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Roberto Behar and Rosario Marquardt: The Absent City

Post #1233 • September 19, 2008, 12:03 PM • 38 Comments

Madison, WI - I've written before about Roberto Behar and Rosario Marquardt, a Miami-based artist couple who deals with citizenship and lack thereof in the contemporary world. Planes, flags, and miniature people wandering outsized environments recur in their work, invariably executed with great thoughtfulness and stylish taste. They have three pieces up at the Madison Museum of Contemporary Art. One is a curtain of long, colored ribbons that does not even slightly "raise questions - both cultural and architectural - about the relationship between the city and the museum," as claimed by the museum, but does make a pretty adornment for the knife-like corner of Cesar Pelli's building. An altar of tchotchkes under a map printed so that south appears as north doesn't hold up too well - I have seen the image elsewhere on a t-shirt. But the main work is a walking maze of floor-to ceiling ribbons that leads to a gathering of a half-dozen figures, each a foot high, around a flagpole which hoists their standard - a banner of pink carnations. Surrounded by a universe of stripes, as if the flags of the world had been borrowed color by color, their pleased expressions suggest that they are celebrating their membership in a nation of charm. Thus won over, I long for my own residence there.

Roberto Behar and Rosario Marquardt: installation view of The Absent City (detail), 2008, photo: Devon Hugdahl, © 2008 Madison Museum of Contemporary Art

Roberto Behar and Rosario Marquardt: installation view of The Absent City (detail), 2008, photo: Devon Hugdahl, © 2008 Madison Museum of Contemporary Art

Roberto Behar and Rosario Marquardt: installation view of The Absent City (detail), 2008, photo: Devon Hugdahl, © 2008 Madison Museum of Contemporary Art

Comment

1.

MC

September 19, 2008, 12:42 PM

"... a gathering of a half-dozen figures, each a foot high, around a flagpole which hoists their standard - a banner of pink carnations."

It's unfortunate they don't have an available image of this...

2.

Franklin

September 19, 2008, 12:44 PM

It really is.

3.

george

September 19, 2008, 2:34 PM

Off Topic for John.

The SEC has banned short sales, long-puts, short-calls on financial stocks, they must be closed out today. The shit's hit the fan and the government is rigging the game, be carefull.

4.

John

September 19, 2008, 7:06 PM

Thanks George. I sold my puts when the VIX reached 41.6 yesterday, just about 20 minutes before the indexes hit bottom. I made a nice profit, one worthy of the risk I took in buying the instruments in the first place. Today, they are worth less than I paid for them, thanks to government intervention.

The Libertarians on this blog should be very very concerned about what the government is now doing to the "free market". Their actions *might* be appropriate during a genuine depression, but not even Michigan is close to that right now. The government is transferring money from the prudent to those who fucked-up, and because the fuck-ups are in the majority, the transfer will be accepted. Democracy and capitalism are not the same thing.

5.

Chris Rywalt

September 19, 2008, 8:23 PM

As I noted on Facebook responding to someone's calling the buy-out of AIG socialism: Too bad it's not socialism (ownership of businesses by the workers) but corporatism, the system of government whereby profitable companies distribute their profits to the wealthy and any risks that come due are shouldered by the middle class and poor in the form of government hand-outs, bail-outs, and buy-outs.

6.

Franklin

September 19, 2008, 9:32 PM

And the libertarians on this blog, at least this libertarian, are apoplectic. These bailouts are unconstitutional and corporatist in the extreme. All those neocons who were bitching about Hillarycare and now are behind the bailouts can go poke themselves in the eye.

7.

MC

September 19, 2008, 10:00 PM

Those are the same guys who wanted to take Social Security out of big bad governments hands, and invest it on Wall St., right?

8.

John

September 19, 2008, 10:13 PM

It is the same administration. The essential problem with Social Security is that the government never invested the money. This year's collections are used to pay this year's bills, same way last year, year before that, and so on.

The original reason for that was they wanted to begin providing benefits to those who were entering retirement at the same time the program was instituted. Those lucky individuals had not paid a cent into the system, yet the government, in its largess, mandated that they should receive the same benefits at those in the future who would pay into for 30 or more years. This original violation of common sense and justice has created the "crisis" we now have even though everyone eligible now paid their dues, and then some.

