Topic: Economics
Patriotism is Paying More in Taxes The federal government is taxing us to pay the multi-Million dollar salaries of (mostly Democratic) CEOs of mismanaged companies. And the Democrats tell us this is "Patriotic." The media wants us to believe that Wall Street rallied on this news. Not really. The SEC banned Short Selling; next week traders will bail out of the market and the rest of us will be living in a new age of serfdom.by Natalie Schultz
(libertarian)
Friday, September 19, 2008
Patriotism is Paying More in Taxes
That was Joe Biden's response to this economic crisis. "Rich" people have to pay more in taxes because that is true patriotism. He then defended his view by telling America that the Vatican tells us it is the right thing to do. I could write a diatribe on his misinterpretation of Catholic Doctrine alone, but at this point in time his lack of Constitutional acumen is a moot point.
Any other day a politician saying "Paying more in taxes is Patriotic" would sound absurd. Today, the Socialists of the World are in control - of EVERYTHING!
The Stock Market rallied yesterday and today? Not really. WHO? WHO has been buying stocks? This is the problem: The "rally" is irrational. At best traders were just recouping their losses from Monday and Wednesday. Please, traders are not stupid. They are taking advantage of the current chaos and flux in the market to cover their losses and then they will BAIL OUT of the market altogether.
The current volatility of the Commodities Market highlights this problem. Commodities should be skyrocketing, but they are in total flux - Up a record amount, then down, then up ... Just wait until next week; commodities like Gold and Oil will skyrocket beyond anything ever seen before. The DOW, NYSE and NASDAQ will plummet to unheard of lows in turn.
Traders are taking advantage of this newly socialized government-controlled market that is currently in a state of animated suspension while congress waits to fight it out next week. They are manipulating the market to grab gains where they can. Then they will walk. NO ONE in their right mind would actually invest in an UNKNOWN market like this.
There is no light at the end of the tunnel as far as I can see. The only rational reaction to this chaos that would give anyone with half a brain any confidence in the future of the stock market would be if companies took advantage of these lows and started to buy back shares in their own companies. They are not. That is a very ominous sign.
Let's look at what happened yesterday. The world markets were in chaos. The Russian Market all but collapsed until Moscow pumped Billions of liquidity into it. Apparently, the world was "starved for dollars;" knocking down the doors of banks begging for actual American Dollars. So the Fed banded together with the other Central Banks of the world and expanded currency swap lines by at least $180 Billion. OK, so now everyone in the world has immediate access to American Dollars on the hour. But, the premiums being paid for dollars were insane, from 4-6% by the Brits, up to 8% by the ECB, and the Australians were paying 10%. The current rate is only 2%. And then there was the rush into Treasuries - people were buying Treasuries at virtually 0% interest just to have access to dollars. WHY? This makes NO SENSE!
So, the world markets were flooded with billions of dollars in liquidity. And what happened a few hours later? Institutional Money Market Funds had to close their doors because everyone wanted to get their money out. I guess that's better than what happened the day before when one Money Market Fund broke the buck and investors were left with 96 cents on the dollar. The message: The odds are under your mattress.
Next, London banned short sales, and the US considered the same. The SEC decided that anyone shorting stocks over $100 million would have to report their daily short positions to the public. The Hedge Funds reeled; one rightly responded "Such a requirement is akin to the government suddenly requiring Coca-Cola to disclose their secret formula for free to all their competitors." Ignoring the fact that this would make hedge funds all but irrelevant, such a move would have a devastating effect on the market as investors would see such short positions as a sign that those companies suck, not as the investment strategy that short selling is.
Then there was the infamous meeting between Paulson, Bernanke and congress to come up with an RTC-like resolution. What was the outcome of that meeting? Well, as of today NO ONE REALLY KNOWS!
Yesterday's market "rally" was nothing more than irrationally exuberant chaos.
Today, short selling was banned. How did analysts react? They were PISSED OFF! And the market rallied. WHAT? So, just before the market closed, the ban on short sales was amended to allow the Options Market to short. HUH? The SEC was so stupid as to have such a broad ban that it eliminated the Put side of Options trading? And the market still rallied? If this does not prove that SOMETHING IS WRONG, I do not know what will. HELLO?!? For almost one whole day an entire market, Options Trading, was turned upside down, and the market RALLIED?!?
You think this only paralyzes Hedge Funds? Yeah right. Banning short sales impedes real long-term investors. Wise investors hedge their bets by shorting stocks to protect themselves from short-term losses; by banning short sales investors are not going to go long on what in a Free Market would be a strong company.
The market is in total chaos. How can an investor stay in this market when what we have always relied on, FREEDOM from government manipulation, no longer exists? What has happened over the last few days is akin to the Tower of Babble. The sky is no longer up, the sky is no longer blue. Heck, the Fed might as well just tell the world that the sky is Red. RED like the Revolutionary Communist Takeover of the Formerly Free Market that this is. Not a single shot fired. A Silent Revolution before the World's eyes.
International Bankers of the World Unite!
And the Socialist "democratically" elected leaders of the world lined up in rank, "bailed out" these banks, and announced to the Proletariat masses that "WE are TAKING your money because PATRIOTISM is Paying More in Taxes."
The market closed up 368 points on the day. It closed FLAT for the week. If this really was a "rally" it would have closed up for the week, not flat. Traders are simply cutting their losses, not buying into the market.
The media reaction to all this regulatory and liquidity malarkey is totally and completely inexplicable! This "rally" is like an earthquake before the tsunami.
There is no rational way to explain what is going on any more. Like I wrote on Wednesday [link edited for length] THIS IS THE END!
Yeah, I did say that the Market would fall, fall, fall. It did not. However, there has been no rational catalyst for these two days of "rallies." I stand by my initial prediction. In fact, after yesterday and today, and God only knows how many of TRILLIONS of dollars the great "Plan" to save Wall Street is going to cost us taxpayers, I am doubling-down on my pessimism.
The SEC could have re-instituted the Uptick Rule. But no, it just BANNED short selling altogether. So, the Financials could not fall because the natural market regulator was simply done away with.
Investors should have stepped in and filed a class-action lawsuit against the credit rating agencies who flat-out FAILED to do their job and properly rate the financial firms BEFORE they tanked. Heck, the government could have stepped in and said no more taking the stock price into account when rating companies. Who the hell actually considers the stock price of any company as a reliable gauge of the actual fundamental soundness of the firm's holdings and business acumen in the first place? Just because the stock price is high doesn't mean the company has any value; stocks are often over-valued. Value Investors must be fuming right now. How the heck were the credit rating agencies rating quality companies with under-valued stock prices?
Whatever. Everything will be all happiness and joy once the Bolsheviks have liquidated all the assets of the world. Do not fear, we can watch this all in real-time on CNBC: Communist News Broadcasting Central.
Sleep sweetly, my fellow Serfs. Soon enough our beds will be burning. Save for the lucky few who are hunkered down in their bunkers with bullion.
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The views expressed in this
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