Americans expatriate because they want to get out of the country. Corporations expatriate for similar reasons. Clem Chambers explains...
In a 2009 article, the Huffington Post went into considerable detail about the number of people with PhD degrees in economics employed by the Board of Governors of the Federal Reserve System. This is the government’s branch of the Federal Reserve. It is not one of the 12 regional Federal Reserve banks, all of which […]
The U.S. dollar is the dominant global reserve currency. All markets, including stocks, bonds, commodities, and foreign exchange are affected by the value of the dollar.The value of the dollar, in effect, its “price” is determined by interest rates. When the Federal Reserve manipulates interest rates, it is manipulating, and therefore distorting, every market in […]
The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance or the get-rich-quick adventurer. They will die poor.– Jesse Livermore, How to Trade in StocksThe trouble with capitalism’s guardians is that they have no […]
John Foust, a Democrat running for the 10th congressional seat in Northern Virginia, is — like Gov. Terry McAuliffe and other state Democrats — gung-ho to expand Medicaid. His wife’s position is, shall we say, a bit more nuanced.Foust has slammed his opponent, Republican Del. Barbara Comstock, for her opposition to expansion. He has spoken […]
The midterm election season is upon us, and it’s a tossup whether the Republicans will win the Senate, or if President Obama, seemingly oblivious as conflict flares up around the world, will, through his continuous campaigning, keep Harry Reid in his majority leader seat.The only thing we know for sure is that sociopaths will be […]
Alexander Hamilton was America’s first Secretary of Treasury under President George Washington. When he first entered office in 1789, America was an agricultural nation of just 4 million still broke from its financially costly victory over the British Empire in the Revolutionary War.The states had accumulated relatively massive debts to finance that war, which mostly […]
A great technology solves a problem that we didn’t know we had. It makes us aware of deprivations we didn’t know existed until we discover the new thing. Once discovered, we can’t go back.People in the 1950s, for example, never missed the smart phone. They were pleased to have a phone at all. But today, […]
Fifty years after the 1929 crash, a group of money managers and investment thinkers put together a collection of essays looking back at that experience. The result was a distillation of some pretty fine investment wisdom. Timely, I think, to review now.One of the contributors was Arthur Zeikel, then with Merrill Lynch. The title of […]
Although the mainstream media have turned its attention away from the wreckage of Obamacare, don’t think for a second that all is well.As the politicos in D.C. focus their attention on the midterm elections in November, now is a great time to study, prepare, and seek out the most affordable, accessible, and highest quality options […]
Turn on the tube and economic ignorance seems to be everywhere. There is constant shilling for more government. Business is demonized. Man is said to be trashing the environment. “Workers and women are oppressed” is the constant mantra.And members of the clueless media nod their heads in unison.Only John Stossel has provided the fresh air […]
In early July 1944, delegates from 44 countries gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire. A three-week summit took place, at which a new system was agreed to regulate the international monetary and financial order after the Second World War.The U.S. was already the world’s commercial powerhouse, having eclipsed the British […]
In the minds of many people around the world, including in the United States, the term “capitalism” carries the idea of unfairness, exploitation, undeserved privilege and power, and immoral profit making. What is often difficult to get people to understand is that this misplaced conception of “capitalism” has nothing to do with real free markets […]
Some people are saying it is just what the doctor ordered. Others are saying that the cure is worse than the disease.The Affordable Care Act? Reengagement in Iraq? Tea Party bullying in the GOP?Not this time. Just as protracted in the corridors of Congress and the White House is the debate over the proposed reform […]
In 2012, money mandarins running the European Union chose stagnation over restructuring. Here’s a consequence of that choice: expectations for a self-sustaining economic recovery keep getting crushed.Two years ago, European Central Bank (ECB) chief Mario Draghi promised to do “whatever it takes” to hold the eurozone together. He bluffed nervous investors into believing in a […]
People jacked up about income inequality can find a new hobby. The 1% are victims of a doomsday machine, and the countdown is ticking. Machine, thy name is “family.”This came to mind as I was reading a preview of Columbia Professor Andrew Ang’s forthcoming, must-read book on Asset Management. Ang is that oxymoron, an exciting […]
