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December 15, 2011


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Merry Christmas and Happy holidays!

I hope all of Bill's readers have a happy holiday season. Perhaps our political reps will come together and do some good things for the country before the New Year. The best thing they could do for us is start making some decisions, compromises and move on. This political gridlock is killing manager and consumer confidence. If it continues until elections then we are going to be in for a very tough 2012.

Look forward to more exchanges of ideas in the future. Be happy!

Who can print money faster: the Chinese, the FED or the ECB? Today the ECB loaned out $750B at 1% for EU Banks to use to buy Spanish and Italian bonds. The interest rates dropped from 5% to 2% in a single day. Does it make any sense to borrow money to buy debt that is already very risky? How does this shore up the EU banks or reduce the debt of Italy and Spain long term? I knew there was a reason Geihtner was touring Europe. He was explaining the US approach to debt survival. Deflate your currency.

Surrender in Progress?

Is it possible that Biden's latest seemingly crazy comment that the Taliban are not our enemy is a precursor to our pullout of Afghanistan? And, the reason for the rumors of a deal with the Taliban for the release of our prisoners at Guantanamo (to them )in return for a peace deal? Seems idiotic does it not. Like a fantasy plan. But, if you think about a President desperate to energize his base what would make them happier than pulling the troups out of Afghanistan, declaring a peace deal with the Taliban and closing Guantanamo all in the 4th year of the Presidency? At the same time Hillary is reaching out to the North Koreans. Iran, Syria--not sure what might be in the works there. But, Obama and Biden are definitely on the ropes politically and both favor a Drones/Special Forces strategy over ground wars. So perhaps we will surrender to the Taliban and leave the women of Afghanistan to fend for themselves. Interesting cvomment by the VP and backed up by the Press Secretary.

Who's teaching who?

Kick the can used to be a fun game when I was a kid. Now EU and American politicians are playing it with the future:

First, the President and Democrats left the Dr's fix out of the Healthcare Bill, the President kicked the Keystone decision down the road, the Super Committee kicked the budget cutting down the road and last week the Senate kicked the payroll tax cut down the road for two months so the President can go on vacation and the Senators can go home. My Dr has stopped seeing Medicare patients. Now Boehner has said the can kicking stops here. Will he get his way? Perhaps. The President needs a break--too cold for good golf in DC right now. Politicians want to get on the plane early this week. EU politicians kick the can every time decision day comes around. Austerity? No where to be seen. Every time we vote on spending money we fight over the cuts to cover it. That sounds good but it is just reallocation of spending no cuts and the reallocation kicks the cuts down the road making todays deficit even worse.


Good point HarryCat: any connection between the $500,000 that Corzine raised for Obama, the appointment of a Corzine protoge to head the CFTC, and the commission's decision to allow commodity brokers like MF Global to use client funds is probably a coincidence.

This is not a left/right issue. The issue is the lack of oversight in the financial markets. Unbelieveably huge amounts of money can be made in ways that do not benefit the economy. Nothing is being created. No value is created. But, once again, individuals have managed to lose someone else's money.

This does NOT demonstrate anything about the Obama administration. It shows the the powerful of all stripes need to have rules that apply to all. Regulations are necessary and need to be followed. Corzine needs to bunk in with Madoff.

'RIGHT,CENTER,OR LEFT'; INDIFFERENCE certainly is no OPTION. The "connection of Wall St and the political System" is now obvious enough to be seen from any socio/political corner.
Thanks for clearing up that CFTC Reg. 1.25 Corzine was 'lobbying' on. Collateralizing the customer cash accounts is really beyond the 'pale'. 1.25 can hardly be legal. This is really a 'DO OVER' on a smaller scale. Our major catastrophe of '08 had its origins at CFTC when Clinton , Rubin, Sommers, and Greenspan discounted the warnings of Brooksly Born and had her 'Fired'. A story all to itself.
I don't belive the White House 'Bailouts' or DOJ 'squashing' will put this away. There are probably more than a few 'high powered' customers who will prevent that.
At minimum, I believe this could aid in 'pulling' the Country back together.

Corzine never shed his bond trader mentality. Even when he was head of Goldman, he ran a special US Government bond trading account for the firm that routinely made tons of money. He was, according to everyone I know who knew him, a ruthless and unbelieveably good bond trader and that was his second true love (his first love being MONEY). He loved being the boss but I think he failed to grasp the difference between leadership and being boss. He did a horrible job of running MF Global and obviously had no interest in seeing that the rules were followed. I think he also ran a bond trading portfolio at MF and that he had success there as well. In my view he is the personification of what is wrong on Wall Street. Rules are something that other people try to make you follow but aren't all that important. (Reminds me of the Leona Helmsly quote that taxes are for little people to pay.) Typical of his mindset is the incident a few years ago when he was stopped by the NJ highwy patrol for speeding over 90 MPH and not wearing a seatbelt--when he was governor.

There is one thing in the MF Global thing I find confusing. It is alleged that the bets he/they made on European sovereign made money for the firm. So the qustion is, what drove them to bankruptcy? I think it was the lack of liquidity arising from their large trading positons and their shortage of collateral (which caused them to use their clients funds) played into their commercial bankers pulling their credit lines but don't know for sure.

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