Cramer’s Bear Sterns Faux Pas
Why The Hell Are We In Iraq?
Saddam Offered To Surrender . . .
A MONTH Before Bush Invaded
This is worse than the Downing Street Memo . . .
On February 22, 2003, there was a meeting at the Bush Compound in Crawford, Texas between George W. Bush, Condeleeza Rice and Jose Maria Aznar, then Prime Minister of Spain.
A top-secret tape recording was made by Spanish security and has been “leaked” to and printed by El Pais, the highest-circulation daily in Spain.
The White House did not challenge the accuracy of the transcript, with national security spokesman Gordon Johndroe declining to comment.
It shows the whole Iraq War has been orchestrated by a treasonous, power-grabbing United States President that should be immediately removed from office and put on trial for war crimes.
Oh yeah . . . now that it’s out there, the neo-con talking heads will go beserk trying to muddy the water.
First, please remember that Bush’s own Treasury Secretary, Paul O’Neil, said:
“From the start, we were building the case against Hussein and looking at how we could take him out and change Iraq into a new country. And, if we did that, it would solve everything. It was all about finding a way to do it. That was the tone of it. The President saying, ‘Fine. Go find me a way to do this.’ “ The Price Of Loyalty, page 86.
Now, about that secret tape . . .
In it, Bush is typically impatient, bullying, arrogant, poorly-informed and pathologically over-optimistic. The transcript shows, without question, the true evil nature of this man.
It’s all just a game to him, and he’ll play “good cop” or “bad cop” — as long as he gets what he wants.
The transcript shows that Bush absolutely insisted on going to war without any United Nations Security Council Resolution, if he couldn’t get it, and by threatening all other countries of the world – like a spoiled brat – anything necessary to get his way.
Iraq was going to be invaded — no other option would be considered by The Decider.
Bush rejected outright a deal brokered by Egypt that would have avoided a war altogether by allowing Saddam Hussein to leave Iraq with a billion dollars (less than what this war costs us each and every 12-hours). It wasn’t even the United States’ money but clearly NOTHING was going to derail Bush’s blood-thirst.
The War President said, “Hell no!”
And don’t forget that fighter jets were scrambled, just in case, to shoot-down any plane that Saddam tried to “flee” on.
All that time we, the American people, were constantly being told by Bush and his co-conspirators that Saddam Hussein refused to talk, he refused to allow weapons inspectors to look for the non-existent weapons of mass destruction, and he openly defied the United Nations.
BUT YOU’VE BEEN LIED TO ALL ALONG BY “THE DECIDER.”
In other words, the entire Iraq War cold have been completely avoided by sending Saddam off to exile in some other Muslim country but Bush refused to do so – and worse, lied his ass off to the American public – all to further some his private agenda in Iraq and the middle east. If things were resolved peacefully, Bush’s hell-bent-for-invasion plans would all be worthless.
Remember the Time magazine story in from March 2003, where Bush is quoted as saying, “Fuck Saddam! We’re taking him out!”
All the pieces are there for anyone to see.
Now the last smoking gun — proof that Bush callously denied Saddam’s offer to surrender and walk away well before any invasion.
What could have been saved by avoiding this invasion? Over a million lives? Tens of thousands of American casualties and deaths? Over $1-Trillion Dollars re-distributed to Bush/Cheney’s private corporations from the American taxpayers/suckers? Regional instability for years, maybe forever, and a civil war everyone could see coming from a mile away that our brave young troops are stuck in the middle of now?
But, no, the President who covets being a dictator himself, planned to attack Iraq from before he was ever in the White House. He even moved-in there with special maps and photos and a written war plan.
He just needed time to con the American people and strong-arm other countries of the world.
Now he should be removed from the office he stole and put on trial for his premeditated war crimes.
Let’s watch how the corporate propaganda media spins this one . . .
Here’s part of the translation from the Reuters story:
‘The Egyptians are speaking to Saddam Hussein. It seems he’s indicated he would be prepared to go into exile if he’s allowed to take $1 billion and all the information he wants about weapons of mass destruction,” Bush was quoted as saying at the meeting one month before the U.S.-led invasion.’
The transcript in Spanish then says (according to my translation):
‘Aznar: Is it certain that any possibility exists that Saddam Hussein will go into exile?
