat 7% or so even if a few do go bad. The problem is if you've invested in some junk index or junk derivative you don't have any influence at all to fix the sort of problems Gekko had when he bought into the problem child directly. You're at the mercy of others; others who's agenda you aren't necessarily even aware of; at the mercy of healthier foreign competitors; etc, etc.

Where are the Gordon Gecko's to come and save us little investors?  Have they all gone John Galt?

103

Under the current tax system, the feds are only taking in about 13% of national income, and only from half of the people that earn a paycheck.  I don't think the deficits would be as bad as you think, and getting the 'working poor' to put at least a little skin into the game might clarify their minds as to the proper priorities of government spending.  Of course, that last part may be wishful thinking.

Posted by: Vashta Nerada at March 09, 2011 09:50 AM (hiFDo)

I dunno how much cash we're going to squeeze out of the lower half of income earners.  I highly doubt that it will offset the massive tax cuts to the upper middle and rich that a 10% tax rate would involve.  I like it in terms of starving the beast, and all that, but I doubt Americans would tolerate the necessary level of austerity.  Also, the economic disruption, as spending was reallocated away from government consumption, would be utter chaos.

Of further concern to me is the damage to the consumption economy when their spending is choked down.  The poor and middle spend money.   The rich invest money, and there's nothing forcing them to invest it here. 

The poor would indeed see a stake in the game - I'll give you that - but it would simply drive them to either get their taxes cut back down, or to suck up more compensatory benefits since "they pay taxes and deserve it!"  Their vote still counts as much as yours or mine.

104 (World trade is here to stay whether you like it or not, in other words. Deal.)

Posted by: Monty at March 09, 2011 10:30 AM (4Pleu)

Yes.  But why we insist that said trade be carried out on everyone's terms but ours (we, being the biggest cusomer!) is beyond me.  Apparently trade barriers and currency manipulation are only bad when the US does it...

 

105 Diversify.  Guns.  Ammo.  Gold.  A tank of gas.  OK, you'll have to save for that last one, but....

Oh, and some homebrewing equipment, so you can drown your sorrows.   

I'd tell you to invest in the government, because they can always print more money, but you're investing in Social Security whether you like it or not.  Stay diversified.

Or you could go with the philosophy of spend it all now.  I mean you could get hit by an asteroid while you're lying in bed, and then you'd die with money you hadn't spent.  Eat your dessert first too, you never know.

Balance is the key to all things in life.  It hurts when you lose yours.  Trust me.  Ice.  Sloped driveway.  Bad combination.

106 Boned.

107 The poor and middle spend money. The rich invest money, and there's nothing forcing them to invest it here. There is a fallacy here. Yes, the rich "invest" money. But they invest it in firms, goods, and services that are productive. (They must be; otherwise, there'd be no return.) It's a form of deferred consumption, in other words. Rich people spend money in great amounts, just not in the same proportions or on the same things as poor and middle-class people too. Which is obvious, when you think about it. And as far as investing "here": what "here" do you mean? It's a global marketplace, and much of it is denominated in dollars. The investment is usually in dollars, as is the return, so I'm not seeing the problem. A dollar must come "home" eventually.

108 I will tear down my barns, and build bigger barns!

109

For those who are not in the financial industry and are worried by the doom-and-gloom talk, here's what the trade entails (roughly speaking) ...

There's a list of 100 high-yield (below investment-grade) companies.  On a $10mm trade, I pay you $1mm today.  If none of the companies defaults on its debt before the end of the year, the trade is over and you've made $1mm.

If 1 company defaults, you pay me $3mm.  If 2 companies default, you pay me $6mm.  If 3 companies default, you pay me $9mm.  If 4 companies default, I take the full $10mm (you have a net loss of $9mm).

Now, all 100 companies file annual and quarterly earnings reports, so you know how they are doing, how much cash they have, when their debt comes due, etc.  There are maybe 6-8 companies that are at all questionable before the end of the year.  If you're a hedge fund, you have analysts that can do a deep-dive into the fundamentals and can make a judgement.  There probably won't be any defaults, but there might be one that you don't see coming (lose $2mm).  If there are two or three, then it's likely there are a lot more, so the fact that you have limited downside while taking risk with a short time-horizon and good visibility into cash flows is pretty attractive.

