-- Posted Wednesday, 10 September 2008 | Digg This Article
| Source: GoldSeek.com
I used to enjoy reading the essays of Bill Gross and Paul McCulley of PIMCO, but recently as the Credit Crisis has unfolded they are turning out to be nothing more than coarse propaganda to promote the self interests of PIMCO.
It seems that Bill Gross has now found Communism as he wants the Government to intervene aggressively to buy assets to avoid what he calls “Financial Armageddon”. Take this argument to its ultimate conclusion Comrade Gross and you have the Soviet Union whereby the state owns everything. With the Fannie Mae and Freddie Mac fiasco the state already owns more than 50% of the total housing stock of America. How much further do you want to travel down this road?
Nobody forced Wall Street to make the decisions, write the contracts and take the risks they did, they were all taken on in the name of profit. Unfortunately if you make the wrong decisions within a free market, profit has a twin sister she is called loss.
So Comrade Gross why should our children now pay for the mistakes that Wall Street have made? Put simply THEY GOT IT WRONG. So why are the taxpayers now involved? And why are the banks, not taking personal responsibility like very citizen is expected to do, for their own financial mess?
Surely profit has been retained and has been prudently put aside to cover the eventualities of an inevitable downturn? that is simply basic risk management and accountancy? Or the Profits have not all been paid out in outrageous salaries and bonuses? WRONG nothing has been put aside and outrageous salaries and bonuses have taken the lions share of previous profits, the cupboards of the banks are bare. Which brings us to the question why should, and would anybody trust the bankers with there hard earned cash, and what right do these bankers have to give financial advice when they cannot even run their own financial affairs.
The clear message now sent to the CEO of any really large bank is do whatever you want to do, you will never be held to account, you will never be prosecuted, and you will always be bailed out at taxpayers expense = MORAL HAZARD.
What I will concede is that during this last boom large bank CEOs were in a somewhat crazy position lend recklessly and watch the share price rise as short term profits are booked, OR lend carefully and get replaced as the share price languishes. When the boom goes pop, they are replaced anyway, mind you the large contractual pay offs helped to soften the blow!. The mess is then passed over lock, stock and barrel to the taxpayers.
Many respected analysts and economists outside of Wall Street were very loudly sounding the warning bells over many years, people like Jim Puplava, Bill Bonner, Jim Willie, Peter Schiff, Gary Dorsch and many others including myself. Despite presenting a mass of evidence pointing to an impending bust, we were ignored because we stood in front of the profits train being enjoyed at the time by the Government, Federal Reserve and Wall Street. Policy at this time was very simple, we will worry about the bust maybe sometime next week! The party has now well and truly ended. Apart from dumping the problem on the taxpayers they have no solution or policy, NOTHING, apart from taxpayer bailouts.
Paul McCulley has recently been to the Feds Jackson Hole Symposium and talks openly about the “inflation nutters”
“Really, that is essentially their entire story. The only good thing about their story is that it is so easy to refute using standard macroeconomic and finance theory. But unfortunately, not even that seems to get them to shut up”.
Is that the same Macroeconomic and Finance theory that has failed so miserably over the last 20 years Mr McCulley? For example In 1987 we had BUBBLE 1 the Stock Market Crash the largest one day fall in history, that was followed up with BUBBLE 2 the early 90,s housing bubble that led directly to the Savings and Loans Fiasco. The sequel of which was BUBBLE 3 the Tech boom of the late 90,s that led to the NASDAQ collapse, that directly spawned BUBBLE 4 our present crisis the credit crisis and housing implosion.
Do you see a trend developing here, Mr McCulley?, If you could go LONG a derivative contract called Federal Reserve Policy Incompetence over the last 20 years you would have made a fortune. Wall Street in no way can be trusted to regulate itself and the Federal Reserve whose Symposium you recently attended is yet another failed organization probably because it is neither Federal or a Reserve it is a private bank set up only to look after the interests of its members. Do you remember when Greenspan aggressively dropped interest rates after the Technology bubble imploded? Probably using textbook macroeconomic and finance theory, all he did was give birth to the housing bubble.
At the height of the Housing Bubble the 4th in twenty years, yet again created as a matter of policy by the Federal Reserve do you remember Alan Greenspan becoming a salesman for the mortgage finance industry as he extolled the virtues of Adjustable Rate Mortgages to anybody who would listen? What a lovely little investment that turned out to be, was that also classical macroeconomic and finance theory in action?