Bush: The possibility exists, including that he will be assassinated.
Aznar: Exile with a guarantee?
Bush: No guarantee! He is a thug, a terrorist, a war criminal.
And here’s a partial translation of the rest, courtesy of Harper’s Magazine:
Bush to American Allies: support the war or starve
[Condoleezza Rice has just described the diplomatic situation to Bush and Aznar, explaining that Iraq is continuing to insist that it has no weapons of mass destruction.]
Bush: This is like Chinese water torture. We have to put an end to it.
Aznar: I agree, but it would be best to have as much support as possible. Have a little patience.
Bush: My patience has ended. I’m not thinking of waiting beyond mid-March.
Aznar: I’m not asking that you have endless patience. Simply that everything is done to [have maximum international support].
Bush: Countries like Mexico, Chile, Angola, and Cameroon should know that what’s at stake is the security of the United States . . . [Chilean President Ricardo] Lagos should know that the Free Trade Accord with Chile is awaiting Senate confirmation and a negative attitude about this could put ratification in danger. Angola is receiving Millennium Account funds [to help alleviate poverty] and that could be jeopardized also if he’s not supportive…
Aznar: Tony [Blair] wants to wait until March 14.
Bush: I prefer the 10th. This is like a good cop, bad cop routine. I don’t care if I’m the bad cop and he’s the good cop.
Bush on Iraq: the future is bright
“We’re developing a very strong package of humanitarian aid. We can win [the war] without much destruction. We’re planning for a post-Saddam Iraq and believe there is a strong base to build a better future. Iraq has a good bureaucracy and relatively strong civil society.”
Very Rough English Transcript (using Google translator) . . .
The Economic Times Story . . .
How Can Any Sane Person Be “At Peace” Preparing For War?
Ron Paul Blasts Fed Chairman Bernake
Good!
It’s about time!
Ron Paul blasted Federal Reserve Chairman Ben Bernanke for deliberately killing the value of the dollar to artificially bail out Wall Street while poor and middle class people lose their homes and have their living standards lowered.
During a Congressional Banking Committee hearing on Capitol Hill last Wednesday, the Texas Congressman confronted Bernanke and accused the Fed of trying to solve the problem of inflation with more inflation by creating artificially low interest rates that have no effect because of the dollar’s weakness.
Here’s the video:
http://www.youtube.com/v/AeHWW5gbc0w
Sea Change at the Fed
By John Maudlin
The term “sea change” has come to mean a profound transformation ever since Will Shakespeare used it in The Tempest. I think this week we witnessed a true sea change in central bank policy, on both sides of the Atlantic. The stock market rejoiced over a 50 basis point cut from the Fed, assuming that it will stimulate growth and avoid anything more than a slowdown. In this week’s letter, we ponder several questions. Why did the Fed decide to cut now when the rhetoric of just a few weeks ago was that of inflation fighting? What do they see? Are more rate cuts coming? Will they make any difference? And who is Frederic (Rick) Mishkin and why is he maybe the most important Fed governor you haven’t heard of? There’s a lot of ground to cover, and it should make for an interesting letter.
A Sea Change at the Fed
As everyone knows, the Federal Reserve cut both the fed funds rate and the discount rate by 50 basis points this week. The rate cut was clearly telegraphed and only the amount of the cut was a mystery. And for reasons I lay out later on, I think there will be more cuts. But that is not the interesting thing, at least to me. I think the Fed under Bernanke has clearly taken a new direction in determining monetary policy, one that differs with past deliberations.
At Jackson Hole on August 31, Bernanke addressing the problem of moral hazard faced by Central Banks, Bernanke noted: “It is not the responsibility of the Federal Reserve — nor would it be appropriate — to protect lenders and investors from the consequences of their financial decisions.” He did acknowledge that if the system as a whole was at risk, then a central bank would have to act even in spite of the moral hazard issue.
That was then and this is now. We got rate cuts September 18. Bernanke in his testimony to Congress this week said the Fed cut rates “to try to get out ahead of the situation and try to forestall potential effects of tighter credit conditions on the broader economy. While he gave no hints as to future policy, he did note that the Fed would “keep reassessing our outlook and adjusting policy” as the situation demanded.
