by Larry Levin
Sometimes it helps to illustrate the absurdity of a subject by being as jaded, or absurd, as possible. This way, one may be able to see the end game, or at least part of it.
Before we get there, lets take a look at one man's reason for how the markets reached this point. It's not conjecture; it is a fact of life in Washington DC , which is much to blame for the start of this mess as the Federal Reserve.
This was recently written in the Washington Post by Eric Hovde. It is certainly at least one reason why Congress unquestioningly leapt upon its sword in order to bail out Wall Street:
The Wall Street investment banking firms, their executives, their families and their political action committees contribute more to U.S. Senate and House campaigns than any other industry in America . By sprinkling some of its massive gains into the pockets of our elected officials, Wall Street bought itself protection from any tough government enforcement.
This is no doubt the same reason why so many members of Congress were consistently blocking attempts to reform and downsize Fannie Mae and Freddie Mac, which are essentially giant, undercapitalized hedge funds. These two entities have been huge money machines for Democrats in both the House and the Senate, many of whom recently had the gall to ask why these companies hadn't been reformed in the past. Nor should several Republican congressmen and Senators who likewise contributed to watering down legislation aimed at reforming these institutions be let off the hook.
Money and power folks, that moves Washington DC . What about your votes you're wondering? Not so much. After all, the White House and all of Congress have most of the media in their pockets. With a slick campaign of why they bailed out Wall Street and not the mortgage holders themselves, (this is about home foreclosures, isn't it?) the average slack-jawed yokel with a voting card will go along with the propaganda and vote the scoundrels right back into office.
Do individual teachers have much influence in DC? Nope. Does the teachers union? You betcha! Every new administration dramatically increases funding for education, yet test scores are flat, and probably declining in some areas. They are an embarrassment. Apparently funding isn't the whole problem. Since the teachers union is so powerful in DC, what with all those union dues being sprinkled into the pockets of the elected officials, the massive bureaucracy stays intact and nothing changes.
Since the increased funding hasn't resulted in any ROI (test scores haven't improved), the absurd suggestions of the last few years has been to change the test. Nobody is being held accountable. Root causes are rarely discussed. School choice is not allowed. So the government, local and federal alike, look for the easy way out: dumb-down the test to achieve the level of the MTV-rotted-out-skulls.
What is happening in DC today is equally absurd. On the hill today were both Mikhail Paulson and Vladimir Bernanke. The Federal Reserve can easily be blamed for today's financial crisis, brought to you by EZ-Al Greenspan. Although Bernanke is taking the heat for EZ-Al, they are cut from the same cloth. And the Treasury Secretary, Hank Paulson himself, can also be safely blamed for today's predicament. Paulson was the CEO of Goldman Sachs, the investment bank that all other banks emulated, when the derivative nonsense was born and then ratcheted up to insane levels. The posers were copying Hank himself! Thanks Hank - you're great ideas are costing us dearly.
And then we have Congress itself holding court over the whole absurd mess, which is like asking the cat who ate the canary.
I'll assume we can agree to blame the trio just mentioned; but isn't there a larger reason? This country, public and private alike, has been living on CREDIT for far too long. Nobody saves anymore - it's all about instant gratification. And now that credit is tight and getting tighter, very few people will qualify for loans to keep the house of cards standing much longer. The average American won't be able to buy something he doesn't need with money he doesn't have. And Congress won't stand for that.
So I'm guessing that the absurd answer to this by Congress will be (as usual) to ignore the root causes, especially its own role, and go for the quick fix. Few if any will be held accountable. Like forcing tests to be dumbed-down so Sally the cheerleader doesn't develop a deserved idiot-complex, Congress will force rating agencies to change their FICO score tallies. For example, Congress will decree that a FICO score of 500 is now the new 700 and so on.
Voila - everything is solved. Borrow, borrow, borrow, spend, spend, spend. And that folks is illustrating absurdity by being absurd!
Real Time Trading Signals*for
Trade Date: 9/23/08
E-Mini S&P Trades*
(before fees and commissions):
1) B/away sell @ 8:30am at 1210.50 = +2.50 (1 lot)
2) Engf buy @ 2:05pm at 1207.25 = +5.25 (1 lot)
3) Algorithm positions (5)...combined total...+4.25
ZB (30 Year Bond) Trades*
(before fees and commissions):
1) No ZB trades today...combined total...0
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