- These days, financial/market punditry seems to follow
two opposite lines of thinking. It ranges from the predominant view that
world economies are growing and sound, problems in them minor and fixable,
and current volatility (aka turmoil) is corrective, normal and a healthy
reassessing and repricing of risk.
-
- Contrarians, on the other hand, believe the sky is falling.
Most often, extreme views like these turn out wrong and are best avoided.
Things are never that simple and hindsight usually proves only Cassandra
was good at forecasting although calling market tops and bottoms wasn't
her specialty.
-
- Amidst all the commentary and sorting out of market Strang
und Durm these days, some financial world figures stand head and shoulders
above the rest for their wisdom, level-headednessness and believability.
One in particular is Jeremy Grantham, called by some the philosopher king
of Wall Street even though he's based to the northeast in Boston. In 1977,
he co-founded Grantham, Mayo and Van Otterloo, now known as GMO. In his
Quarterly Letters to clients, he assesses current market conditions and
usually takes a longer view as well. His commentaries are detailed, scholarly,
sober and clear.
-
- The Vanguard Group of mutual funds founder John Bogle
calls Grantham "one of the top two or three individuals in this business
(and) If there's anybody in this whole business who calls a spade a spade
(that person is) Jeremy Grantham." A metaphor for his wisdom, attitude
and investing style sits aside his office desk. It's a huge 9th century
stone Buddha signifying "everything in moderation" and one of
Grantham's core beliefs that all markets eventually revert to their mean
values from their highs and lows.
-
-
- Based on his company's exhaustive research, there are
"no exceptions ever." Bubbles come and go, but, in time, they
all settle back in same place. As Grantham puts it: "We know one principal
truth at GMO and that is that we live in a mean-reverting world in investing.
(Our research) has shown....that all bubbles....eventually break (and our
definition of a bubble is a) 2 standard deviation event - the kind of moves
that occur about every 40 years." Grantham mentions four stock market
ones in particular that stand out - the US in 1929, US again in 1965 -
72, 1989 in Japan (in land and stocks) and the still ongoing greatest ever
US 2000 bubble yet to come back to its mean.
-
- Grantham is known in the trade as a value investor. That
means buying financial assets at less than their intrinsic value or what
famed investor/Columbia University professor Benjamin Graham (1894 - 1976)
called a "margin of safety." Warren Buffett today calls it "finding
an outstanding company (or any financial asset) at a sensible price"
as opposed to a bargain that may turn out bogus or a booby trap.
-
- Grantham correctly called the equity bubble in the late
1990s and believes the 2000 - 2003 bear market is secular, long-term, and
unlikely to end before 2010 despite a continuing four year cyclical bull
run reprieve from 2003 to the present. Only in the fullness of time will
he, and the rest of us, know if he's right.
-
- Earlier in the year, Grantham toured the world for six
weeks, returned worried, and wrote about it in his April Quarterly Letter
titled "It's Everywhere, In Everything: The First Truly Global Bubble."
It's "bubble time," he observed "from Indian antiquities
to modern Chinese art; from land in Panama to Mayfair; from forestry, infrastructure,
and the junkiest bonds to mundane blue chips." All the necessary conditions
are in place - "fundamental economic conditions" look excellent;
central bank supplied liquidity is plentiful and cheap; and there's so
much around, it's easy to leverage. Since around mid-July or so, the latter
condition no longer is true or perceived to be by investors turned cautious
and in some cases even panicky.
-
- Grantham explains human behavior causes bubbles when
positive market conditions unleash "animal spirits" to capitalize
on opportunities that get carried to extremes when there's enough cheap
credit around as fuel. Even in the best of times, that's a recipe for trouble
with success feeding on itself. It signals by leveraging up, the better
investors can do until the music stops as it always does, and the longer
and louder it's been playing, the severer the subsequent headache.