9.

george

September 19, 2008, 10:40 PM

I've been answering questions or blogging this all day, I'm burned out, so I'll keep it short. (cut n paste)

The FED/gov is not bailing out FNM, FRE, AIG and the other financial companies.

It is bailing out the USA.

We are in the middle of a potential world wide financial meltdown. It is the most threatening financial event since the 1929 depression.

Expect the money guys to do whatever is necessary to prevent it from happening. Central banks are currently pouring money into the financial systems world wide in order to alleviate the freeze up in the system. They will change the rules where needed, inject any amount of money necessary, in order to get the beast under control. There is no other solution.

Yes, there are a lot of woulda, coulda, shoulda's, but they didn't and here we are.

10.

opie

September 19, 2008, 11:08 PM

Well, golly, George. I guess that means we can't be pissed off at the dudes who walked off with all the money and left everyone else to pick up the bill, right?

Too bad no one looked back into the history of large-scale financial catastrophe - and there is plenty of it - to see what was going to happen. But this is the here and now, so we will deal with it, set up a few regulations and then go ahead and do it all over again.

But then, as you so often point out, learning from history is SO yesterday.

I sold every security I owned in October 2007 and put it into treasuries. Now I am worried about treasuries.

11.

george

September 19, 2008, 11:24 PM

Well, golly, opie where did I suggest you couldn't be pissed off?

Someone did: Bernanke did his doctoral thesis on the depression.

Treasuries? Safe but can't keep up with real inflation.

12.

that guy

September 19, 2008, 11:33 PM

George, the problem is not liquidity, but systemic institutional insolvency. Any government that tries to inflate their way out of this will end up much like Zimbabwe or Weimar Germany. Probably not the best choice of fiscal policies. These bailouts pose a much greater risk than the widespread financial panic everybody thinks would have happened. (and might still happen anyway) The greater risk is of-course, the moral hazard this creates within wall street and the still overvalued assets that are now going to be propped up the feds instead of having the transparency of marked to market assets. The short term purging of the excess risk, which was unfolding relatively normally until this summer/fall was normal free market fair. Welcome to the U.S.S.A This will go down as one of the biggest financial heists in history. Why did Comrade Paulson and Chairman Bernanke rob the Jones? Because there was no $ left in the banks!

13.

Franklin

September 20, 2008, 7:44 AM

Cleaning up after yourself is a kind of virtue even if making a mess isn't, so I can see the Fannie/Freddie rescue in that light. But lo and behold, it turns out that we've been socializing home ownership for the last 70 years and it turns out to cause perverse externalities. Of course, my man Ron Paul was trying to shut down this mess five years ago back when no one was paying attention. The deeper into the hole we go, the more the guy looks like a clairvoyant. Time to brush up on Austrian economics.

14.

George

September 20, 2008, 8:37 AM

that guy,

With all due respect and realizing this is not the time for inflammatory comments, I think your assumptions are incorrect.

The immediate problem was liquidity.

Commercial paper is used by banks and corporations to finance the day to day business, to purchase inventory or to manage working capital. [wiki]

The size of the commercial paper market has collapsed 20% over the last 15 months. In addition, CP rates (30d A2/P2 nonfin) which had been stable near 3% spiked to 5%. The system froze up. Access to working capital for non-financial businesses became nearly impossible and very expensive. The whole economy was threatening to grind to a halt. This is what panicked the FED

The capital provided to offset the current liquidity crisis in non-inflationary. It is short-term capital used to finance the day to day operation of businesses, like paying the employees every Friday. Since the economy is contracting, it is not stimulating demand to the point where it can cause prices to rise.

..........

... the still overvalued assets that are now going to be propped up the feds instead of having the transparency of marked to market assets.

Curiously, if in fact, the mark to the market provision was correctly applied we would have less of a problem.

The problem is extremely complicated, but I will venture to say that the majority of the loans held by the Fannies are good (performing), that they will be paid off over the life of the loan.

The problem lies with the non performing loans, both for the Fannies and for those held within CDO's (mortgage bundles). When loans become non-performing, they reduce the value of the CDO's (bundle, or portfolio) and the ratings firms (Moodys, S&P etc) downgrade the instruments making borrowing money on them more expensive. (higher risk => higher rates). When the real estate market drops further, the ratings agencies again downgrade these instruments.

