stock market

Financial Crimes

Mark Noonan15 Comments

The Game Stop scandal once and for all exposed just how corrupt the financial system is. The bottom line is that regular folks simply outwitted the Experts and the Experts, rather than take the loss and learn the lesson, called on the power of major corporations and government regulators to squash the regular folks. They do want us to take our savings and dump it in the market, but they don’t want a million of us, each using our $1,000.00, to do what they do all the time – manipulate stock prices for personal benefit.

This was also a rare moment of unity where everyone from Commies to MAGA were united in their outrage. Naturally, most solutions proposed for this are ineffective. I’m still in favor of breaking up all large corporations and confiscating all personal wealth above $5 billion (the proceeds to be distributed by lottery to American citizens in $100,000.00 lots). But even the Commies aren’t in favor of that. So, as we won’t actually solve the problem, a few other proposals.

  1. You can’t sell stock you don’t own (they really do this).
  2. The additional capital gains tax on a stock held less than 24 hours is 90%. Less than a week, 50%. Less than a month, 40%. Thirty one days or longer, no additional penalty. The idea here is to get people to be investors, rather than gamblers.
  3. Corporate boards are responsible, civil and criminal, if financially critical corporate information leaks before public announcement (this to hamper insider trading; don’t go after the guy who acts on a tip – go after the tipster).
  4. Shares of corporations bidding for government contracts in excess of $10 billion cannot be traded until after the contract is released. Once you start the bid process, no one can buy or sell your stock (this to prevent government people from insider trading).
  5. No bail out, ever, for any financial corporation. Sink or swim.
  6. No corporate executive can become a government employee until five years after leaving corporate employment. No government employee can become a corporate executive or board member until ten years after leaving government.
  7. Corporations with a market cap in excess of $1 billion cannot donate to political parties; pay speaking fees; employ spouses, siblings; children, grandchildren, parents, first cousins or in-laws of government officials

I know we’ve all defended free markets – and, in fact, we still do. But the reality is that we don’t have free markets. We have a quasi-feudal, bastard child of Capitalism and Socialism. The economy isn’t for GDP. It isn’t to get rich. It isn’t to provide a tax base. It is to allow one person, working hard and living frugally, to support a family and leave a legacy for children. Anything that is not geared towards that is bad and must go. Until we wake up to the fact that the system, itself, has to go, we really won’t get anywhere.

Who’s Afraid of the Big Bad Coronavirus?

Mark Noonan21 Comments

Not me. Several reasons.

1. It’s a flu. I know, I know – people say it isn’t like other flu viruses…but, it’s a flu. We don’t even really know how deadly it is – 0.5% to 2%…which means, no one has a clue. It seems slightly more deadly than regular flu, but the deaths seem to be heavily concentrated in people with underlying health problems. The bottom line is that if you’re healthy, you’ll probably get through it after a miserable couple weeks. Any one of us is highly unlikely to die.

2. We have much better sanitary conditions and health care than China – or, it would seem, Italy or Iran. We’re not as densely packed into cities; our pollution levels are much lower; the free market provides vast amounts of medical services at short notice.

3. The MSM is lying. A lot. They are hyping this up as the End of Days in order to harm Trump. Have you heard that the disease has already peaked and started to recede in China? Of course not – that wouldn’t fit the Narrative. Whatever they’re telling you is designed to scare you.

4. President Trump is a great President – he’s doing a good job; I’m confident he’ll be up to meeting whatever this throws at him.

It must be kept in mind that everything you’re going to see from now until Election Day in the MSM is designed to harm Trump and/or help the Democrats. Trust nothing of what they say. Look around. Seek alternate sources. Use your own common sense.

In the other bad news: stock market flop. Partially Coronavirus, partially oil price war – not sure if the Saudis are trying to blow up our oil industry or kill Iran…could be a little of both. But the underlying economy is strong and the Saudis can’t long sustain low oil prices…equilibrium will eventually prevail…but we might get a shot at really cheap gas over the Summer, and that will help the economy as much as the oil disruption harms.

