This is the best time to invest since probably the early 1980s.
~ Bill Miller, as appeared on CNBC, October 20, 2010
Oct 17, 2010
Sheldon Richman on the charade of left-right politics
The political establishment, helped by the mass media and intelligentsia, has long played a game in this country. It consists in depicting the competition for power as between two blocs: one hostile to business in the name of social justice, the other friendly to business in the name of “the free market.” Each bloc’s talking points and pet projects are calculated in superficial ways to reinforce its signature theme. Whenever the blocs need to rally their respective bases, they accentuate their surface differences. The “anti-business” bloc accuses its opponents of being, say, Wall Street lackeys, while the “pro-free-enterprise” bloc accuses its opponents of being, say, socialists.
It’s all a sham that serves both side’s interests. The rivals actually want two variations of the same thing: the corporate state, a system of economic privilege that transfers wealth via government from market entrepreneurs, workers, and consumers to well-connected business interests.
~ Sheldon Richman, "The Charade," The Freeman, October 15, 2010
Janet Tavakoli on how Bill Gross's Pimco Total Return Fund benefitted from Fed intervention in 2008
On July 15, 2008, ex - Goldman Sachs banker and then Treasury Secretary Henry ( “ Hank ” ) Paulson asked Congress for the authority to buy stakes in Fannie Mae and Freddie Mac. Paulson asserted: “ If you have a bazooka in your pocket, and people know you have a bazooka, you may never have to take it out. ” In my experience, boasting about a big bazooka just tempts the curious to see how you measure up in exciting circumstances, and the person to do that might be named Mr. Gross. Bill Gross manages the Pimco Total Return Fund, the world’s largest bond fund with large exposures to Fannie Mae and Freddie Mac (and AIG along with a number of investment banks as of September 2008). Gross is a fan of Fed intervention, and his investments reflected it. His fund reportedly gained $1.7 billion after the U.S. government took over Fannie Mae and Freddie Mac on Sept 7, 2008.
[...]
Bill Gross’s Pimco Total Return Fund had sold $760 million of default guarantees (as credit default swaps) on AIG, and it would have cost him if AIG went under. 22 Mr. Gross might have thought he had a good idea of how the Fed would behave. Pimco had hired Alan Greenspan as a consultant. I was not surprised when Bill Gross said the Fed intervention was a “ necessary step. ”
[...]
Pimco ’ s Bill Gross found there is a limit to the Fed’s largesse, and his Lehman investment lost money. In March, Bear Stearns, the fifth largest investment bank, was deemed too big to fail, but the Fed refused to help Lehman, the fourth largest investment bank. As Jim Rogers predicted, larger investment banks than Bear Stearns had problems, and the Fed had other problems besides investment banks — Fannie, Freddie, and AIG. Pimco’s investments were only partially protected by the Fed. The Total Return Fund’s return slumped, and it will be interesting to see if Gross ends up a net winner or a net loser as the market struggles for balance.
~ Janet M. Tavakoli, Dear Mr. Buffett: What An Investor Learns 1,269 Miles From Wall Street, Chapter 10
[...]
Bill Gross’s Pimco Total Return Fund had sold $760 million of default guarantees (as credit default swaps) on AIG, and it would have cost him if AIG went under. 22 Mr. Gross might have thought he had a good idea of how the Fed would behave. Pimco had hired Alan Greenspan as a consultant. I was not surprised when Bill Gross said the Fed intervention was a “ necessary step. ”
[...]
Pimco ’ s Bill Gross found there is a limit to the Fed’s largesse, and his Lehman investment lost money. In March, Bear Stearns, the fifth largest investment bank, was deemed too big to fail, but the Fed refused to help Lehman, the fourth largest investment bank. As Jim Rogers predicted, larger investment banks than Bear Stearns had problems, and the Fed had other problems besides investment banks — Fannie, Freddie, and AIG. Pimco’s investments were only partially protected by the Fed. The Total Return Fund’s return slumped, and it will be interesting to see if Gross ends up a net winner or a net loser as the market struggles for balance.
~ Janet M. Tavakoli, Dear Mr. Buffett: What An Investor Learns 1,269 Miles From Wall Street, Chapter 10
Oct 6, 2010
Warren Buffett on financial bailouts and moral hazard
The common shareholders did not get bailed out of those institutions, they lost hundreds and hundreds and hundreds of billions. There is no moral hazard in terms of big financial company stockholders.