The problem is that the downgrades are made based on the initial collateral value of the instruments at 100%. Initially this is correct because the risk adjusted returns are based on the collateral being valued at 100%. At this point the holder may take the paper loss by marking it to the market, carrying it on the books as only 70% of the original value.

However, assuming another non-performing event occurs or the collateral value again declines, the instrument is again downgraded by the ratings agencies. This calculation is based upon the original face value (100%) of the instrument because at the present there is no easy way to evaluate bundled securities. As a result the security which actually will have a positive return when its collateral value is calculated at 70% is incorrectly downgraded making it again harder to finance the loan.

Of course, at the root of the problem is leverage, the continuing need to borrow short term money to finance the longer term loans, and somewhere within this web of finance, a downward spiral occurred making it impossible for the lenders to raise enough capital to either reduce leverage or finance the loans, Poof.

Over the last year, all the parties have been trying to unwind this mess. My hunch is that even if real estate prices are only half way to their nadir, that most of the fire sale discounted CDO's are going to produce fabulous returns for those who scooped them up. This should include the US government.

Without a doubt the lack of oversight by the government regulators has contributed to this crisis. It points to Greenspan's philosophical failure to realize that greed and fear distort the functioning of a free market.

So we find ourselves gripped in fear, the capital markets have frozen up and without intervention, a problem which is primarily one of a small sector of the economy would have spiraled into a severe recession. People and businesses who had nothing to do with the housing industry would be dragged into the abyss of a financial collapse.

Sorry about the length of this.

15.

Franklin

September 20, 2008, 9:00 AM

It points to Greenspan's philosophical failure to realize that greed and fear distort the functioning of a free market.

We don't have a free market because we refuse to allow the prime rate to be decided by market forces. And for some reason people thought that allowing government sponsored enterprises to garner a monopoly on the secondary mortgage market would be a good idea. These problems came into existence because of interventionism, not freedom.

16.

opie

September 20, 2008, 9:15 AM

What a trader's marker this has been, and will be for a while. I wish I had the nerve and knowledge to make a bundle here, but I will keep my treasuries until things stabilize.

I don't get the impression that anyone knows what a "free market" is. Opinions seem to be mostly guided by politics. We have a system of laws to guide everyday behavior; we need one for the financial business that is more mature and works better. Some of the activity that provided us with the subprime crisis should have been criminalized.

17.

george

September 20, 2008, 9:40 AM

The general definition is: a market where the price is determined by the agreement of the sellers and the buyers without outside influence.

The best example are the futures markets (except at limit conditions).

This does not mean that prices are 'fair' or 'correct' just that the buyer agrees to pay the sellers asking price.

18.

that guy

September 20, 2008, 10:21 AM

Well George, the Rating Agencies waited until Lehman filed for chapter 11 before downgrading. They are worthless. If the government must 'do something' as everybody says. They should force all players to mark all assets to market. No more hidden level 3 assets. I hope you are right that the government will make a bundle as you say, but the more likely scenario in my view is that the actual value of these assets will be worth much less than the government will pay for them. So if they say this will cost 1 trillion, I would straight away double any 'official figure' that comes out of D.C.

I'd be interested to hear John's take on this matter. Stock values may raise from here, but they did the same thing during the Weimar Republic. We have been in a deflationary trend i.e lower home prices for awhile now. This recent manipulation is a policy shift.

19.

John

September 20, 2008, 10:32 AM

George, do you really think the problem is "primarily one of a small sector of the economy"? I suspect it is much wider than mortgages, it is the way our whole structure depends on credit that has gone unbridled. Collateral that seemingly secures one debt actually got used to secure many debts and no one knows exactly how many. Further, private contracts to offload risk from one party to another have multiplied into something that most resembles a very large tangled up ball of twine with no one ultimately responsible if the cows get called home.

In addition there is a lot of securitized debt that has no collateral, i.e. credit card debt, that is equally obscured by a myriad of deals to off load risk.

