Archive for February, 2013
The middle class in America is caught in a vise, and they need a way out.
There is a way, of that I am sure.
But, like almost everything else in life, it’s not about anybody keeping you down.
It’s about you being honest with yourself that it’s up to you. It’s about understanding that all those “other people” keeping you down don’t give a damn about you. They don’t even know you. They do what they do for themselves and if they can use you… oh, they will.
I’m talking about the bankers and brokers who too many of the middle class rely on.
They’re in it for themselves. Their job is making money for themselves.
If they make money for you it’s good for them because they keep you in tow. If they don’t make money for you, do you think they really care? No. They don’t. There’s always another sucker – I mean customer – to be had… I mean helped.
How do you help yourself up and out of the middle class if, according to the Bloomberg article I referenced last week, some 67% of your (the middle class) wealth is tied up in your home and 401(k) or other retirement “assets?” How do you “diversify” if you don’t have money lying around and aren’t sitting there thinking, “Gee, now what am I going to do with all this cash?”
It’s a lot easier that you ever imagined, really.
Let me make this as simple as I possibly can.
From Venetian goldsmiths issuing paper receipts, to America’s first and second central banks – the Bank of North America in 1781, and the First Bank of the United States in 1791 – we arrive at the year 1836.
Chapter Two, on the beginnings of central banking, ended with: “The Second Bank (of the United States, chartered in 1817) was bitterly opposed by President Andrew Jackson, who made the existence of the Bank, and its power over the people, a central issue in his campaign… Jackson won, and in 1836 the Second Bank of the United States’ charter expired, along with another central banking experiment.”
So, why did Andrew Jackson, after a successful first term as President of the United States, bet a second term on breaking up the huge, monumentally successful bank?
This is a chicken and egg kind of discussion about what caused the housing crash.
It’s not that there’s a right answer (but I am right) or a wrong answer, it’s about looking at what happened to determine whether it’s going to happen again. It is.
I’m always right.
Really, it’s about America’s middle class mostly, and the vise they’re caught in.
Notice, the title here poses that as a question. Are they caught in a vise?
I say, “Yes!”
But, I’ll get to that.
First, it’s back to the chicken… or the egg.
You got that “White,” as in Mary Jo White. She’s President Obama’s nominee to head up the Securities and Exchange Commission. You remember the SEC, don’t you? It’s the same SEC that works for every crook on Wall Street. They go in, they get slapped on the wrist, pay a fine, pass the fine along to the shareholders and then head right back down to the Street to keep on stealing.
Personally, I like Mary Jo.
I lived in New York City when Mary Jo was the U.S. Attorney for the Southern District of New York. During her tenure, from 1993 to 2002, M.J. chased down the mafia and terrorists. She did a good job corralling the likes of John Gotti and World Trade Center bombing masterminds – including Ramzi Yousef.
As far as her going after Wall Street crooks, let’s see…
On February 6, Getco Holding Company LLC announced that, “the Premerger Notification Office of the Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino (HSR) Act for the pending merger. Accordingly, the HSR Act condition to the closing of the transaction has been satisfied.”
In plain English, that means that the FTC says there’s no problem with Getco, the privately held, Chicago-based high frequency trading 800-pound gorilla, buying publicly traded Knight Capital Group Inc. Knight is another 800-pound gorilla in the high frequency trading arena. It blew itself up back on August 1, 2012 and had to be rescued.
Maybe it’s fine that the FTC approved this “transaction.” But the Securities and Exchange Commission (remember them?), kinda, sorta the regulatory body who should oversee this transaction, is looking for white swans in an otherwise dark pool.
Maybe it doesn’t matter to you that Knight lost $460 million on that fateful August morning, in only 100 stocks and in about the same amount of time it takes for a fish to travel from a swan’s beak down its long neck and down to its gut.
What happened next?
If there’s one single, indispensible key to successful investing, it’s to go with the flow.
That’s my distillation of well-worn market mantras that you’re probably familiar with.
The trend is your friend.
Don’t fight the tape.
Trade the market you are given, not the one you want.
And don’t fight the Fed.
Go with the flow.
You can do all the homework and analysis you want – and be right – and yet still lose money. That happens when you own stocks you love, but the market isn’t loving any stocks. It can happen when you try to pick bottoms, and you get in before the market heads a lot lower.
And while you won’t lose any money by not being in the market, you’re not going to make any money in it either.
That brings us to today. We’ve had a furious up-move in the market since March 2009. We’re scratching at new all-time highs, and global markets are dancing to the same tune.
But the world hasn’t changed since last May – or the May before, when markets swooned on fears about Europe, America’s fiscal fiasco, a slowing China, or any of the other dark clouds that, at any time, can rain on the markets.
So, are we going higher?
Chapter One, on how money came into being, ended with, “Governments made legal tender laws to make it illegal not to use their paper money – backed by nothing but promises.”
There’s a partial truth in that sentence. Can you spot it?
Don’t worry if you can’t. You’re not supposed to. It’s part of an orchestrated deception.
It’s the part about “their paper money.” The truth is that governments, and by extension, the countries they govern, don’t issue their own money.
The twist is, while government agencies print their currency’s bills and stamp their coins, it’s not always “their” money.
Countries throughout the free world don’t actually own their money.
Guess who does?