(I've skipped a lot of details, like the fact that it's really 86 companies because 14 of the original 100 have defaulted, not all are still high-yield, the losses are floating, etc.)

110 Yes, just picture all of us standing behind you with big smiles that aren't at all creepy. That should really help.
Posted by: Mama AJ at March 09, 2011 10:12 AM (XdlcF)

And we'll be wearing pants, but just this once ...

Best of luck to you, Backwoods Boy!

Posted by: ya2daup at March 09, 2011 10:16 AM (FcKXR)

Not me.  I'm not wearing pants, or a shirt either.  This way, no matter what happens, you'll be smiling like a little ole school boy

Good luck!

111 Not all hedge funds are bad, of course, but there are way too many of them, and too many operate on voodoo principles that have nothing to do with actual economics.

Way too many? What is the right number of hedge funds? Many of you self-labeled "conservatives" expose yourselves on these threads where you prescribe a centrally controlled solution to a problem that you know almost nothing about. Hedge funds are a convenient boogeyman because the vast majority of people are completely ignorant of the huge array of different fund strategies. It has become a catchall term used to imply murky and nefarious doings by villainous robber barons. Saying scary words like "hedge fund" and "voodoo" is a lot easier than actually knowing something.

112 I personally know some hedge fund manager types. Advanced accounting degrees from Dartmouth and such. They are some scheming motherfuckers. The wheels never stop turning, let me tell you.

113

There is a fallacy here. Yes, the rich "invest" money. But they invest it in firms, goods, and services that are productive. 

Paper returns in the form of increasing stock prices are not the same as factories.  Stock prices will continue to inflate and PE ratios will continue to increase, since more and more money will continue to pour into the market - the "greater fool" approach we hear so much about coming to fruition.

And as far as investing "here": what "here" do you mean?

I mean here, on shore.  Yes - dollars do come back eventually.  But after how long?  Dollars invested overseas are far less effective in terms of producing domestic economic activity.  Further, it helps to finance foreign governments, as they take the first dip of taxes from the produce.  And in its current form much foreign investment has the effect of destorying domestic assets - which can't compete due to the uneven playing field. 

 

114 Posted by: Vic at March 09, 2011 09:25 AM (M9Ie6)

Are you talking about the National Banking Act of 1863?

115 Or you could go with the philosophy of spend it all now.  I mean you could get hit by an asteroid while you're lying in bed, and then you'd die with money you hadn't spent.  Eat your dessert first too, you never know.

Posted by: MarkD at March 09, 2011 11:04 AM (6CLxP)

For those who really think it's all going Mad Max soon, this is the right way.  If things ever got to the point of true economic collapse, I'd rather not be around to enjoy it.  To those who want to subsist in their bunkers drinking home brew rot gut - I say God Bless.  As for me, I hope I'm the first one killed in the riots.

 

116 [SUMMON: "Ted Kennedy's Gristle-Encased Head"] [Category: Demon] [Description: Uttering the phrase "financial derivative" in a negative context will summon a huge gristle-encrusted disembodied head modeled on the famously meaty noggin of the late US politician.] [Effect: The head will shoot out waves of contempt while croaking "Idiot!"] [Dispel: Can only be dispelled by "Ignore" spell or "Mockery" charm. -3 Enervation to the entire group.] [Spell Class: Financial] [Spell Level: 1] [Spell School: Economics, Voodoo, Conjuration] [Cost: Time and aggravation] [Cooldown: At least 3 followup posts] [Target: Area]

117 I was asked today if I thought muni bonds were a good safe investment.  My friend was asking all of us.   The responses were fascinating.  Up to and including "stuff your mattress with twenties".

118 OMG, someone just cautioned "make sure you remember you stuffed the mattress and don't give it away or sell it on craig's list".

hmm guess this is a more popular option than i thought.