The lesson of last week is that all those who thought they were protected from the risks they took, were not, and they learned it in a very concrete way. They have known they had made a mess for a long time, of course, but as long as they did not have to face it, and could get by with statements like "we are well capitalized", it was not truly real.

I dobut that the government has solved the problem, only stuck a control rod into it, as one sticks a control rod into a nuclear reactor that is heating up too fast. Instead of a bomb the slow burn will continue, eith even perhaps a bomb coming in the future. The problem is that each time they stick in the another control rod, the price everyone pays goes up geometrically.

I rememberhow Greenspan charaterized Long Term Capital as "too big to fail" and "carrying risk of inducing system failure". I think he was playing the role of chicken little, certainly compared to this. Had Long Term Capital run its natural course, the market might have purged itself of the contamination, the big players might have learned a leson that they still have not learned, and things might be quite positive now. The sky was not really falling then, it was just a rain that would have done a lot of good, even as we wished fo sunshine. As it is, putting off that problem appears to have led to larger problems and even if the current government bullying works, it won't turn the downturn around.

As a measure of the difference between the beginning of the Bush administration and where we are now, you can buy a share of the DOW for 12 ounces of gold today. When Bush took over, it cost 43 ounces of gold. I'm not a gold bug (own exactly 1 ounce of the stuff), but for reasons I don't understand, gold seems to be the closest thing to real money we have.

Of course it could be argued that without Bush's prowess as a leader, things would be worse. One of his best ideas was that Fannie and Freddie should be dissolved. He just never followed through on it when it could have been done in an orderly fashion and at lower cost all around.

Whatever the politicians found out in their secret metings, it must have been serious enough that they understood it would make their re-elections unlikely. That, along with purging the financial system of whatever poisons it has created within itself, might have been the new beginning for the nation that everyonw seems to want.

20.

george

September 20, 2008, 10:38 AM

Congressional Leaders Stunned by Warnings
By DAVID M. HERSZENHORN

Published: September 19, 2008
WASHINGTON — It was a room full of people who rarely hold their tongues. But as the Fed chairman, Ben S. Bernanke, laid out the potentially devastating ramifications of the financial crisis before congressional leaders on Thursday night, there was a stunned silence at first.

Mr. Bernanke and Treasury Secretary Henry M. Paulson Jr. had made an urgent and unusual evening visit to Capitol Hill, and they were gathered around a conference table in the offices of House Speaker Nancy Pelosi.

“When you listened to him describe it you gulped," said Senator Charles E. Schumer, Democrat of New York.

As Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Banking, Housing and Urban Affairs Committee, put it Friday morning on the ABC program “Good Morning America,” the congressional leaders were told “that we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.”

Mr. Schumer added, “History was sort of hanging over it, like this was a moment.”

When Mr. Schumer described the meeting as “somber,” Mr. Dodd cut in. “Somber doesn’t begin to justify the words,” he said. “We have never heard language like this.”

“What you heard last evening,” he added, “is one of those rare moments, certainly rare in my experience here, is Democrats and Republicans deciding we need to work together quickly.”

Although Mr. Schumer, Mr. Dodd and other participants declined to repeat precisely what they were told by Mr. Bernanke and Mr. Paulson, they said the two men described the financial system as effectively bound in a knot that was being pulled tighter and tighter by the day.

“You have the credit lines in America, which are the lifeblood of the economy, frozen.” Mr. Schumer said. “That hasn’t happened before. It’s a brave new world. You are in uncharted territory, but the one thing you do know is you can’t leave them frozen or the economy will just head south at a rapid rate.”

As he spoke, Mr. Schumer swooped his hand, to make the gesture of a plummeting bird. “You know we’d be lucky ...” he said as his voice trailed off. “Well, I’ll leave it at that.”

As officials at the Treasury Department raced on Friday to draft legislative language for an ambitious plan for the government to buy billions of dollars of illiquid debt from ailing American financial institutions, legislators on Capitol Hill said they planned to work through the weekend reviewing the proposal and making efforts to bring a package of measures to the floor of the House and Senate by the end of next week.

Lawmakers in both parties described the meeting in Ms. Pelosi’s office on Thursday night with Mr. Paulson and Mr. Bernanke as collaborative, and that they were prepared to put politics aside to address the needs of the American people.