It might sound like the latest new product from Apple, but IPAB is actually the newest major legal challenge to Obamacare.Recently, a three-judge panel in the 9th Circuit Court of Appeals in San Francisco heard arguments about the Independent Payment Advisory Board, or IPAB, a 15-member panel created by the Affordable Care Act and empowered […]
Americans have come to believe that the IRS and the income tax are inevitable parts of our lives. After all, most everyone alive today has lived his entire life under federal income taxation.It wasn’t always that way. For some 125 years, the American people lived without having any tax imposed upon their income.The obvious question […]
Here’s a fun fact: Although we all hate the U.S. dollar, as it continues to hemorrhage wealth, its foothold as the world’s reserve currency isn’t going to disappear overnight.A Russian gas deal with China won’t change that — as we’ll highlight below.But before we get to the nitty-gritty, let’s dive into a story that’s right […]
Franklin Delano Roosevelt famously used the term “forgotten man” in a 1932 speech to describe those at the bottom of the economic pyramid who, he felt, government should aid.But the originator of the phrase “forgotten man” had a whole different meaning in mind. He aimed to expose the seeming good intentions of government to reveal […]
The Keynesian disaster recovery plan has been to lower rates, force people to take more risk in search of yield, and entice others to borrow and spend and, magically, more jobs will be created. If people won’t buy stocks, central banks will.Back in 2011, Ben Bernanke, when asked if QE2 was driving up stock prices, […]
I want to share some insight and give you a front-row seat to America’s next big shale play.Let’s get to it…Over the past 10 years, the U.S. has turned the ship around, quite literally.We’ve gone from a country that was expecting to import massive amounts of oil and gas — to a country that’s sitting […]
Whatever your views on the role of government, one thing is clear: There will be no way to pay for it if the economy doesn’t grow. And I’m not talking by a measly percentage point or two. If we can’t find our way back to 5% annual economic growth or above soon, America’s accumulated federal […]
According to the Bureau of Labor Statistics, consumer prices are rising at a 2.1% annual rate. This suggests to us that the current stock market boom will die with a bang, rather than a whimper.Fed economists say they don’t think inflation rates are rising. They think the most recent reading is a fluke. But why […]
Politicians love raising the minimum wage because they don’t have to ask voters to pay more in taxes. They just dump the costs onto shop owners. But they don’t act like politicians and go into debt to pretend like they have all the money in the world. They face real world situations. And sometimes that means replacing workers with more affordable options...
Regulation is supposed to keep you safe and make the economy function smoothly. At least that’s what they tell you in the news. But there’s another cost to regulation. One that you won’t hear about unless you have to deal with directly. And for the people in the economy who do, they’re the ones who have to pay the final cost.
The experts will tell you the recession is over, but they’re only torturing the data to hide the truth. The economy never recovered from the downturn it experienced. But the downturn happened in 2000, not 2008. The country’s been in the middle of a 14 year recession and hardly anyone knows the truth.
If you don’t have the angst out of your system concerning Wall Street banksters, Government Sachs, and the Affordable Care Act, settle in with Matt Taibbi’s Griftopia to make your blood boil one more time.
Investors should be reminded of 2008 as they shrug their shoulders and put their money back in the stock market. The whole Obamacare fiasco has blown up in the president’s face, but Americans should know how that legislative sausage was made.
Taibbi is no financial scribe. He writes for Rolling Stone and the like, so he can actually write. He also comes at these issues from a side readers of this page may not normally see. Friends of free markets tend to want to give Wall Street a free pass, believing the nonsense that the financial exchanges are free-market capitalism at work.
The list of legislation regulating Wall Street is as long as your arm, and it’s the government’s currency they’re trading with. The 800-pound gorilla in the markets is the Federal Reserve. The corner of Wall Street and Broad Street is nowhere near Galt’s Gulch.
Early on, Taibbi writes, “Like most Americans, I don’t know a damn thing about high finance.” He tells the story of how while Wall Street was unraveling, he was covering the 2008 presidential campaign.
What this means for readers of Griftopia is that the author goes to great pains to explain all of that financial gobbledygook in language anyone can understand. If you never quite got the concept of what a collateralized debt obligation (CDO) or a CDO squared, or a credit default swap was, then let Taibbi walk you through it.