Ok, So Maybe the Markets are Getting Pretty Bad

Mark Noonan8 Comments

Haven’t paid much attention to the global crash in stocks over the past couple weeks because I’ve been figuring, after all these years, that the central banks would be able to make them go higher before things got bad. I know full well that an economy based upon fake money and debt cannot go on forever, but after watching it keep going for 7 years, I figured they’d be able to keep the ball in the air for a few more years. But, maybe not – from Zero Hedge:

FACTS: By midday break, nearly 2000 stocks down 10% daily limit in Chinese market — only 13 stocks up; Shanghai benchmark index down 8.45%

And:

…It is unclear just what is going on, or whether some prop desk or hedge fund just got tapped out, and/or how the Fed will react but the last time we had action like this, the Fed confused a liquidating SocGen trader for an economic collapse, and cut rates by 75 bps in January of 2008. This time it does not have that luxury.

Indeed – back in 2008, the Federal Reserve – and pretty much every other central bank – got into money-printing and zero percent interest to support the collapsed market: what do they do, now? I don’t know – but we’ll see. I was fully expecting the DOW to sky rocket on Monday morning after Friday’s sell off…and that still might happen. We’ll see.

Getting Back to the Open Thread

Mark Noonan14 Comments

I was working on a good, fantastic, fabulous open thread for Monday Morning – but as I’m on vacation, that didn’t work out…so, here it is, later in the day, and I have some more things I’ve been thinking about.

…The duelists had from their own point of view escaped or conquered the chief powers of the modern world. They had satisfied the magistrate, they had tied the tradesman neck and heels, and they had left the police behind. As far as their own feelings went they had melted into a monstrous sea; they were but the fare and driver of one of the million hansoms that fill London streets. But they had forgotten something; they had forgotten journalism. They had forgotten that there exists in the modern world, perhaps for the first time in history, a class of people whose interest is not that things should happen well or happen badly, should happen successfully or happen unsuccessfully, should happen to the advantage of this party or the advantage of that part, but whose interest simply is that things should happen.

It is the one great weakness of journalism as a picture of our modern existence, that it must be a picture made up entirely of exceptions. We announce on flaring posters that a man has fallen off a scaffolding. We do not announce on flaring posters that a man has not fallen off a scaffolding. Yet this latter fact is fundamentally more exciting, as indicating that that moving tower of terror and mystery, a man, is still abroad upon the earth. That the man has not fallen off a scaffolding is really more sensational; and it is also some thousand times more common. But journalism cannot reasonably be expected thus to insist upon the permanent miracles. Busy editors cannot be expected to put on their posters, “Mr. Wilkinson Still Safe,” or “Mr. Jones, of Worthing, Not Dead Yet.” They cannot announce the happiness of mankind at all. They cannot describe all the forks that are not stolen, or all the marriages that are not judiciously dissolved. Hence the complete picture they give of life is of necessity fallacious; they can only represent what is unusual. However democratic they may be, they are only concerned with the minority… G. K. Chesterton, The Ball and the Cross, Chapter IV.

Trigger Warning: the book was written more than 100 years ago and uses words and phrases which Precious Snowflakes Who Got Awards for Participation may find offensive. But, it is a good read for everyone else. And it pretty much in those two paragraphs demonstrates why paying attention to what the MSM wants you to see is not really wise.

The Chinese stock market crashed 8.5%! That is amazing for one trading day. It would be as if the U.S. stock market shed around 1,500 points in a day. I guess that even with injections of more funny money and the prospect of getting arrested if you sell hasn’t convinced China’s stock market to start going up.

Should Jonathan Pollard be released? Pollard has been in jail for decades. The article notes that Donald Rumsfeld doesn’t want him released – and a lot of people are on Rumsfeld’s side on this. To me, mercy triumphs over justice. Maybe it is time for Pollard to be released? Pollard becomes eligible for parole in November.

The Senate GOP leadership is, well, rather foolish. We know that they are in bed with big corporations and we know that they are largely Establishment drones who just want to go along to get alone (and, of course, so is the Senate Democrat leadership) – so, we know that they want to reauthorize that bit of corporate welfare known as the Export-Import Bank and they want their pork-laden highway bill. We in the base dig all that – and there’s no chance we’d ever actually like the GOP passing such things. But if they were to de-fund Planned Parenthood and take a big swipe at Obama’s Iran deal, we’d better deal with Ex-Im and the Iran deal actually happening. But, nothing doing – the GOP leadership by legislative hard-ball blocked conservative efforts to do both things…and then rammed through re-authorization of Ex-Im on the highway bill. Turns out, though, that the House GOP leadership (which is much more threatened by that tiresome, will-of-the-people thing), isn’t going to play along. Hey, Mitch – here’s a bit of advice: you have to play ball for things to get done. Just throw us a conservative bone once in a while…geesh!