Read those words again. “…to try to get out ahead of the situation…” Hello. That is something new. Normally watching the Fed and predicting the next move is about as exciting as watching paint dry. The Fed has always waited until the data suggested (and/or the market demanded) a rate hike or especially a cut. The Fed has been what good friend Paul McCulley calls “opportunistically disinflationary” for the past two-plus decades. They tighten until inflation comes down and only when it is apparent that a recession is in the works, or if there is a crisis like 1987 or 1998 (more on that important distinction later) do they cut rates. They have reacted to the data rather than made forward looking assumptions.
Over time, this has been a good policy, as it dropped inflation down from the mid-teens in 1980 to below 2% a few years ago. There are those who argue (and with some justification) that Greenspan left rates too low for too long and allowed inflation to rise back to an uncomfortable 3%, although it has been tending down of late.
But the point is that inflation is merely tending down. It is not below 2%, and year over year comparisons in the fourth quarter suggest that headline inflation of closer to 3% is quite possible. That being said, the similar comparison numbers for core inflation are not as difficult, but certainly do not suggest - at this time - that we will drop below 2% this year.
Indeed, there may be some concerns that the CPI (Consumer Price Index) number could come under pressure from the housing component. Given that home prices are falling, that may be considered odd by many. But CPI does not measure home prices. It measures something called owner’s equivalent rent. And even as house prices rose by 93% in real terms (per Bob Shiller) in the last decade run-up, rent in real terms did not go up all that much, so the cost of a new home was not reflected in the CPI.
Now, we may have the opposite problem. As more and more people cannot get a mortgage coupled with a very precipitous rise in foreclosures, we are seeing more people who need to rent. Rental property availability in many markets is quite tight, which means that rent prices are increasing. If you go to the Bureau of Labor Statistics and look at the housing rent data, it is not too hard to think that the housing component of CPI could easily rise by more than 4% in the fourth quarter given the current trend.
Since the housing component is about 30% of the total CPI, a 4% inflation in housing could be significant. And oil is over $80 and rising. The dollar is falling, meaning that import prices are going to rise. And should we mention that food costs a lot more than this time last year?
Given that the Fed has two mandates, stable prices and full employment, is the Fed abandoning its inflation mandate? Is Bernanke, who argued in academia for explicit inflation targeting, no longer worried about inflation? Is he willing to accept the possibility of 3% inflation? Is inflation getting ready to come back, a la the 1970s? Isn’t that what the rise of gold is telling us? And aren’t TIPS suggesting the same since the rate cut (a long term 2.64% inflation)?
In general I think the answer is no. I think that the Fed is concerned about other problems, and specifically heading off a recession. And to that topic, we need to turn to a recent speech at Jackson Hole by Fed Governor Fred Mishkin.
Long time readers of this letter should recognize that name. Mishkin was the co-author of a 1996 New York Federal Reserve paper on the predictive power of an inverted yield curve and recessions, which I have written about on several occasions. He was most recently a professor at the Graduate School of Business at Columbia before President Bush nominated him to the Fed Board of Governors which he joined last September, 2006. His resume is long and strong. He is a consummate and well-regarded insider. (http://www.federalreserve.gov/aboutthefed/bios/board/mishkin.htm)
At Jackson Hole in late August, he essentially argued that central bankers should ease monetary policy quickly and aggressively in response to a big fall in housing prices. “Presenting a paper on the final day of the Fed’s Jackson Hole symposium, Mr. Mishkin said policymakers should not wait until output falls, but should ‘react immediately to the house price decline when they see it.’
“He said the optimal policy response was both quicker and more aggressive than that suggested by a standard policy rule, in which policymakers respond only to deviations in output and inflation.
“He said simulations show that this approach ‘can be very successful at counteracting the real effects’ of even a large house price slump, because of the long lags from changes in housing wealth to changes in consumer spending.” (Financial Times)
Transmission Problems
In a car, the transmission is responsible for taking the power of the engine and transmitting it to wheels. Economists also talk about transmission. How does an opportunity (or problem) in one area affect another seemingly unrelated area? How does a rise in housing prices affect overall consumer spending? What is the mechanism (the transmission) of the Wealth Effect? One obvious answer (among many) would be Mortgage Equity Withdrawals that are possible as home prices double in ten years.