119 Are you talking about the National Banking Act of 1863?

There is no "one particular act". It is a series of acts and policies that were pushed by first the Federalists, then the Whigs, and lastly the Radical Republicans who inherited from the Whigs. Following the conversion of the Democrat Party to socialism with William Jennings Bryant the Dems now own it.

Bing up "The American System". And when you read about it think trillions of dollars going into the central government to be dispensed as they saw fit on "improvements". After Andrew Jackson killed one central tenet of their plan, the National Bank, they backed up and tried to get it implemented in local laws via the States.

Abraham Lincoln was a great supporter of this plan. He succeeded in getting it passed in IL. It nearly bankrupted the State when after they had frittered away 12 million dollars in State Bonds that had to be redemed by the State there were no "completed projects".

There were however, a lot of wealthy "friends of Abe" left standing. After the South left and the Radical Republicans took over congress they were finally able to implement it with no opposition.

There is a reason the Grant admin was the most corrupt in history. However, even with all of the corruption that was revealed, the truly corrupt system has never been dismantled. It is now the normal method of U.S. government operation. The only things that have changed are the names of the "friends" and their corrupt companies. The corrupt railroads of the 1800s have given way to the corrupt GEs of the 21st century and the income tax has replaced the tariffs of abomination.

120 They say gambling is addictive. Wall streeters have a big streak of addict in them.

Old saying: Once a junkie; always a junkie.

They can't help themselves, it's in their nature.

121 What is the right number of hedge funds?

However many survive.  That's the right number.  It may vary daily.

122 What is the right number of hedge funds?

However many survive.  That's the right number.  It may vary daily.


Bingo.

123 Helo, your blog is really good, I like it very much!By the way, if you like NHL Jersey you can come here to have a look!. the best team : Chicago Blackhawks Jerseys and Pittsburgh Penguins Jerseys Boston Bruins Jerseys.

124 It's right here that yesterday in Bible study we were discussing what evil angels do, and the topic came around to discrimination. I said there are two kinds of research paper discrimination. The first is what we think of usually - when we make judgments based on what doesn't matter, like not voting for somebody because of their race or gender research paper. That's bad discrimination. But there is discrimination that's good and necessary. For instance, "You have no way to pay this loan back; therefore I'm not going to give it to you." When we don't properly discriminate, evil thrives research paper. I explained that the KGB wanted to get rich, powerful people in media, education, and business to believe it would be good to have a society with NO discrimination research paper. That doesn't just mean we don't have the bad discrimination, but also that we don't have the good discrimination. So there's no difference between those who work and those who don't, research paper those who make sound choices and those who don't, etc. Everyone is guaranteed the same outcome regardless of what they do. Nothing we do matters research paper. That's what communism is, and people who live under it often end up alcoholics or an average of 6 abortions in their lifetime. If what we do doesn't matter, we lose the will to live. That's the legacy of communism research paper. I mentioned that Yuri Bezmenov was amazed at how the openly-communist folks from the '60's are in control of media, education, and business. And wherever someone totally controls the flow of ideas research paper, it's ripe for the devil and his surrogates to lie and deceive. As long as the realities of life and the truth are observable to everyone, we're not going to wander too far from reality research paper. But when the truth is hidden, people can't learn from reality. Then I made my fatal error. I mentioned that all of the news companies have the proof that Obama is a member of The New Party - a branch of the Democratic Socialists of America research paper. I was going to say that they won't let anyone know that truth research paper. We can make our choices for whatever reason we think best, but when someone needs to deceive us, evil is at work and we need to watch out. Before I could finish, though, a lady jumped up waving her arms and shouting that we shouldn't talk about this in church. Church is for how we're supposed to become better people research paper. Then she and her husband stormed out. Later, someone commented that the devil can work wherever he wants to, and if we refuse to consider his role in any area of our life, we give him free rein there research paper. Another added, "I think it was clear that the devil was right here in Bible study - and didn't like being recognized." It's right here.