Assad is hunkering down in his section of Syria and essentially writing off the parts controlled by the rebels. The reason for this? Fundamentally, because Syria isn’t a nation. Iraq isn’t a nation, either. Joe Biden caught a lot of flack when he suggested a post-war partition of Iraq, but it was about the only sensible thing he’s ever said. Syria and Iraq were drawn willy-nilly by Anglo-French imperialists in the post-WWI settlement. They are collections of different peoples with, often, very different ideas of what constitutes the good life. They were only held together – and held down – by imperial and dictatorial powers. Partition may be the only viable solution.

Governor Bruce Rauner (R-IL) is locked in a battle with the State’s government unions – who, of course, control the State Democrat party. This is a re-do of the battle in Wisconsin, but Rauner lacks a legislative majority as Walker had. The fundamental situation is the same – a bankrupt State government faces out of control spending forced through by government unions and their willing minions in elective office. It is either reform, or collapse – but the unions don’t care and insist the only way to go is more taxes and more spending. But Rauner isn’t backing down – and I’m certain that the Democrats/Unions will pull out all the stops. They have to. It was bad enough they were crushed in Wisconsin where the whole government was in Republican hands – but if they get crushed in Illinois where the Democrats control the Legislature, then it is game over for the government unions, and thus the whole idea of Big Government at the State level. Keep and eye on this one – and if Rauner pulls it off, pencil him in for 2024 (if the GOP wins next year) or 2020 (if it loses).

Remain Calm: All is Well!

Mark Noonan6 Comments

Just had to put this up from Zero Hedge:

China Bans Use Of Terms “Equity Disaster” And “Rescue The Market”

…And so, with every attempt to manipulate the (Chinese) market higher falling flat in the face of selling pressure from the hairdresser/ farmer/ banana vendor day trading crowd (which has now thrown in the towel on the whole “it’s easier than farm work” theory and now just wants to break even and head for the hills) the only thing left for China to do is “fix” the narrative.

In other words, when banning selling doesn’t work, the logical next step is to ban talking about selling…

…So apparently, Beijing will now prevent journalists from accidentally jawboning the market lower so that Party mouthpiece media outlets are free to jawbone the market higher.

Needless to say, we doubt if this hail Mary attempt to rescue the market will do anything at all to save China from its homemade equity disaster.

Indeed. I haven’t paid too much attention to the market slide in China because I just figured the Chinese government would order stocks to go higher – telling the money bags in China that they’d better buy or else, ya dig? But if China’s market has got a huge number of small traders who are now getting burned…well, you can shoot a dozen bankers who don’t cooperate: its a much more difficult prospect to shoot 100,000 small investors who are bailing out.

There is one thing I do know about markets – when average folks start borrowing money to invest in it because it will always go higher, then it is crash time.  We’ll see how this plays out – but China has already lost $3 trillion in stock value since June…ain’t looking too pretty.

Economy Open Thread

Mark Noonan12 Comments

As I write this (8:36 pm EDT, Sunday), the market futures have been swinging from negative to positive and back to negative.  Rumors abound – some saying the Bernanke will print up bags of free money for the banksters, others holding that the end of the Libyan civil war will lower oil prices…but, meanwhile, gold continues its skyrocket towards $1,900.00 an ounce.  So, mixed bag.  Who in heck knows what will happen tomorrow?

Given this mystery, I can’t think of anything particular compelling to write…its all so messed up and so unpredictable that if I wrote something now, then by 9 am in the east, Monday, everything I said might be nonsense.  So, an open thread…watch what happens this glorious Monday…and feel free, even, to comment about non-economic things, if that is what you’d like here.  We’re really just along for the ride, anyways…

Gold Hits $1,750 an Ounce

Mark Noonan1 Comment

From Bloomberg:

Gold futures exceeded $1,750 an ounce for the first time as the global rout in equities and commodities deepened on concern the economic slowdown will worsen after Standard & Poor’s cut the U.S. credit rating.

Gold for December delivery in New York advanced 2.5 percent to a record $1,756.80 an ounce and traded at $1,752.60 at 1:17 p.m. in Melbourne. Immediate-delivery gold rose as much as 2 percent to $1,754.63, also an all-time high…

Meanwhile, the Asian markets are getting slaughtered (Hong Kong was down more than 7% at one point, but it has bounced back a bit), while London looks for a bad day, partially fueled by the increasingly out of control riots.