And Mishkin talks about just that transmission in his paper. And he makes it clear that a precipitous drop in home prices would be a negative force. Of course, that is somewhat intuitively obvious. But the interesting thing is that he argues for a pro-active response from the Fed when it becomes clear that housing prices are getting ready to fall. Let’s read carefully the following from the closing arguments of his paper. (You can read the speech at http://www.federalreserve.gov/pubs/feds/2007/200740/200740pap.pdf)
“My discussion so far argues against a special emphasis on house prices in the conduct of monetary policy. This argument does not extend to a recommendation that central banks stand by idly when house prices climb steeply. To the contrary, central banks can take steps to reduce the negative consequences for aggregate economic activity of sharp movements in house prices. But rather than try to preemptively deal with the bubble–which I have argued is almost impossible to do–a prudent central bank would be better advised to deal with adverse macroeconomic consequences as they emerge in the wake of any substantial decline in asset prices. One way a central bank can prepare itself to react quickly is to explore various scenarios as a normal part of its business to assess how it might respond to a variety of shocks, including a drop in house prices, to achieve maximum sustainable employment and price stability.
“Indeed, the exploration of different scenarios by the central bank can be thought of as stress testing similar to that regularly conducted by commercial financial institutions and banking supervisors. They see how financial institutions will be affected by particular scenarios and then propose plans to ensure that the banks can withstand the negative effects. By conducting similar exercises, in this case for monetary policy, a central bank can mitigate the effects of a drop in house prices without having to judge that a bubble may be in progress or predict when a bubble might burst.
“One objection to an easing of monetary policy following the collapse of an asset bubble is that it might lead market participants to believe that the central bank will always act to prop up asset prices, a belief that can make a bubble more likely. The central bank can mitigate such an interpretation, however, if it publicly emphasizes that its monetary policy is not directed at stabilizing any particular asset price but is rather focused on achieving price stability and maximum sustainable employment. Making sure that a house-price collapse does not do serious harm to the aggregate economy in no way eliminates sharp declines in house prices and so does not provide insurance against such declines. The same reasoning holds true for stock prices. Indeed, we have seen substantial declines in housing and other asset prices in many countries even when monetary policy has been eased substantially.”
A 50% Drop in Housing Prices
Dr. Robert Shiller of Yale (of Irrational Exuberance fame) also presented at Jackson Hole. He said housing prices could fall as much as 50% in some areas given how home prices have diverged relative to rents.
Let’s put the timing in perspective before we get back to housing. At the time of the Jackson Hole conference (my invitation once again seemed to get lost in the mail), the credit markets were in the process of freezing up. The European Central Bank was injecting hundreds of billions of euros into the economy. The Fed was also opening the monetary door. But as noted here often, the problem is not one of available liquidity, but of confidence.
The subprime problem, which everyone assured us last spring would not spread to other markets, clearly had infected the entire world. What should be a US problem was more of a problem for European banks. We were told that the housing markets were bottoming last winter and then last spring and now it is clear that we are no where close to a bottom. (I wrote about this time last year we would see a crash in the housing market in late 2007 and 2008 and this winter that the subprime problems would spread.)
By the end of August, all this had to be clear to the Fed gathering at Jackson Hole. And when Shiller stands up and starts talking about precipitous housing price drops, everyone evidently paid attention. Mishkin argues for a pro-active response, and the FOMC (the Federal Open Market Committee which sets rates) responded.
Let’s run through the scenario that the US economy, and thus the world, faces. It is going to be many months before there is a functioning subprime mortgage market in the sense that mortgages can be packaged and sold to investors. We are first going to have to create transparency in the various banks to allow the commercial paper market to function. No one is going to buy commercial paper from a bank unless they are 100% sure they can get their money back. And you can’t be sure unless there is transparency into the books of the lending institutions. And that includes all the SIVs or Special Investment Vehicles that allow banks to move liabilities off their books. Kind of. Sort of. Maybe. As long as there is not a problem. And then they come back.
Jumbo mortgages (over $417,000) are difficult to obtain without paying exorbitantly high rates. The only functioning mortgage markets are for conforming loans that can be sold to Fannie Mae or Freddie Mac or with FHA backing. (As an aside, I expect that $417,000 to be raised, and for government intervention in subprime markets.)