-
- No one knows for sure when big trouble's coming next
or how bad it'll be when it arrives. Up to early summer, it was smooth
sailing and easy profits, but Grantham says what he sees today is unprecedented:
"everyone, everywhere (in all asset classes) is reinforcing one another."
Across the world you hear it confirmed that "they don't make any more
land (and) with these growth rates and low interest rates, equity markets
must keep rising (and) private equity (plus merger mania, huge stock buy-backs
and plenty of central bank supplied fuel) will continue to drive the markets."
-
- It's become self-reinforcing and the results are "predictable
and consistent." The three major asset classes - real estate, stocks
and bonds - are "expensive compared with (their) replacement cost
where it can be calculated." Equally worrisome, risk premiums "reached
a historic low everywhere" until just weeks ago.
-
- Grantham's conclusion is these are all warning signs
spelling eventual trouble because as noted above "Every bubble has
always burst (with no exceptions, ever)." When the 2000 bubble deflation
resumes, "it will be across all countries and all assets, with the
probable exception of high grade bonds." In addition, risk premiums
will widen (and now are) forcing companies to pay higher financing costs
for borrowed funds that will depress investor confidence and reduce economic
activity.
-
- No one knows how deep or protracted a decline will be,
but Grantham stresses it's coming because the current global bubble is
unprecedented. "No similar global event (of this magnitude ever) occurred
before." Now that's pretty scary stuff to chew on because economic
troubles bite everyone and most of all those most vulnerable and least
able to weather the storm. That includes ordinary working people with little
or nothing invested.
-
- During the current bull run, Grantham was troubled as
early as January, 2004 when he advised clients that "The outlook for
2004 is not bad, but the (stock) market is very overpriced and all predictors
look bad for the next year and the year after." As things turned out,
he was wrong, or perhaps with future hindsight just way early in his judgment.
He was troubled again at year end 2005 when he told investors to "prepare
for a decline in the performance of equities and other risk assets in 2006."
Once more, his call was either early or wrong as the past 18 months saw
considerable strength until just recently.
-
- His January, 2007 Quarterly Letter assessed what happened
saying "Against all odds, Goldilocks tiptoed through the perils of
the first (2005) and second (2006) year of the Presidential Cycle....it
(2006) was the rarest of rare birds - a perfect year." As a result,
"risk taking also prospered" because of low global inflation,
no financial crises anywhere, low interest rates, and "very very"
available credit. As things turned out, "this was almost certainly
the best year in the entire history of finance for the selling of high
credit risks at low premiums."
-
- One extreme measure of it was the quadrupling of so-called
securitized Collateralized Debt Obligation (CDO) instruments (packages
of risky and other debt) to around $2.5 trillion facilitated by the so-called
"expanded 'carry trade' of borrowing in cheap (low interest) Japanese
and Swiss currencies."
-
- Downsides often accompany opportunities, and Grantham
explained conditions going into 2007 in breathtaking terms. "Goldilocks
global conditions, especially cheap and easy credit, have caused the broadest
overpricing of financial assets - equities, real estate, and fixed income
- ever recorded." However, he stressed, "Just because risk taking
is off the charts does not mean it can't keep going for another year"
or longer.
-
- The end of a Goldilocks economy was clearly on the minds
of people Grantham met on his world tour. Everywhere he travelled he was
asked "What is the catalyst for a (market) break" when none was
then visible or imminent? He answered citing these vulnerabilities: rising
inflation (that's greater than reported) constraining central bank support
for a weakening economy, pointing to the US as an example. This, in turn,
will slow economic activity and reduce profit margins that are still way
above global norms but will come down.
-
- Then there's the housing decline a Center for Economic
Policy Research (CEPR) report shows is the result of overbuilding and home
prices rocketing 70% in value since 1995 adjusted for inflation. It "created
$8 trillion in housing bubble wealth" and an unprecedented oversupply
of unsold homes and "vacant ownership units." CEPR believes the
coming housing bubble correction "is likely to throw the economy into
a recession and quite possibly a very severe (one)."