The Federal Reserve has been an absolute and total failure over the last 20 years, they should hang their heads in shame. However when all is said and done, they have probably been a real success story for their owners. The large international bankers, and that is all that really matters to them. These same Bankers seem to be a constant source of pain and misery throughout history.
"You are a den of vipers and thieves. I intend to rout you out, and by the grace of the Eternal God, I will rout you out”
“The bold effort the present central bank has made to control the government ... are but premonitions of the fate that await the American people should they be deluded into a perpetuation of this institution or the establishment of another like it” Andrew Jackson
They have created four very damaging, and very large speculative bubbles within a 20 year period, that have wreaked havoc on real businesses and real people but provided good speculative conditions for those in the know. To get it wrong once is to be human, but twice is a crime, what would they say about four times?
The Federal Reserve can provide no solutions BECAUSE THEY ARE THE PROBLEM.
How much damage do these clowns have to cause to the real economy and to real peoples lives before they eventually get it right or are forcibly kicked out? And why should we suddenly start trusting them now?
On main street, you know here in the real world and not planet Wall Street. We have a train wreck of truly epic proportions brought about directly because of the “policy” of the Federal Reserve probably using “Standard macroeconomic and finance theory” and enacted by its member banks, most of who are now surviving from day to day on state handouts. They have no credibility left, they have failed. To put it very mildly the average man in the street is fed up of Washington, The Federal Reserve and Wall Street. They are perceived as nothing more than self interested liars.
Us “inflation nutters” broadly believe a person working hard in the real economy has a right to protect their savings from the ravages of inflation created solely by excess production of the Federal Reserve Note, Alan Greenspan got it once.
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value”
“This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard”.
I am not advocating a Gold Standard although we need some standard and not the flawed and self interested judgment of international bankers or bond managers!, what I am saying is that the Dollar is a medium of exchange, but it is not a store of value.
We at the very least require a store of value. The best store of value known to man, the only store of value that has withstood the test of time is Gold and Silver. They were storing value long before the Federal Reserve, PIMCO and “standard macroeconomic and Finance theory” were figments of somebody’s imagination.
Stocks are not a good store of value ask anyone who owns Fannie or Freddie stock.Your Bonds are also a poor store of value, Mr Gross and Mr McCulley they pay a rate of return that is below the real rate of inflation, anybody who buys the products you manage is LOSING MONEY or more correctly purchasing power.
So us “inflation Nutters” get a bit “pissed off” to use an expression that the Chancellor of Britain’s Exchequer Alistair Darling recently used, when we see the constant dirty tricks against Gold and Silver perpetrated by the Government, The Federal Reserve and Wall Street to try and make the Federal Reserve Note look attractive. It is a pig and they are trying to dress the pig with lipstick.
For example at the moment the price of Silver has fallen dramatically BUT physical silver is simply not available, how can this be? PURE MANIPULATION THAT’S HOW. We all know that the Federal Reserve Note is no alternative to Gold and Silver, as it constantly loses value.
A great start in changing policy, so that yet another financial fiasco is avoided as we have already had 4 fiascos in only 20 years, I for one am getting fed up of it, would be a simple policy of honesty.
1 STOP THE GOVERNMENT, FEDERAL RESERVE and WALL STREETS POLICY OF BLATANT LYING.
2 Honest Government statistics in particular inflation.
3 A comprehensive review of the whole Federal Reserve and Banking System.
4 Full and open Audit of the Gold Reserves.
5 Full and open audit of the Governments accounts and future liabilities.
Finally a return to genuine free market principles and an understanding that Government never has any solutions. Therefore what is needed is a return to small and accountable Government. Truly a Government of the people, and for the people.
This present system is nothing more than crony capitalism or socialism for the rich, privatize the profits and socialize the losses. Totalitarian systems such as Communism/Fascism never were, and never will be a solution. They are evil and perverted systems. They are all about BIG GOVERNMENT AND BIG CONTROLS OF EVERY ASPECT OF HUMAN LIFE, getting to sound familiar? it is everything that America historically stood against.
“A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor and bread it has earned -- this is the sum of good government”
Thomas Jefferson
-- Posted Wednesday, 10 September 2008 | Digg This Article | Source: GoldSeek.com