In effect, with what will be tighter standards for loans going forward, we are going to remove 10-15% of the home buyers that were in the market in 2005-6. That is a serious drop in potential demand. That in itself argues for a large drop in housing prices. Couple that with the rest of the housing market problems, and it could get ugly. Gary Shilling suggests a 25% drop. Dr. Roubini thinks 15-20%.
The total housing market value in the US is $20 trillion. Knock of $4 trillion, and you have a serious drop in the wealth of homeowners. For may, that completely wipes out equity built up over the years.
Wildness Lies in Wait
“The real trouble with this world of ours is not that it is an unreasonable world, nor even that it is a reasonable one. The commonest kind of trouble is that it is nearly reasonable, but not quite. Life is not an illogicality; yet it is a trap for logicians.
“It looks just a little more mathematical and regular than it is; its exactitude is obvious, but its inexactitude is hidden; its wildness lies in wait.” - G. K. Chesterton
All of the subprime mortgages and CDOs that sit on the books of banks throughout the world are the wildness that lies in wait. We can know with some exactitude that there are going to be $100 billion in losses, give or take. What we cannot know is from what hidden glen the losses will spring up. Where is this paper?
And thus the difference between risk and uncertainty. Risk has a price. You can establish the probability of a loss, and price it. Life insurance, as an example, or the likelihood of defaults in subprime mortgages (at least, before they dropped rational lending practices).
But you cannot price uncertainty. And now the markets are uncertain about subprime debt, and uncertain as to where that debt is. And so how do you price the debt? If you are no longer certain about German banks when two of them go belly up, then do you take any German bank paper? French paper? Commercial paper from Countrywide Mortgage?
You are a central banker. You can see the problem, and you can see that a housing led recession or at the very least a serious slowdown is in the near future. The mortgage credit markets are not functioning and may not for some time. Do you wait? Mishkin argues no.
Even though housing is only 5% of the economy, it is a huge part of the Wealth Effect. $4 trillion is not a small sum in the psychology of the consumer. Slower consumer spending, and consumer spending is clearly slowing, is the transmission which takes us from a housing recession to a general recession.
Slower consumer spending should result in lower inflation and lower prices. If you read Mishkin’s paper, the Fed is clearly modeling the economy, and just as clearly their models suggests a problem.
And so we get a sea change. We get a Fed that is pro-active instead of reactive. That makes Fed-watching a whole new ball game.
A couple of side points. In 1998, the Fed cut rates 75 basis points in response to the Russian bond crisis and LTCM. When the crisis subsided, they took those cuts away fairly quickly. While I do not think this crisis subsides in a few months, if it does, and inflation even remotely ticks up, they will take the recent cut, and the ones they are going to make in the future, off the table just as quickly.
And I am running out of room, but the Bank of England’s response to NorthRock was also a sea change. They in effect guaranteed all bank deposits in Great Britain. This will take some fleshing out on the part of authorities, but it is a big change.
I Still Think Recession
Even with a proactive Fed, I think we do not avoid a recession.
I think the Fed did the right thing by cutting rates. I think they will cut them more as the economy continues to slow. We will see a Fed funds rate with a “3 handle” before this process is over (meaning that the Fed funds rate starts with a 3 from the current 4.75%). The Fed did not start down this road with the thought 50 basis points would be enough.
The point is to try and drop rates enough to make mortgages (when that market finally rights itself) low enough that home buyers can afford to buy homes. While that will help some individuals, the more important concern from a central bankers perspective is the total economy. You do not allow the housing market to implode on your watch and do nothing.
And yes, it will help business with lower funding costs and encourage deals and risk taking. Which is what you want when an economy is on the verge of recession.
But home construction, even with lower rates, is not going to turn around fast. At the peak of the market, we were building 2,000,000 new homes a year in the US. As the following chart from the Conference Board shows (thanks to Dennis Gartman), it is not unusual for housing starts to drop below 1,000,000, and this typically precedes a recession.
This of course is not helped by all the homes that are coming back onto the market via foreclosures. Mortgage delinquencies are rising, especially in the variable rate subprime market, as the chart below indicates.
And all this puts pressure on consumer spending. Hugh Moore of Guerite Advisors writes:
“Consumer spending accounts for two-thirds of the U.S. economy. Total Household Debt is particularly important in supporting the growth of consumer spending. This indicator includes mortgage debt due to the important role that Home Equity Withdrawal (HEW) has played in sustaining the growth in consumption since the beginning of the decade.