~ Warren Buffett, "Buffett Compares Wall Street to Church With Raffle," Bloomberg.com, October 5, 2010
~ Warren Buffett, "Buffett Compares Wall Street to Church With Raffle," Bloomberg.com, October 5, 2010
Oct 4, 2010
Christopher Manion on the foreign policy split in the Republican Party
Foreign policy is the San Andreas Fault of the GOP, because there is huge money in war, and the bloody trough is bipartisan.
~ Christopher Manion, "A Specter is Haunting the Pentagon," LewRockwell.com Blog, October 4, 2010
~ Christopher Manion, "A Specter is Haunting the Pentagon," LewRockwell.com Blog, October 4, 2010
Oct 1, 2010
Doug Casey on the difference between Democrats and Republicans
Doug: As you know, I've always distinguished them this way: the Democrats definitely don't believe in economic freedom, but they say they believe in social freedom, while the Republicans definitely don't believe in social freedom, but they say they believe in economic freedom. Neither believes in both – that would make them libertarians.
Q: [Chuckles] So, it's what they lie about that really distinguishes them. Or, more to the point, it's not what they believe, or say they believe, that drives them, but what they don't believe. Not what they value, but what they fear. It's not love but hate that is the guiding principle of American politics.
Doug: Exactly. Like most of what we see in politics, it's completely perverse. The only good thing about the Democratic party is that they're at least consistent: they are collectivists and statists through and through. They are collectivists in what they say, and they are collectivists in what they do. That gives them the appearance of being more honest than the Republicans.
Q: They may be crypto-communists draped in red, white, and blue, but at least they're consistent?
Doug: Yes, but not the Republicans. They say they value freedom and the individual, but their actions lie to those claims, and they give freedom a bad name. It makes you reluctant to use words like "free market," when you have the likes of the hostile and mildly demented McCain, and the bent and clinically stupid Bush claiming those principles for what they do.
Q: Makes me mad. It adds insult to injury that Ronald Reagan got elected on essentially libertarian rhetoric – smaller government, lower taxes, getting the state off the little guy's back, etc., and then signed appropriations bills that saw government grow by huge, then-unprecedented amounts. Many people today think the Reagan years prove that less government is a bad idea!
Doug: Remember what the Reagan team used to say, "If not us, who? And if not now, when?" As it turned out, it wasn't them and it wasn't then. The worst enemies of individual liberty are knaves that claim they're for it but utterly betray it. And incompetents and ineffectual fools who say they're trying to save freedom by increasing the size of the state.
~ Doug Casey, Doug Casey on the Tea Party Movement, Interviewed by Louis James, Editor, International Speculator, LewRockwell.com, October 1, 2010
Q: [Chuckles] So, it's what they lie about that really distinguishes them. Or, more to the point, it's not what they believe, or say they believe, that drives them, but what they don't believe. Not what they value, but what they fear. It's not love but hate that is the guiding principle of American politics.
Doug: Exactly. Like most of what we see in politics, it's completely perverse. The only good thing about the Democratic party is that they're at least consistent: they are collectivists and statists through and through. They are collectivists in what they say, and they are collectivists in what they do. That gives them the appearance of being more honest than the Republicans.
Q: They may be crypto-communists draped in red, white, and blue, but at least they're consistent?
Doug: Yes, but not the Republicans. They say they value freedom and the individual, but their actions lie to those claims, and they give freedom a bad name. It makes you reluctant to use words like "free market," when you have the likes of the hostile and mildly demented McCain, and the bent and clinically stupid Bush claiming those principles for what they do.
Q: Makes me mad. It adds insult to injury that Ronald Reagan got elected on essentially libertarian rhetoric – smaller government, lower taxes, getting the state off the little guy's back, etc., and then signed appropriations bills that saw government grow by huge, then-unprecedented amounts. Many people today think the Reagan years prove that less government is a bad idea!
Doug: Remember what the Reagan team used to say, "If not us, who? And if not now, when?" As it turned out, it wasn't them and it wasn't then. The worst enemies of individual liberty are knaves that claim they're for it but utterly betray it. And incompetents and ineffectual fools who say they're trying to save freedom by increasing the size of the state.
~ Doug Casey, Doug Casey on the Tea Party Movement, Interviewed by Louis James, Editor, International Speculator, LewRockwell.com, October 1, 2010
Jim Cramer: "Bear Stearns is not in trouble" (2008)
Dear Jim: Should I be worried about Bear Stearns in terms of liquidity and get my money out of there? --Peter
Cramer says: “No! No! No! Bear Stearns is not in trouble. If anything, they’re more likely to be taken over. Don’t move your money from Bear.”
~ Jim Cramer, CNBC's Mad Money, March 11, 2008
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