SEPARATED AT BIRTH? BAGHDAD BOB and ...

Remember that lovable goofball "Baghdad Bob"? He was Saddam Hussein's last Minister of Propaganda, telling the world that the infidels (the Americans) weren't in Baghdad and that Iraq under Saddam Hussein's leadership was going to win war. We all know how that turned out. Well, get ready for an American parade of Baghdad Bob(s). Only this time these guys are clueless as to what's happened to financial markets, and what role they played in the market meltdown.

First up is former senator Phil Gramm (R-TX), who was the financial world's deregulator extraordinare. Gramm had as much to do with deregulating markets and propping up the dangerous derivative (bets) and swap ("insurance") markets as anyone else. His Washington deals helped swell derivative markets from roughly $900 billion in 2000 to $62 trillion in 2007. But it was all an illusion.


Gramm's claim today is that deregulation played no role in speculation, the subsequent financial boom, and the 2008 market collapse. The real villains according to Gramm? The "predatory borrowers" who bought homes they couldn't afford.

Somehow "clueless" doesn't seem to capture the world Gramm lives.

- Mark

Here's the 60 Minutes story that explains Phil Gramm's role in building up and exploding the derivatives market.

NOT EVEN CLOSE ... $300,671 vs. $11,733

I've posted on this several times over the past year, but this makes it very clear what happens when Democrats are in control. From the NY Times ...

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Since 1929, Republicans and Democrats have each controlled the presidency for nearly 40 years. So which party has been better for American pocketbooks and capitalism as a whole? Well, here’s an experiment: imagine that during these years you had to invest exclusively under either Democratic or Republican administrations. How would you have fared?



As of Friday, a $10,000 investment in the S.& P. stock market index would have grown to $11,733 if invested under Republican presidents only, although that would be $51,211 if we exclude Herbert Hoover’s presidency during the Great Depression. Invested under Democratic presidents only, $10,000 WOULD HAVE GROWN TO $300,671 OVER NEARLY 40 YEARS.

This makes it clear why the electorate trusts the Democratic Party with the economy ...

- Mark

MARKET WOES DEEPEN

With the recent bailout of Fannie Mae and Freddie Mac, more trouble is coming around the corner. The NY Times is reporting that Lehman Brothers, Merrill Lynch, Washington Mutual, and insurance giant, American International Group (AIG), are primed for collapse or bankruptcy as well.

There's a reason why this is happening. And it's all tied to deregulation (thank you Ronald Reagan) and artificially cheap credit (thank you Alan Greenspan). And while analysts are hoping takeovers, or a sudden influx of funds are around the corner, they really have no plan for dealing with the steady drip of institution collapse in the economy.

With more collapses are around the corner you would think John McCain would want to tout his economic policy proposals. Oh, yeah, I forgot. He has none, other than more of the same. Tax cuts.

No wonder all he wants to talk about is lipstick. His world view and economic policies represent the Mother of All Pigs.

- Mark

THIS HELPS EXPLAIN THE ECONOMIC MESS ...

As many of you know, I regularly receive market updates from a number of market "analysts" trying to sell me/everyone their forecasts and pre-packaged intruments. Some of the analysis is good, but most of it is pure self-promotion and self-serving. They do, after all, want to sell you stuff.

This morning I received the following solicitation from Newsmax ...

Dear Newsmax Reader:

As John McCain has soared in the polls after picking Sarah Palin, the Obama campaign has engaged in a vicious smear campaign against her. Obama has likened her to a "pig with lipstick" and the Wall Street Journal reports that 300 liberal journalists have descended on Alaska in an effort to dig up dirt on her ... You can help defend Sarah Palin from such vicious attacks ...

There's a couple of things that need to be pointed out here.

First, "300 liberal journalists" haven't "descended" on Alaska. What's happened is that, prompted by McCain's failure to vet and make available his candidate, the press has determined they need to go out and get the information themselves. The last time I checked the 1st Amendment makes it clear that this is both legal and constitutionally protected. If McCain hadn't panicked and picked Caribou Barbie without vetting her this wouldn't be happening. McCain's to blame for the mess he's whining about today.

Second, Newsmax is using their mailing list, which is quite extensive, to peddle lies and innuendo. This fits their M.O. ... using their list to dump garbage off on less than informed customers. You can bet your lipstick pack others are doing likewise.

Third, these guys can't even get their quote right. It's "putting lipstick on a pig" not a "pig with lipstick." But what's a simple fact-check when you're peddling lies? This, unfortunately, is what happens when you watch too many Porky's movies.

Finally, Newsmax is demonstrating it has no clue about market performance under Democratic and Republican administrations. It's not even close. If these guys were smart, they would be pushing Obama-Biden. Don't believe me? Check this out.

No wonder the market is in such a mess. Newsmax and their kind are clueless ideologues who are not only fact-challenged, but clearly have no problem peddling half-truths and lies.

- Mark

"JUST THE FACTS, MA'M"

Most of us over the age of 40 can still remember the Dragnet series. I used to get a kick out of Joe Friday asking questions, dispensing with ignorant gossip and personal opinions with: “Just the facts, Ma'm.” I think a few money managers and conservative pundits need to watch some Dragnet reruns.

I was reading through my e-mail inbox this morning, and the usual daily market news from Newsmax was there. The subject heading read: “If the Democrats Win Watch Your Wallet.” I don’t know how many times I’ve seen this or similar commentary. Usually it’s some blowhard on FOX lamenting the coming economic apocalypse if a Democratic candidate wins the White House. Does their ignorance know no bounds? Here are the simple facts.

Using the Dow Jones industrial average as the benchmark, if you had invested $10,000 in 1901 and kept it in during republican presidencies you would have $78,699 by 2005. However, if you had taken the same $10,000 and put it in the market under Democratic presidents, by 2005 you would have a whopping $279,705!

Just the facts, Ma'm. Just the facts.

- Mark