While Democrats initially said after the meeting that they planned to use the administration’s proposal of a huge rescue effort to win support for an economic stimulus package, they pulled back slightly on Friday morning, saying that their top priority was to help put together the bailout package and stabilize the economy.

But it was clear they continued to examine ways to make clear that the government was stepping up not just to help the major financial firms but also to protect the interests of American taxpayers and families by safeguarding their pensions and college savings, and by preventing any further drying up of consumer credit.

In addition to potential stimulus measures, which could include an extension of unemployment benefits and spending on public infrastructure projects, Democrats said they intended to consider measures to help stem home foreclosures and stabilize real estate values.

Among the potential steps Congress can take include approving legislation to allow bankruptcy judges to modify the terms of primary mortgages — authority that the bankruptcy laws do not currently allow and that the banking industry has strenuously opposed.

But the Democrats said it was too soon to discuss such details, and that they were awaiting a draft of the proposal from the Treasury Department.
“We have got to deal with the foreclosure issue,” Mr. Dodd said. “You have got to stop that hemorraging..If you don’t, the problem doesn’t go away. Ben Bernanke has said it over and over again. Hank Paulson recognizes it. This problem began with bad lending practices. Those are his words, not mine, and so this plan must address that or I’ll be back here in front of a bank of microphones at some point explaining the next failure.”

Even before the drafting of the plan was complete, the Bush administration and the Fed began efforts to sell the idea of a huge rescue to potentially skeptical rank-and-file members of Congress. Mr. Paulson and Mr. Bernanke held a conference call with House Republicans to explain their thinking.
Senator Richard C. Shelby of Alabama, the senior Republican on the Senate banking committee, said in a television interview that cost to the government of purchasing bad debt could run to $1 trillion — a potential warning sign since Mr. Shelby is a longtime skeptic of government intervention in the private market.

Until Mr. Shelby was interviewed on Friday morning, officials on Capitol Hill had been careful not to discuss specific figures, though the rescue envisioned by the Treasury Department clearly entails a government appropriation of hundreds of billions of dollars.

(Reposted from a trusted site, I don't have a link to the original source)

21.

John

September 20, 2008, 10:59 AM

I think of deflation and inflation a little differently than most.

Inflation is when fiat money is created. Because there is more money chasing goods and services, their price usually rises. But higher prices are the effect of inflation, not the essence.

Deflation is when fiat money is being destroyed. Prices usually go down because there is less money to chase goods and services. Deflation, in this sense, is rare, but there is evidence that it is taking place right now, just as it did in the 30s. The fact the DOW is 70% cheaper today in terms of gold than it was in 2000 is one indicator. Gold has not been a very good hedge against inflation lately, but it may be a good one against deflation, as long as collective society continues to respect it. Governments that issue fiat currency hate gold. Gold may be relatively useless, but you can actually touch it, weigh it, assess it, and even make trinkets out of it. Try that with "the full faith and trust of the US government". Or any government.

It is possible, especially when the tide is turning from the creation of money to the destruction of it, that prices rise (out of habit? out of desperation?) and the system locks up into "stagflation" because there is not enough money to chase the high priced goods. Interest rates rise because there is great fear loans will not be repaid due to the shortage of money, making it harder for people to pay the high prices in a credit dependent society, adding fuel to the fire.

Right now, our politicians are taking the position of "benevolent dictators". Citizens are defined as too dumb, excitable, whatever, to know the truth behind the situation and hence the reasons the actions are "necessary" are as smokey as the rooms in which they are fashioned. We are told it is for our own good that it is kept secret. Perhaps knowing this secret would be enough in itself to ensure most of the current group would not be re-elected. I don't know because they won't talk straight about it. What I do know is that I trust the "dictator" part more than the "benevolent" part.

22.

george

September 20, 2008, 11:04 AM

John,

Too many questions to answer here without hijacking Franklins blog.

Right now the problem is liquidity which finances all the other stuff from payrolls to credit cards. Is excess credit the problem? Maybe, maybe not, I don't know for sure.

While the other sectors of the economy are feeling the crunch, they are not or at least they weren't, collapsing. This is not to say everything is ok, it's not.