-
- It notes housing construction has to decline, and revaluing
$8 trillion in housing wealth excess will reduce consumption and bring
saving rates "back to more normal levels." Consumers need all
they can get because, at today's elevated prices, the average potential
home buyer can't afford one, and, as one analyst observed, lenders are
relearning how to say "no."
-
- Current economic conditions worry PIMCO's Bill Gross
as well. PIMCO is a 36 year old firm and "one of the largest specialty
fixed income managers in the world." Gross is one its founders and
serves as managing director and chief investment officer. In his July Investment
Outlook, he said people are "looking for contagion in all the wrong
places." The Bear Stearns and other hedge fund losses are "now
primarily history (and) can be papered over with 100 cents on the dollar
marks." The real problem lies in "those millions and millions
of homes....not going anywhere....except for their mortgages....going up,
up, and up....and so are delinquencies and defaults."
-
- He cites a recent Bank of America estimate that about
$500 billion of adjustable rate mortgages (ARMs) will be reset in 2007,
another $700 billion in 2008, and a large proportion of them are subprimes.
He noted 7% of these loans are now in default, and the "percentage
will grow and grow like a weed in your backyard tomato patch." This
will affect real money in the hundreds of billions of dollars of "toxic
waste" that will spill over into reduced consumption, less new home
construction, and even AAA-asset backed commercial paper "feel(ing)
the cooling Arctic winds of a liquidity constriction."
-
- In Gross' view, the sky isn't falling, and "there
is no hint yet of a true 'crisis' - these developments" may, in fact,
have a salutary effect with "easy credit becoming less easy (and)
excessive liquidity returning to more rational levels." Gross still
sees strong global growth ahead, but as a bond fund manager, he's paid
to worry.
-
- In his report, Grantham is worried, too, and notes the
housing decline affects prices, credit growth and consumption when subprime
and other loan rates are reset higher with a considerable amount coming
this year and even more ahead as just noted. In addition, and most significantly,
he says rising inflation and widening risk premiums lower "the feasible
leverage in private equity deals and place many deals that can be done
today (meaning last spring) out of reach, which, in turn, has dire effects
on the current stock market (and economy)."
-
- In his current July client Letter, Grantham conceded
"no areas of this unprecedented global bubble had yet gone hyperbolic
like the internet and tech stocks did in 1999 (until now):" The "candidate"
is "the growth rate of leveraged loans. At (a hugely speculative)
$545 billion for the first half of this year, it is running 60% up on last
year" that's about the same size gain dot.com and tech stocks made
year over year in 1999 with painful consequences not far behind for investors
owning them.
-
- Grantham's July commentary mentioned one other likely
market headwind after the 2008 election. It's the expected fallout from
"piling on" moves of "more wealth to the wealthy by shifting
more of the tax load to sales and income taxes of average taxpayers and
away from the capital gains and dividend taxes of the wealthy." It
means "ordinary working stiffs are not doing particularly well....and
are getting antsy" enough to worry politicians to raise taxes on the
most well-off.
-
- Grantham expects them to come in higher taxes on capital
gains, dividends and top-end ordinary income rates as well as redefining
what income is. That will mean more of it will be taxed to reduce the gross
disparity between what rich and ordinary folks now pay, and not a moment
too soon for those championing fairness, not special privilege. If this
happens, however, it "will not be good for the animal spirits of investors"
who represent the most important bubble-sustaining input.
-
- Grantham sums up his current thinking with what he calls
a "torture(d) analogy." He compares the global financial system
to a giant suspension bridge. "Thousands of bolts hold it together.
Today a few of them have fractures and one or two seem to have failed completely.
The bridge, however, with typical redundancy built in (unlike the Minnesota
one that collapsed), can (easily) take a few failed bolts, perhaps quite
a few....This global financial structure is far too large and has far too
many interlocking pieces for weakening US house prices and a few subprime
issues to bring it down."