While Taibbi leans left, his chapter on the Affordable Care Act is worth the price of the book. Sure, the government website doesn’t work, and every night we hear some new horror story on Fox News. But Taibbi hits Obama’s crown piece of legislation where it hurts. “Really, Obamacare was designed as a straight money trade,” writes Taibbi. Billions in subsidies “and the premiums from millions of involuntary customers in exchange for the relevant industries’ campaign contributions for a few election cycles going forward.”
Echoing Hans Hoppe’s theories about democracy and high time preference, Taibbi harangues the Obama administration for its short-term thinking. “A radical reshaping of the entire economy, for two election cycles’ worth of campaign cash — that was what this bill meant.”
As it is, American health care is no free-market system, and Taibbi knows it. He describes it as “a Kafkaesque parody of corporate inefficiency.” He runs through some studies that point to administrative costs as the culprit for rising costs. Then he talks about the real medical cost smoking gun — the McCarran-Ferguson Act — that said until Jan. 1, 1948, the insurance industry was not subject to antitrust regulation. Even after this date, the industry would be exempt in any case where there were already state laws in place.
Insurance companies collude to set prices, and they do all they can to not pay. Taibbi illustrates this by morphing his Obamacare discussion into the behavior of property and casualty insurers after Hurricane Katrina.
The Democrats could have pursued undoing McCarran-Ferguson, but they instead “decided to try to ensure private competition in the health industry by creating a state-run insurance plan.” Obamacare was driven by chief of staff Rahm Emanuel, and the going price for votes was $100 million on the Democratic side.
Taibbi’s description of the bill’s passage captures the essence of all legislative work. Obamacare was passed “in a romper room of overgrown children seemingly barely old enough to keep from peeing on themselves.”
The author devotes a chapter to trashing Alan Greenspan, “a perfectly two-faced man, serving a perfectly two-faced state.” Taibbi takes some shots at Greenspan’s guru Ayn Rand. While not always on target, some of it is funny. Taibbi’s observation that never in history has there been a funny objectivist may, in fact, be right.
He also points out the irony that an objectivist, who by definition should be opposed to the very idea of the Federal Reserve, would have the job of running a central bank. Taibbi knows enough to recognize the Fed creates money out of nowhere, quantitative easing is “an utterly insane program,” and the Maestro was constantly wrong.
There are instructive chapters on Wall Street’s capture of the mortgage market and the commodity boom. Taibbi leans a bit hard on the idea that the rise in commodity prices was completely engineered by Wall Street, with supply and demand having nothing to do with it.
He does point out the idiocy of making long-term investments using short-term speculation instruments, and insists Wall Street sales sharpies took advantage of “midlevel state employees” who ran pension funds.
Where the author really lets loose is in his famous blistering attack on Goldman Sachs, which originally appeared in Rolling Stone. Taibbi updates and adds to his work, which was widely quoted when it first appeared, calling the white-shoe Wall Street investment bank a “vampire squid.”
In the chapter titled “The Great American Bubble Machine,” Taibbi lays out all of Goldman’s connections with government and market-manipulating activities. The author mentions an often forgotten bailout Goldman received in the heat of the financial meltdown. Overnight, the investment bank was granted bank holding company status, allowing them to attract FDIC-insured deposits. This process normally takes months or even years.
That change made the bank’s primary regulator the New York Federal Reserve Bank, whose chairman at the time was former Goldman managing director Stephen Friedman. He was conveniently able to get this violation of Federal Reserve policy waived by the Fed’s general counsel themselves. To top it off, Friedman didn’t divest himself of his Goldman shares, as the law requires. Instead, he actually bought 37,000 more shares.
The government takeover of AIG was really a way to hand billions directly to Goldman Sachs. And Bernanke’s zero interest policy boils down to “taxing Grandma to pay Goldman,” quoting University of Maryland professor Peter Morici.
The tea party can scream from the right and MoveOn.org can cry from the left demanding change. But it’s “groups of anonymous lawyers and bureaucrats and lobbyists” that dictate not only the rules of the game, but who wins and loses.
This linking of government with its preferred industries has turned the economy into a back-alley casino. One operated by Washington’s hidden bureaucrat class and rigged for the political elite to come out on top.
Knowing what you’re up against is half the battle. Taibbi shines a spotlight on the dark alley that connects Wall Street and Washington.