“As shown in the graph below, each time the year-over-year increase in Total Household Debt has dropped more than 40% below its recent peak, a recession (or in the case of 1967, a mini-recession) has occurred. The mid-1980’s slowdown touched this level, but did not exceed it. The current -38.9% level is approaching this boundary and, based on recent credit tightening by financial institutions, is likely to drop significantly below the -40% level.
And quickly, a preview from next week’s Outside the Box, courtesy of my friends at GaveKal (this actually written by Louis Gave). They track the velocity of money. As they note, central banks are pushing money into the system. But is it going anywhere?
“Which brings us to today. Following the recent central bank actions in the US, Europe and the UK, most commentators seem to expect a sharp acceleration of either inflation, economic activity, or asset prices (or all three). As a result, gold is making new highs, the US$ is plunging to new depths, etc…. But aren’t the recent buyers of gold focusing solely on likely changes in the money supply (M), while forgetting why central banks are set to dump money into the system in the first place? Isn’t the reason behind the loosening of monetary policies the fact that the velocity of money (V) has been plummeting?
“As in 2001, the question investors should thus ask themselves is whether velocity is set to rebound? If it is, then investors are right to position themselves for an ample liquidity environment (long gold, long commodities, long deep cyclicals).
“But if it isn’t, then the investment environment could start getting a lot trickier.” (emphasis mine).
We do live in interesting times. Next week I will try and look at the currency markets. The dollar is going to continue to be under pressure.
It’s Good to be Home
I must admit I do love to travel and see the world. But I have been doing a lot of travel this year, and it feels good to be home for the next three months. I am sure that something will come along and necessitate a trip, but right now re-acquainting myself with my home is a pleasant exercise. And even more fun in my new digs.
As many of you know, I moved my residence this spring to a high rise in an area of downtown Dallas called Uptown, as a personal experiment in urban living. It also puts me rather close to my two older girls. I find that I like it a great deal, at least so far. Being able to walk to restaurants, entertainment, shops and more is quite convenient, and the area is more fun than the suburbs I have haunted all my life. And I leased. I would have to pay almost two and a half times more a month to buy the equivalent space. That suggests there may be a buying opportunity at some point in the future.
I did my bit for the economy this week. I helped my daughter Abigail buy a car in Tulsa, where she goes to school. I must confess to not looking at a smaller car for a long time. I drive larger SUVs and have done so for decades. Abigail is 4′10″ on a good day, so she was looking for a smaller car. We ended up with a Nissan Sentra. I was quite impressed with all the features and luxury that you can buy for $17,000. I know Bill King and others hate hedonic adjustments in the CPI, but this was a massively better car than I bought when I was 22, for about a third the nominal dollars, and used at that. Safer, more reliable. Airbags everywhere. 30 MPG. Blue tooth. 100,000 miles before the first tune-up. I used to change my plugs every 6,000 miles.
And best of all? “Dad, I have been looking at jobs in the paper here. There are just none for public relations, and I want to work for a sports team. I think I might move to Dallas when I graduate.” Mark Cuban, are you reading? I’ll be glad to drop you a resume at the season opener.
Life is so very good, even with all the bumps here and there. Once again, thanks from the bottom of my heart for letting me send you my musings each week. Your support and comments mean a lot, and I do appreciate it.
Your ready for the Mavericks to start playing again analyst,
John Mauldin 
John Mauldin, Best-Selling author and recognized financial expert, is also editor of the free Thoughts From the Frontline that goes to over 1 million readers each week. For more information on John or his FREE weekly economic letter go to: http://www.frontlinethoughts.com/learnmore
“Forget the investors!”
I was channel surfing last night and saw part of Jim Cramer’s Mad Money. This guy just doesn’t get it . . . or worse: maybe he does but his priorities are different.
They’re losing their jobs? Well tough! They deserve to.
But . . . “forget the investors”?!
