Wednesday, February 2, 2011


Have you ever wondered why the stock market never seems down for long, and then makes sudden and even convenient rallies? Even the 2008 market crash and recovery seems strangely managed, and is now taken for granted. What we're seeing is the virtual elimination of volatility and risk in the stock market (which Zero Hedge discusses here).  And it's all being done on the backs of the American taxpayer.

How has this happened? While the process may seem complex, it's all tied to a bailout and stimulus addicted market where cheap taxpayer-backed money is made available (in Washington-speak it's called Quantitative Easing, or QE). Simply put, the federal government, through the Federal Reserve, is doing it's level best to pump taxpayer money into a gambling den that used to be a competitive market system.

This money pump makes it very difficult for firms to fail, and for their stock prices to collapse, when they do stupid things.

While the goal is to get the economy back on it's feet and to instill confidence in reality it subsidizes and props up a crippled market environment. This helps the Mafia of Mediocrity that runs Wall Street feel good about the crappy decisions they've made. It also encourages Wall Street and other market players to continue doing business as usual, in the process ignoring how their taxpayer subsidized profits make them the super star investors they see in the mirror.

And why not? The government through the Federal Reserve simply won't let the biggest and most foolish market players collapse.

Why is this important? Because as Tyler Durden at Zero Hedge points out there is no longer "normalcy" in the market. The integrity of the market suffers because bad management is no longer weeded out. This is a problem because once Treasury purchases, trillion dollar guarantees, or future stimulus programs get cut, or fail to produce results, our Mafia of Mediocrity on Wall Street will still be there.
Worse, the only people who will win in this environment are the money barons who are rolling the dice today, betting on the market's collapse (i.e. those who "short" the market).

This is one of the reasons market players and their Republican errand boys want to privatize social security (which is currently generating cash surpluses). They're going to need a flood of money to cover the bets they've made in the market. A steady stream of Social Security payments from you and me will guarantee payoffs for those who bet against America.

Think of it as a Quantitative Easing, in perpetuity.

To be sure, a steady stream of social security payments will help to stimulate the market, at first. But it's real effect will be to lock the American taxpayer into Wall Street's casino for generations. Can you imagine Wall Street with trillions in taxpayer guaranteed funds, in perpetuity?

Viva Las Vegas!

If you want a road map into how this looks in real life check out how the Bush administration transferred $64 billion in carefully managed public pension funds to their market buddies right before the market collapse here. While big fees and bonuses went to those who made big bets on Wall Street, the big losers were the retirees who depended on the government to protect their pension funds, only to see it siphoned off by Wall Street's biggest players.

Any one who expects Wall Street to treat trillions of dollars in social security funds any different is simply living in a fantasy world.

- Mark

P.S. This helps to explain Quantitative Easing ...

1 comment:

Joseph said...

As an attorney in Bakersfield CA practicing in social security disability law. Your article is a benefit to my practice. Keep the information coming!

Joseph S. Pearl
Bakersfield Disability Attorney