What will happen tomorrow?  Beats the heck out of me…could be that stocks will surge a bit as some people figure they’re beat down enough and its time to buy.  Could be that Bernanke will announce right at market opening that he’s firing up the printing presses.  Could be that it drops another 500 points in the first hour.  We’ll have to just see.  But as I keep saying – even if we dodge this bullet, we won’t dodge them all…the crash is coming, because there is simply too much debt.

Did You Ever See a Stock Market Crash?

Mark Noonan40 Comments

The Tel Aviv market gives a good indication of what it looks like – and here’s the really bad news:  Israel’s economy is healthy.

Of course, by the time the markets open tomorrow Bernanke and the boys might have figured out some way to finesse around the downgrade and the spreading crisis in the Eurozone.  I honestly don’t know what will happen tomorrow – but things are looking really dicey both in the short and long term.

We’ve got one heck of a mess and it won’t be easy to get out of…and we need a government which recognizes the mess (no more happy talk about how things are moving in the right direction when they’re not) and has the guts to do what is right.  We need to massively reduce spending, reform taxes and entitlements and free up the wealth-creating capacity of the American economy.  This will infuriate all those special interests who are still living off the carcass of Big Government, but it has to be done.

Asia-Pacific Markets Getting Hammered

Mark Noonan1 Comment

Mish has the details and a roundup of really, really lousy economic headlines.

My take:  if the employment report comes in better than expected tomorrow, then the sheep who run our financial system will some how, some way, hold it to be evidence that things aren’t as bad as they look…the market might surge by hundreds of points.  On the other hand, if it comes in worse than expected, then watch out.

The bottom line for the global economy is, as it has been for years, that there is way too much debt.  Each and every nation – yes, including China – is honeycombed with bad debt which cannot be repaid…in some cases never, in other cases just not in the contractual time frame.  We borrowed ourselves in to a global boom and now the piper has to be paid.  We might dodge this one more time but no matter how many times we pull back from the cliff, we are still ultimately heading for a crash.  Default is the only way out for some nations, while a quasi-default will be required of all other nations.

The lesson to be learned is that debt is poison…we’ve been hoodwinked; suckered by a classic, get-rich-quick ponzi scheme which held that we could borrow forever, live like kings and never have to repay.  Don’t get me wrong, here – we, the people, for the most part eagerly joined in the scam.  We lost our heads – and, more importantly, we lost our sense of moral rightness.  Once we pay this price, it is to be hoped that we’ll take our lesson to heart and build an economy based on hard work, savings and careful investment.

Financial Crisis, Part 2: Welcome Back, 2008?

Mark Noonan17 Comments

Quite a slide in stocks today, huh?  As for me, I’m congratulating myself on shifting all my 401k funds from stocks to bonds just yesterday.  I’m not sure that this move, in the end, will really save my 401k, but I was seeking some means of avoiding the crash in value I had back in 2008.

So, what now?  Do we keep crashing, or does something happen to make it all go away, at least for a while?  I honestly don’t know – but over at Zero Hedge a dire warning that there is no way out:

…Nothing from 2008 has actually been fixed. Faith and trust do not exist in the financial system anymore. Everyone knows the deal… they just don’t want to admit it as it means GAME OVER for the system as we know it.

Which is why now that the next round of the Financial Crisis has hit, there’s really nothing the Fed or anyone can do about it. They had their big chance to fix things in 2008 and failed. This time around, no one will believe the Fed can fix anything. And what’s coming will make 2008 look like a joke….

Could be – but I still think that the Federal Reserve and the US Treasury can pull a couple more rabbits out of the hat.  They can’t fix it, but they may be able to juggle the financial balls until after election day, next year.  Which is, by the way, the primary aim of the Ruling Class…keeping things together until after the election and hoping that no TEA Party-backed candidate wins the White House.  Their ultimate nightmare is a President who will actually change the system…the corrupt system, that is, which benefits the Ruling Class.

As for me, I admit to a tremor of fear today … I work at a firm highly sensitive to things like stock market crashes; this recession could become a depression right quick (on the “a recession is when your neighbor looses his job, a depression is when you lose yours” theory).  But, with all that, things will be as they will.  We’re in one heck of a mess – the end of Big Government liberalism will not be easy and it won’t be pretty.  Decades of living by lies has to be paid for…and we who are in the work force today will just have to pay.  But, also, we must change things…so that the children and grandchildren have that better future the liberals of the 60’s told our parents we’d be living today.