I've been this road before, people have widely differing opinions on economic matters and the debates seem to go nowhere. I play the markets by in part by assessing the economy, in part through statistical analysis and by trying to understand the direction of the market's psychology.

I've done it for over thirty years and have a firm understanding of all the different ways to lose money:-)

23.

John

September 20, 2008, 11:31 AM

Well George, have you considered this way to lose money?

In #11 you say "Treasuries? Safe but can't keep up with real inflation."

I visited a friend of mine who retired from teaching 8+ years ago. He kept most of his retirement money in TIAA-CREF'sSstock fund, a well respected and well managed mutual fund. He made the point that the value of CREF Stock was now less than when he retired.

Would he have not been better off buying Treasuries? He took on a heck of a lot of risk and has nothing to show for it but a slight loss. Treasuries would have added a significant amount to his principle. 8 years is a long time to practice "buy and hold" with no reward.

24.

that guy

September 20, 2008, 11:37 AM

Yeah Franklin, thanks for letting us hijack your blog for a while. I agree with you about Ron Paul by the way. He wants to abolish the Federal Reserve and quick.

Glad to see our 'fiscally conservative' commander and chief just sent over an $700 billion proposal to the hill! His words say it best (remember to double it):

"It is a big package because it's a big problem," he told reporters.

http://money.cnn.com/2008/09/20/news/economy/bailout_proposal/?postversion=2008092010

25.

george

September 20, 2008, 11:42 AM

I just trade stocks, never hold anything over a year so I'm not an expert on other instruments.

The hidden risk in tresuries is that they don't keep up with inflation, that's par for the course with low interest situations including bank accounts.

The second risk occurs only if you need to cash them in before maturity and rates have gone up, their market value will be less than 100.

BUT, the're safer than a buck under the bed.

26.

opie

September 20, 2008, 11:53 AM

I'd be in the same position as your friend, John, if I haden't sold out last October. Last time I checked my largest former mutual fund holding (last week) it was exactly where it was 5 years ago, 40% down from where it was in October 2007 when I sold it. That is true pain.

I don't have treasuries, I have a treasury mutual fund. I guess if that isn't safe the next investment is an AK-47, a couple miles of razor wire, a tractor and a farm in Iowa.

27.

John

September 20, 2008, 12:34 PM

Opie, that treasury fund, which is a fund for "savers' who wish to conserve real money (or the closest thing we have to it), is going to be diminished by the recent and proposed actions of the government, as the value of treasuries tend to decrease with each and every goose they administer to the stock market. Thus, savers pay more to bail out the speculators than any other group, because the damage done to their savings is added to the extra burden in taxes and deficit that everyone suffers. But you executed perfect timing in dumping that mutual fund - it was the double top for the S&P and the top of the solo walk by the DOW.

Now for That Guy: George Bush, who has wrecked EVERY business he ever tried to manage, is asking for $700 billion on the grounds that if he doesn't get it, there will be a depression next week. This is the same George Bush who asked for $80 billion to rid Iraq of weapons of mass destruction. This is the same administration that pumped $180 billion into the market Thursday morning only to see it all gone by noon. Jim Cramer said last night that if the administration does not get its way with this project, there will be no money in ATM machines next week. The establishment herd is in full panic and will jump off any cliff without giving it so much as a single thought. All they want is for the rest of us to join them.

An alien from Mars would see this as comedy on steroids, chicken little writ very large. I see it as a sign that the panic of 08 continues. Congress will give him the $700 billion and billions more, when the time comes. It is like a family that takes the food out of its refrigerator and puts it directly into the garbage disposal, then wonders why they need to buy more. But they do buy more and they stay hungry until they learn to quit putting it into the garbage disposal.

But yes, it is a big package because it is a big problem. It is a big problem because the government serves only those who contribute enough to ensure their re-election.

If we really knew what mischief they have been up to, we would probably not stop at electing someone else. We would call a new constitutional convention. They fear that much more than they fear "next week's depression".

28.

John

September 20, 2008, 12:38 PM

Opie, if you can't afford the tractor and the farm, take the AK-47 to Alaska. Just be sure to by a pair of frameless glasses. Then you will blend right in.

29.

opie

September 20, 2008, 1:40 PM

Is there something better than treasuries? Gold? Every time I think about buying gold it plunges. Same with oil.