-
- What is worrisome is whether or when we reach a "broad-based
level of financial metal fatigue" causing simultaneous multiple bolt
failures "with ultimately disastrous consequences." What's also
scary is the global financial structure is heavily "faith based, held
together by unprecedented amounts of animal spirits" moving in the
same positive direction. If the faith wanes, it's then "every man
for himself" and look out below.
-
- Also worrisome, but so far contained, is growing subprime
mortgage trouble. Until a month ago, equity markets were totally unaffected
and may bounce back from their current sell-off. Grantham isn't panicking
but shows concern about flat to declining home prices, a high inventory
of unsold homes likely moving higher, and mortgage "honeymoon rate"
reset increases up to 2.5 points coming soon for holders "already
stretched." We're told, he says, that even the subprime market is
"contained," but we have to wonder if "the container, in
this case, will turn out to be Pandora's."
-
- Then there's a slowing economy, inflation concerns, high
oil and other industrial commodity prices and now agricultural ones as
well "boosted by ethanol production" pressuring consumers. "So
two of the three great asset classes (now all three) are having the wobblies
in some of their components" - real estate and low grade debt (and
since mid-July equities and other type debt instruments as well), "especially
real-estate related but increasingly including corporate loans and private
equity funding...."
-
- Grantham may have written this commentary before the
the July-mid-August equity market sell-off. However, based on his prior
(and long-standing) comments, his current analysis probably still holds
true: "stocks (will likely) make it through this third (and traditionally
strongest) year of the Presidential (four year market) Cycle." The
third year in the Cycle "has never declined materially and should
be considered the bane of short sellers (and equity market naysayers) everywhere."
-
- In sum, Grantham says, "a few more bolts in the
bridge may fail, but in the end you have to bet the bridge will hold, supported
by amazing animal spirits." At least that's true up to October when
the fourth year of the Cycle begins. Then, the "odds of failure rise"
but won't likely become high until October, 2008 with a new administration
and Congress soon to take power. Grantham then gets blunt stating "based
on history" (and tax increases he expects), that's the most likely
time for a bear market, and he's betting on one that could be nasty.
-
- He concludes saying he's been trying to come up with
a simple way to explain "how serious the situation is for the overstretched,
overleveraged financial system." He does it this way: "In 5
years I expect....at least one major bank (broadly defined) to have failed
and up to half the hedge funds and a substantial percentage of the private
equity firms in existence today (to have) simply ceased to exist."
-
- He continues saying he's been too bearish at times in
the past 12 years but his language "has almost never been this dire."
His feeling is that today we're "watching a very slow motion train
wreck" beyond the point of stopping so watch out ahead. It's a good
idea to be cautious and prepare. If he's right and economic conditions
deteriorate enough, everyone will be affected through job and income losses
along with investors losing big from speculative and other investments.
All financial bubbles end. Sadly, even those not participating in them
get burned, especially those most vulnerable and least able to ride out
the storm that could be mean, nasty and long.
-
- Engineering the Coming Wreck
-
- Back in October, 2002, Grantham took aim at a financial
icon Wall Street and the financial press practically defied when he chaired
the Federal Reserve from August, 1987 to end of January, 2006. It didn't
matter to them (and still doesn't) that he engineered the largest ever
stock market bubble and bust in history through incompetence, timidity,
dereliction of duty or a combination of all three. In their eyes, Alan
Greenspan was above reproach. He could do no wrong, and here's why. His
policies made it possible for wealthy and powerful investors to cash in
big as long as the party lasted, and then get plenty of advance warning
when to exit.
-
- Most ordinary investors, on the other hand, were caught
flat-footed based on advice from market pundit fraudsters with Mr. Greenspan
most deceptive and influential of all. In January, 2000, just weeks short
of the market peak, he claimed "the American economy was experiencing
a once-in-a-century acceleration of innovation, which propelled forward
productivity, output, corporate profits and stock prices at a pace not
seen in generations, if ever."
-
- Grantham's reply to this outburst: "Phew!"
