“Concentrated power has always been the enemy of liberty.”
— Ronald Reagan
Wall Street blames Washington for all the financial crises. And Washington blames Wall Street back. It would be amusing, if it wasn’t so pathetic.
Now we know the truth — that both are taking turns bringing us to the brink, with only their own self-preservation in mind.
As we emerged, rather confused, from the 2008 financial crisis, a posting appeared in the comments section of The Wall Street Journal. It was as prescient as it was disturbing. It appears in my book, but I am re-posting it below.
Whether you are a Democrat, Republican or Independent, it is worth a read. It is also worth considering that while Wall Street bewails any hint of a redistribution of wealth to the unwashed masses, the largest-ever redistribution of wealth occurred right under taxpayers’ noses to the banks by the billion-load — Wall Street’s greatest coup ever, rubber-stamped by our own elected officials.
“All this goes to show we are now entering the second phase of the world financial crisis. Despite the fact that the anti-social nature of banks has been found out, the corruption of the Fed and the finance committees in the Senate and House are now public, and the solutions to the problems are well known, we still do not possess the political will to carry them out.
“It is clear that a larger problem now looms — the crooks are firmly in power and intend to stay there . . . Americans are again ruled by a plutocracy that has no interest in them other than the money that can be made off them, the same as in 1776 . . . If we cannot kick these people out of power, we are no longer America. And most people sense that. We have become the pleading chickens our founding fathers would have despised.”
Somewhere in the United States, right now, a billionaire is paying his taxes. This makes some people — not naming any names — very unhappy. In our nation, it is imperative that hedge fund managers, for example, pay roughly 15% on earnings via a handy loophole, whereas someone like, say a writer-girl, coughs up over 30%. That strikes some folks as just about right. Call it pursuit of happiness.
Other people’s happiness.
So we have some disagreement there. Elsewhere, others feel that taxing the daylights out of Americans who can’t afford to pay for gas to get to work sounds about right. And that, at one of the worst moments in financial history, forcing Americans to buy health insurance they don’t necessarily want or need so that the healthy insured can subsidize the less-healthy insured is a great idea.
I was cleansing my inbox today and found this friendly letter to the Fed from 2007 written by our comrades at Long or Short Capital (vaguely connected to our own fake hedge fund, Intergalactic Capital). I was all ready to take a whimsical walk down memory lane, since 2007 was the year before our financial meltdown. Yet strangely, this missive does not seem dated.
To: The Fed
From: Long or Short Capital
Re: You suck
Dear the Fed,
You suck. You don’t have a backbone and as a result you are slowly and very surely making our country and our currency irrelevant. Usually the masses rebel and bring down great empires but luckily for us democracy fixed that problem. Unfortunately, democracy can’t fix how lame and fickle you are and so you will be our ruin.
A few things to tell you:
1) Inflation isn’t 2% like your pathetic CPI ex-Food & Energy says it is.
First of all, as far as I can tell food and energy are the only two items you should NEVER exclude from an inflation index. Tell your wife and kids they can have everything in the consumer basket except food and energy and you will quickly see that they are actually the two MOST important and indispensable factors in the CPI.
You can find substitutes for, or go without, everything in the basket EXCEPT those two.
Secondly, stop using “Seasonally Adjusted Intervention Analysis” it’s as sketchy as the Seldom-Accepted-Accounting-Principles (SAAP) we use to cook the books here at LoS. I mean writing a computer program to automatically remove any items in the basket which deviate meaningfully from the previous year? Isn’t the point of the data to SHOW the change versus the previous year, not hide it? Oh, I found the list of items that you’ve adjusted for and it’s embarrassing. Continue reading Dear The Fed: You Suck→
My New England home was my favorite place in the world when I was little. We bought it with several acres of land and it was surrounded by fields and forests and freshwater ponds on all sides. Our property was flanked by the longest line of ancient green-and-blue fir and spruce trees in the state. My parents were very proud of that. We grew up blueberrying and ice-skating and catching painted turtles.
My parents, who were born of Depression-era parents, were fiscally conservative and hugely diligent savers. They bought the house for $49,000 in the mid-70s and sold it for almost a half million in the late 90s when they retired. In the interim, they ceaselessly worked the land to make it beautiful.
Growing up, my mother was the only mother I knew who fed her kids from her own orchards and gardens year round, just for the pleasure of it. A teacher and artist, she set her summers aside for planting and canning for winter. My father was the only father I knew who could build and landscape almost anything from nothing. He loved deep-sea fishing and we ate seafood — mussels, scallops, flounder, bluefish — year-round hooked off his boat. He caught so much he would often give it away to the neighbors. Continue reading What’s Left Of My Childhood Home→
So there’s this small issue of the world being debt-ridden and nobody hiring and the delicate financial machinery of our country breaking down in a way that can only be called utterly embarrassing.
This is not altogether bad news. For those who have long been looking for their moment to escape a lifetime of professional drudgery, it is a chance to hit the reset button. Go back to university, take a master class in sculpture or become a Cordon Bleu chef. Our favorite course of late is this one.
Go to the desert and paint your masterpiece knowing you will be unmolested.
The great thing about no opportunity is this: if you remove yourself from the world to do what you want to do, as opposed to doing the fake thing you’re pretending to want to do, it comes with no opportunity cost. You will not be missing out on all the good jobs. There are no good jobs!
The best part is, after taking a year or two out to reposition yourself, the odds are you’ll be returning to a world of renewed opportunity. Maybe not of the milk-and-honey variety, but certainly superior to what you see today.
Hold the phone, we run of cash when? In two and a half weeks? Bah, fie and tut-tut. So that’s what’s behind this whole debt-ceiling/deficit talk getting in the way of my “Mad Men” re-runs. But maybe there’s a silver lining. One humble query: If our entire nation can no longer pay its bills and decides to cut little old ladies’ social security checks, will anyone notice — or care — if I don’t pay mine?
Seems if the U.S. Treasury and Congress can’t get it together, then why should I?
During a pivotal summit with Republicans yesterday, Obama rose, looked around and, well, booked it out the door. (Or as The Wall Street Journal more kindly put it, Obama found himself “abruptly walking out of a key meeting.”)
Having done that, I now turn to more important matters.
Like this cash-or-credit debate taking place in the papers. Financial vigilantes are urging consumers to cut up their credit cards and throw them away. One article in SmartMoney actually sounded the shibboleth: “I’m going all cash!”
To which readers had a range of emotional responses. Two encapsulating these:
“This is simply an irritating article. I am willing to bet $1000 that the author
is lying and in fact is still using his credit cards and not wandering around
paying for everything with cash. If you’re going to write an article, at least
please be intellectually honest. Do you think we are that stupid?’
“Already living this dream. In fact it is a great reality to know that you owe nothing to anyone. We do not have credit cards either, we have covered that with an emergency fund. We own a house (no mortgage) and we have paid cash for all of our vehicles (no financing). As far as I’m concerned, living within your means and being debt free is the NEW AMERICAN DREAM.”
The most compelling reason for getting rid of your credit cards is obvious: ordinary folk have to pay 14% interest on average for them. Yet banks pay less than 1% whenever they feel like borrowing from the government (yes, that includes JPMorgan Chase, Bank of America — even Goldman Sachs and Morgan Stanley, which received “bank holding company” status during the credit crisis).
Not my words, just something an observant Canadian living inside the U.S. had to say today about our country’s death match over the debt ceiling — before remarking that it might be wise to, uh, “back-migrate.”
Instead of an espresso shot this morning, take a gander at our impressive U.S. Debt Clock. If that doesn’t jolt you awake, nothing will.