Last Friday, when the Fed manipulated the markets before the open on Options Expiration Day, Cramer was all warm-and-cuddly . . . like the 2-year-old who got his way by throwing a temper tantrum. He defended the private bankers who jerked our “free market” around and actually attacked the Federal Reserve President from St. Louis who is one of only a few to say the right thing so far:
“As is often the case, the market’s punishment of unsound financial arrangements has been swift, harsh and without prejudice. While I cannot feel sorry for the lenders who have gone out of business, my attitude is entirely different toward the relatively unsophisticated, but honest, borrowers who have lost their homes through foreclosure. Many are true victims.”
–William “Bill” Poole; President, Federal Reserve Bank of St. Louis (July 2007)
His entire speech is here.
Last night, Cramer was at it again. Calling for the guy’s resignation. He cherry-picked some politician who supported his position and had a special call-in “interview” that was nothing short of propaganda . . . and why? Because the guy wants rich investment bankers to be responsible for their actions? Because he opposes a bailout when they take a risk and screw-up?
Make no mistake, guys like Cramer and his investment banker buddies want it both ways: They want to keep their profits, all their profits, every penny, with no capital gains tax . . . and I could support that as part of a broader tax package . . . but then they want bail-outs when they loose!
“Forget the investors!”
Who is calling for bail-outs for the little guy who lost money on his investments? Not Cramer.
“Forget the investors!”
Who is calling for bail-outs for the homeowners caught-up in the bursting housing bubble? Not Cramer.
“Forget the investors!”
Who is calling for protection when tragedy strikes and someone can’t pay their bills and stands to loose everything from the just-in-time “re-written” bankruptcy laws? Certainly not Cramer.
Who is calling for fiscal responsibility? Bill Poole.
Who has shown any sympathy for honest borrowers who are losing their homes to foreclosure? Bill Poole.
And who is calling for Bill Poole’s resignation as loudly and publicly as he can? Jim Cramer.
So, does Cramer really care at all about those folks who call-in to his show or does he really just care about his investment banker buddies? “Forget the investors!” . . . hmmmm.
How about forget the Federal Reserve?
Bastards!
One of my friends has been after me to set-up a place like this.
And after watching the total bulls**t of what happened over the last few weeks . . . especially Friday . . . I finally said O.K. Just do it.
I’m mad as hell that the little guy gets screwed everywhere he/she turns: dishonest brokers churning commissions while your account steadily drops; almost automatic, phantom slippage from certain unnamed brokerage firms; fraudulent “gurus” who couldn’t even trade in a crashing market but who sell their “knowledge” to newbies; fraudulent snake-oil salesmen who steal money selling worthless trading systems and software; and, now, when the little guy gets through all that and does everything right, they still get f***ed by private bankers (the Federal Reserve) who effectively just wipe out their proper short positions at substantial loss – maybe even blowing accounts out – just so their rich buddies get a second chance to profit and dump their positions.
I heard about Jim Cramer ranting and raving like an idiot a week ago, demanding Fed Chairman Bernake lower the discount rate to bail-out some of Cramer’s rich buddies who invested in a few of the sinking hedge funds. He whined, “they’re losing their jobs . . .” Well, tough! They deserve to lose their jobs, and their fat bank accounts . . . and maybe even their houses like middle-class Americans are every day because of the credit-fraud game they played. I’d get fired for this level of incompetence and so would you.
Don’t be fooled . . . they knew exactly what they were doing Friday morning.
The timing was especially cruel . . . not just a quarter-point but twice that much, and before the open on Options Expiration Friday. And all that on top of the Fed putting hundreds of BILLIONS of money created from thin-air into the markets the prior 10-days to “prop them up.”
The government puts unlimited resources into prosecuting one, single NBA Referee who fixed a few basketball games, and it should . . . and the media goes on and on about it, and I guess it should too . . . but I’ll bet good money there won’t be a single dime spent investigating and not a single word written by the corporate-owned media about who made tens or hundreds of millions on “lucky” options trades between Thursday afternoon and Friday morning.
Yeah, one of the NBCs had Cramer on by phone right after the open to praise the “courageous” decision by the Fed . . . and all I could think was, “What crap!” I wanted to just reach out and choke him!
As a daytrader, I don’t really care if the market goes up or down . . . as long as it moves . . . and as long as the game is not rigged . . . and it sure looks rigged when you give rich people 2 or 3 chances and the little guy is lucky to get 1 good one.
So put a cork in it, Cramer.
Here’s Cramer’s meltdown.