He might have also drawn an analogy to famed Yale University economics
professor Irving Fisher's comments just before the 1929 stock market crash.
He claimed economic fundamentals in the country were strong, the stock
market was undervalued, and an unending period of prosperity lay ahead.
It just took over a decade to arrive and plenty of pain to go around before
it did.
-
- Grantham spared Fisher, but bashed Greenspan saying:
"The internet (highlighted by the dot.com bubble), which had 'pushed
back the fog of uncertainty' for corporations, was his particular pet."
It's hard to believe now Greenspan actually said: "Lofty equity prices
have reduced the cost of capital. The result has been a veritable explosion
of spending on high-tech equipment....And I see nothing to suggest that
these opportunities will peter out anytime soon....Indeed many argue that
the pace of innovation will continue to quicken....to exploit the still
largely untapped potential for e-commerce, especially the business-to-business
arena."
-
- One week later, the Nasdaq peaked at 5048 and fell to
a low of 1114 on October 9, 2002 losing 78% of its value. The broadly based
S&P 500 stock index merely dropped from its March 24, 2000 high of
1527 to an October 9, 2002 bottom at 777 for a loss of 49%. Mr. Greenspan
was nowhere in sight but was busy reengineering phase two of the bubble
with a tsunami of easy money. His successor now continues the same policy
despite his high-sounding Fedspeak concerns for inflation and a stable
economy. Call it more Fedbaloney pointing to the obvious eventual consequences
ahead. The Fed-built credit bubble and other excesses are unwinding. Before
it's over, they'll be plenty of pain to go around and another culpable
Fed Chairman claiming no responsibility and being able to get away with
it.
-
- Grantham was clearly upset in October, 2002 and made
his views known to investors. His commentary was titled "Feet of Clay
- Alan Greenspan's Contribution to the Great American Equity Bubble."
He started out with a Fed Chairman's job description saying "In its
earlier years, the Fed's emphasis seems to have been on economic activity....By
the nineties, the heavy emphasis (shifted) to inflation control."
Both objectives are "critical to stability," because the Fed's
"underlying job" is to maintain "general economic stability,"
not fuel bubbles. "Nothing threatens (that stability) more than the
deflating of a major stock market bubble." It's the Fed's job to spot
and moderate them in time and be willing "to bear the (political)
consequences" for its actions. Alan Greenspan failed on all counts.
-
- "Did he see the (largest in US history) bubble coming,"
Grantham asked? He provided generous amounts of liquidity fueling it, and
when things began getting out of hand, all he did was suggest "irrational
exuberance" might have "unduly escalated asset values" in
a December, 1996 speech. He did nothing to curb it then or thereafter whereas
he could have raised interest rates, margin requirements and added a lot
more jawboning persuasion to cool an overheated market and restore stability.
-
- Grantham was clear and emphatic: "Had Greenspan
been prepared to use all the tools available and shown his determination,
it almost certainly would have worked" enough to prevent the market
plunge after March, 2000. Not only did he fail to act, but he then denied
all responsibility for what Grantham called "the Greenspan fiasco....he
has overtaken my efforts with his breathtakingly shameless and complete
denial of responsibility....he seems to have believed....this new era nonsense
(at its) March 2000 (peak more completely) than anyone else....the title
of 'most credulous' (and Fed Chairman) belong to the same man." By
his concocted "logic," he'd have "fail(ed) a Finance 101
final."
-
- Even worse, Greenspan "had the knowledge, experience,
and belief and failed to act." Yet, to this day he's gotten away with
it. He's still extolled in lofty terms, practically elevated to the ranks
of sainthood, and is now retired to new "green" pastures of lucrative
book deals and speaking engagements (at $100,000 fees) where his every
word is still taken as market gospel. In addition, Greenspan Associates
began operating in May with his lawyer, Robert Barnett, saying "virtually
every major investment-banking firm" in the world is eager to hire
him for his rainmaking connections. Better those than his advice best avoided.
