Entomology 101, The Corruption of Capitalism in America
This is an excerpt. The full article can be accessed on the above link.
The reckoning has already arrived. Stockman makes a well supported case that the US economy has deteriorated since the 1971 closure of the gold window, the deterioration accelerating after the new century’s financial crises. The scant economic fruits have gone disproportionately to the wealthy. Another crisis, the most severe yet, is inevitable. Stockman offers remedies, but given the nonstop political turmoil and gridlock he foresees, it’s a wish list. Although his work is not political philosophy, wherein actual solutions are found, it is nevertheless valuable. He has turned over a rock and shone his light on the saprophytic Washington-Wall Street ecosystem of creepy-crawlers sucking the life out of our decaying country.
The reckoning has already arrived. Stockman makes a well supported case that the US economy has deteriorated since the 1971 closure of the gold window, the deterioration accelerating after the new century’s financial crises. The scant economic fruits have gone disproportionately to the wealthy. Another crisis, the most severe yet, is inevitable. Stockman offers remedies, but given the nonstop political turmoil and gridlock he foresees, it’s a wish list. Although his work is not political philosophy, wherein actual solutions are found, it is nevertheless valuable. He has turned over a rock and shone his light on the saprophytic Washington-Wall Street ecosystem of creepy-crawlers sucking the life out of our decaying country.
After all this time I am amazed that we have not developed a monetary system that resists corruption by the political class other than gold. Gold is hard to defend because the reasons that it works are too simple. Intelligent adults with any sense of morality should be able to resist the lies that support indiscriminate printing of paper currency. That the only way to control those urges is to depend on a metal, I finite supply that requires the expenditure of capital and labor to produce is archaic. Yet, it's all we got. Had?
You can pretend that the lemonade is just as strong as it ever was - but you know this is not true.
Jan, not good at economics but better at science
That being said, The vast majority of venture capital firms ARE vultures - out to make a quick buck.
Staples: Supposedly the great success story of Bain. Tom Stemberg got $5 million in seed money from Bain. Bain flipped that stake a few years later with a $15 million profit, long before Staples made it big. It was one of Bain's first deals, and it was small potatoes compared to later Bain winners.
Stockman cites a WSJ story that examined Bain's record during Romney's tenure. 67 out of 77 deals yielded returns average .7 times the original investment, returns that were less than the S & P over that period. 10 deals, on the other hand, yielded profits of $1.8 billion on investments of $250 million, or 7 times the investment.
Of those 10 deals, 4 went bankrupt after Bain loaded them with debt and made its exit. One deal, a 22 times winner, was a fast flip of an Italian phone book company that allowed the Italian government to evade the EU's debt requirements.
22, or even 7, times profit are not the hallmarks of capitalistic prowess. Rather, they are empowered by below market interest rates and speculative equity markets unmoored from any fundamental notions of value, points Stockman makes. If you want to read Stockman's book, or at least Chapter 27, we can continue this discussion. If you do not want to do so, then the discussion is over, at least on my part.
By the way, the accusation that I engaged in either name dropping or character assassination by association is completely false. Stockman deconstructed Romney's record and that's what I said in my review. If you have a problem with that your quarrel is with Stockman, not me. I strive for the highest standards in my writing. I think even a quick perusal of my website, http://straightlinelogic.com, or my novels, The Golden Pinnacle and The Gordian Knot, will verify that fact.
As to your writing, I haven't read enough to comment, so I'll reserve my thoughts until they are formed. You seem to express yourself and your ideas clearly and have a good grasp of grammar and sentence structure, which bodes well. The fact that you have a professional publication under your belt also speaks highly to your creativity and persistence.
Any prognostications regarding how much longer this house of cards can be kept upright?
Frankly, I am surprised the collapse has not occurred already.
The stock market is so disconnected...
Regards,
O.A.
There ARE other opinions... :)
But hey, I've said all that before, and what do I know... I don't run an investment firm. I just use Ken Fisher. And as of now, my IRA is about 3 percent HIGHER than it was when I handed my IRA to his firm to manage... in June of '04... BEFORE the housing bubble popped, the Great Recession started, and before I'd paid his fees and taken withdrawals for living expenses of about 65% of the initial 'deposit.'
Yep, Can't make money in Stocks and Bonds and all investment managers are out to screw you. Sure. YMMV, FWIW. :)
Thanks for the options. Many are making money on their IRAs, but I have seen them lose when the market falls also. It is all about timing isn't it? Either way it sure beats a savings account.
Thank's again,
O.A.
And when the market falls, most 'investors' bail out and then wait too long to get back in, so they usually end up avoiding the (inevitable?) recovery phase, thus killing their own returns.
The total of my IRA and my wife's IRA is roughly down 0.31% PER YEAR for the over ten years we've been with Fisher. At that rate, we will deplete our IRAs in... a bit over 300 years.
And my results STILL include the housing bubble's burst AND the Great Recession.
So anecdotal, right? Like his other individual and corporate and municipal clients.
As Ken loves to point out, newsletter publishers have forecast about 25 of the last three market drops. I do a LOT of recycling of mailers I get from them.
ps... "Savings Account"? What's a 'savings account'? :) I use our checking account to receive IRA disbursals and SocSec payments and the balance is automatically used to pay off our Visa card(s) and most recurring bills on a monthly basis. We try to keep at least one or two months' cash flow as the minimum balance and our wonderful banks credits us with about 25 cents a month "interest" on the balance. Not enough to move the needle of my consciousness. I trust they understand that, too. It's a fun world. I recall when my mom moved all of her savings accounts from our NJ bank to a bank in Southern California because the CA bank offered 2.5% interest.... a full point or so higher than the bank two miles' drive from our home. Oh, yeah... that was somewhere back in the 1950s or 1960s... Yep, she, too, was quite an influence on my 'money habits.'
Cheers, and enjoy! And I believe the MarketMinder subscription can be had at no direct cost...
Thank's
I knew that the Great Recession was well over when my inbox and snail-mailbox both started to fill up with can't-lose investment 'advice.'
And seriously, several decades ago, I pissed several tens of thousands of dollars down the drain trying to chase some of those 'advisors'' claims. None were long-term successes, and one guy did time in federal prison and I helped supply some documentation to the prosecution.
Sometimes, the only thing worth keeping is the emails they send... :) Sort of as a 'moral investment in their future... behind bars.'
Live long and prosper...
I say we should dismantle it now but will wait for a mini-crisis to take action. You say we'll wait for a mega-crisis.
Either way, more people should read this to increase the chance we'll act sooner rather than later.