30.

MC

September 20, 2008, 1:41 PM

Sculpture.

31.

John

September 20, 2008, 2:15 PM

Buying treasuries directly is safer than buying a treasry fund. Most funds are heavy in zeros and their value fluctuates according to prevaling interest rates. When rates go down, zeros go up in vlaue, and vice versa. If you own a tresurary outright (not a zero cupon), you will get the interest that was stiuplated in the bond. Unless the government fails, or decides not to honor its debt.

There are probably safer (more stable) fiat currencies than the almighty USD. I don't know what they are, though.

Like I said earlier, countries with fiat money hate gold and drub it down every chance they get. Australia eventually dumped its entire gold reserve to keep the price of gold low, for instance. But if you bought gold in January of 2000, you would be way ahead of buying the DOW at the same time. And DOW stocks have suffered the least of all the stocks. That's because it is dominated by multi national companies that have taken advantage of the dollar's decline.

Just like short sellers are being squashed by the government, gold bugs are also under the perpetual thumb of Uncle Sam. Remember "free" citizens were not allowed to own gold (except for jewelry) until 1972.

Here is how our regulators protected us from the perils of the market:

a) They never regulated market participants with the greatest potential of blowing up the system, such as hedge funds and credit default swaps, even though they were willing to bail out those who hold their bonds;

b) They deregulated market participants such as Bear, Lehman & AIG, who depended on the unregulated market participants, and bailed out two of them too;

c) They retained regulatory control over market participants that had the least potential of doing damage, such as short-sellers, who are treated as unpatriotic nabobs of negativity and near traitors. Last week the governement created the mother of all short squeezes, as opposed to bailing them out. Well, to think like Jack here, maybe the government bailed them out of the profits they had earned by playing by the rules.

Freedom and bailouts for those who can do the most harm, tight regulation for those who can do the least, along with an occasional thumb in their eye.

32.

1

September 21, 2008, 10:20 AM

what blogs can you guys recommend to follow the current bailout situation and other financial topics?

33.

george

September 21, 2008, 5:06 PM

Re:#32. 1

I write a blog FutureModern Finance which primarily covers the mechanics of the stock market. Since the ongoing financial crisis will be affecting market behavior it will be an open topic. Artists interested in learning about the stock market are welcome. What I write about may seem a bit arcane at first, but it works.

For general news I recommend Bloomberg which seems to be the most level headed (non-sensational) of the financial news sites. The New York Times is ok, as is Crain's.

34.

John

September 21, 2008, 5:22 PM

I can certainly vouch for George's FutureModernFinance blog. He has some interesting ways of using standard indicators, such as the McCellan Oscillator, too.

If you want the sensationalized, bullish take on the market, try CNBC. They tend to "scoop", that is break news first, the other networks. But beware of their opinions and advice, as well as that of (most of) their guests. Especially Mad Money Cramer who announced that the ATMs will be out of money next week if Bush does not get his $700 billion.

Bloomberg is the most objective, but do not go there looking for "the truth", fresh from a burning bush. No one has that.

35.

opie

September 21, 2008, 6:46 PM

Cramer is a scandal. I have never seen anyone be so consistently wrong. He could almost be a contrarian indicator.

Try Christopher Whalen, who turns up on the financial programs sometimes and always eats the other guests alive. He was yelling about the derivative thing years ago.

http://www.rcwhalen.com/articles.asp

36.

John

September 21, 2008, 7:09 PM

Thanks opie. I've "seen" Whalen before, but because I usually turn off the sound and just watch CNBC for the numbers, I never listened to him. The way they treated him during his last interview at CNBC reminded me of the way modernists get treated by pomos. They wanted to deny what he said but didn't have the nerve.

37.

opie

September 21, 2008, 11:08 PM

You observation about the way Whalen gets treated is exactly on target. And it is for exactly the same reason, in different terms

I'm amazed they even invite him, or that any of those meany-mouthed jerks agree to go on at the same time.

38.

that guy

September 21, 2008, 11:42 PM

Hey 1,

Try http://globaleconomicanalysis.blogspot.com for a blog that is up to date and not shy about voicing opinions about this mess. His views about deflation coincided nicely with John's.

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