-
- The Greenspan legacy got Grantham to conclude: "You
can indeed 'fool most of the people all of the time.' 'Most of the people'
this time probably included Her Majesty who (days earlier on September
26) knighted (Sir Alan) for his global services. My secret hope though
is that she justified it by having had a good short position for the last
3 years." Or "short" of that, been tipped off in time to
bail out at the top and let her subjects take the pain.
-
- Engineering the Coming Wreck - Part II
-
- Other than rampaging armies on the move, no institution
anywhere has more power than central banks. And no central bank has more
of it than the US Federal Reserve unless it's the secretive, unaccountable
Bank of International Settlements (BIS) founded in 1930 and based in Basle,
Switzerland. The BIS is central banker to its member banks (a sort of financial
boss of bosses) that includes the Federal Reserve.
-
- Some savvy financial experts believe the world's ruling
elites control this bank of banks and intend using it to establish a global
borderless financial world controlled by them. It's no hairbrained conclusion
with the European Union in place, talk of a similar one in Africa, and
a North American Security and Prosperity Partnership arrangement coming
to a head that will create a borderless continent headquartered in Washington
and likely will aim next to link with the EU for greater global control.
-
- So what's important about the Fed, and why should we
care? Despite common belief, the Federal Reserve is not a government agency.
It's a privately owned for profit cartel of powerful banks (including Wall
Street ones) protected by law, even though the Federal Reserve Act of 1913
violates the US Constitution. It's Article I, Section 8 states "The
Congress shall have Power To coin Money (and) regulate the Value thereof..."
In 1935, the Supreme Court ruled only Congress has this power and cannot
constitutionally delegate it to another group or body, and that includes
private for profit bankers running the Fed.
-
- Simply put, commercial banks in charge of printing and
controlling the nation's money supply constitutes criminal fraud. It's
the reason the Federal Reserve was designed to look like a government agency
when, in fact, it isn't. Being headquartered in Washington in the stately
mausoleum-looking Eccles building is just part of the clever subterfuge.
-
- But it's even worse than that. By establishing the Federal
Reserve, Congress and President Woodrow Wilson privatized the nation's
money creation system relinquishing the most important power governments
have that got famed banker Baron MA Rothschild once to say: "Give
me control over a nation's currency and I care not who makes its laws."
-
- Ever since US private bankers got it, they've been empowered
to print money in any amount, control its supply and price, and benefit
hugely by loaning it out for profit. That includes making government pay
interest on its own money it wouldn't have to do by printing its own. This
amounts to no less that government sanctioning the right to counterfeit
the national currency for private gain with the Fed and private bankers
being world class pirates masquerading as guardians of the public interest.
-
- It's no exaggeration to call this the all-time, greatest
ever financial scam, still ongoing, and totally beyond the reach of public
or any other type scrutiny. If there were any, it would be learned this
institution was created as a scheme to transfer wealth from ordinary people
to giant banks and Wall Street. It's worked like a charm, and few people
are the wiser.
-
- But there's more still to the story, and it keeps getting
uglier. Supposedly, the Federal Reserve was established to stabilize the
economy; smooth out the business cycle; maintain a steady, healthy rate
of sustainable growth; create price stability and control inflation; and
work for the betterment of everyone. So let's grade it on its performance.
-
- Since 1913, we had economic crashes in 1921, and the
major one in 1929 followed by The Great Depression lasting until the outbreak
of WW II. Post-war, we then had recessions in 1953, 1957, 1969, 1975, 1981,
1990, 2001, and we're likely heading for future major trouble resulting
from past Fed policy abuses under Alan Greenspan and his successor, Ben
Bernanke, carrying on in the same fashion. We also had a serious inflation
problem beginning in the 1960s that became crisis-level severe in the 1970s
and early 80s. In addition, in the wake of reckless financial market deregulation
in the 1980s and lack of government oversight (with the Fed's blessing),
we had a major financial crisis causing more bank failures than ever before
or since in our history.
-
- Further still, under the Fed, we've had -
-
- -- soaring consumer debt; -- record high federal budget
and current account deficits;
-
- -- an off-the-charts national debt, far higher than the
fictitious reported number;
-
- -- a high and rising level of personal bankruptcies and
mortgage loan delinquencies and defaults;
-
- -- an enormous government debt service obligation we're
taxed to pay for;
-
- -- the systematic loss of manufacturing and other high-paying
jobs to low-wage countries;
-
- -- a secular declining economy, 84% service-based, and
mostly comprised of low-wage, low or no-benefit, non-unionized jobs;
-
- -- an unprecedented wealth gap disparity; -- growing
rates of poverty in the richest country in the world;
-
- -- a decline of essential social services; and -- a lawless
nation devoted to militarism and imperial conquest with the Federal Reserve
complicit in supplying all the funds needed to fuel it, and all the while
caring not for the public interest it's supposed to serve.
-
- This type record adds up to a clear conclusion. Above
all else, the Federal Reserve failed to accomplish what it's supposed to
do revealing instead what's really going on. The Fed doesn't serve the
public interest. It abuses it because that's how bankers and all corporate
predators make money. In the world of finance, ordinary people lose out
because giant banks and Wall Street are allowed to pull off the grandest
of grand thefts, their thievery continues unabated, and the stakes keep
rising.
-
- Some astute financial observers now believe current excesses
and resulting turmoil were caused by the intentional engineering of the
US housing bubble with the Fed in on the scheme. Insiders made loads of
easy money in the process and now stand to cash in big buying troubled
assets for a fraction of their value the way they always do in the wake
of market meltdowns. It's called "vulture" investing with shrewd
buyers profiting hugely in good and bad times that are all good for them.
-
- One analyst calls the subprime mortgage turbulence a
global bank run with potential huge yet to emerge consequences. Writer
Danny Schechter has another view in his article titled: "Subprime
Or Subcrime? Time to Investigate and Prosecute," and he makes a strong
case. He calls the subprime credit squeeze a "sub-crime ponzi scheme
(causing) millions of people (to lose) their homes because of criminal
and fraudulent tactics used by financial institutions (posing) as respectable
players in a highly rigged casino-like market system." There's nothing
free and open about it.
-
- The problem is deep, structural and aided by stripped
away regulatory protections giving predatory lenders and Wall Street schemers
free reign to target unsuspecting victims. Part of Schechter's fix is calling
for a "jailout," not a "bailout," but with friends
in high places, don't bet on it beyond a small fry or two. It's sad and
disturbing because this type behavior is part of the American "ethic"
to scheme, defraud and prey on the innocent knowing big players nearly
always get away with it, and under George Bush, it's practically guaranteed.
-
- With a clear field ahead and friends in high places,
the "Masters of the Universe" are now heading for their perfect
kind of buying opportunity if Jeremy Grantham and other worriers are right.
Manipulation aside, Grantham's persuasive evidence suggests we're watching
an unstoppable "very slow motion train wreck" likely to be pretty
ugly on "impact." By his reckoning, it's probably too late to
undue the enormous damage done no one will escape from. His advice is that
to be forewarned is forearmed to prepare as best as possible although for
most people it's practically impossible.
-
- It's a good time to think of the ancient Chinese proverb,
that's, in fact, a curse and not of Chinese origin, but it sounds good
saying it is: "May you live in interesting times." Whoever coined
the phrase intended it to be ironic and "interesting" meant dangerous,
turbulent or uncertain. That, indeed, is true now but to what degree we'll
only know in the fullness of time.
-
- Stephen Lendman lives in Chicago and can be reached at
lendmanstephen@sbcglobal.net.
-
- Also visit his blog site at sjlendman.blogspot.com and
listen to The Steve Lendman News and Information Hour on TheMicroEffect.com
Saturdays at noon US central time and now archived for easy listening.
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