View Full Version : The Great Risk Shift, Private Equity Bubble Update, Volatility Shock

04-17-07, 10:16 AM
http://www.itulip.com/images/jR.jpgThe Great Risk Shift, Private Equity Bubble Update, Volatility Shock, Limits of Philanthropy, and Whither China?

"Investors shouldn’t go anywhere near is a CDO or residential mortgage-backed securities rated triple-A by Moody’s and S&P because these securities are going to get downgraded by the hundreds of billions because they are secured by sub-prime and Alt-A mortgages where there’s going to be massive defaults.”

- Kenneth Heebner, manager, CGM Realty Fund

The Great Risk Shift

(Econotech FHPN (http://econotech.blogspot.com/)) April 17, 2007

“The one thing they [investors] shouldn’t go anywhere near is a CDO or residential mortgage-backed securities rated triple-A by Moody’s and S&P because these securities are going to get downgraded by the hundreds of billions because they are secured by sub-prime and Alt-A mortgages where there’s going to be massive defaults … most of them appear to have been sold to hedge funds and foreigners and pension funds. Interviewer: Who owns them? Heebner: No one wants to talk about it … They [hedge funds] buy a pool of mortgages that yield 8%, and they borrow against the yen and pay 3% [a yen carry trade], and they lever it ten to one, and so you have a lucrative profit. The hedge fund that you’re running, the manager gets 20% of the gain. So even if you go a year before you go broke in the hedge fund, you get rich until the thing gets shut down. So there’s a huge incentive to gamble recklessly here in the hedge fund business … They [largest investment banks] created, they invented this machine. They’re the ones that came up with the idea of securitization. They know the products are toxic. I don’t think they’re going to suffer losses. They simply passed them on to everybody else ... The only impact [on the i-banks] this will have when it shuts down is that the profits flow from it will get less … So, they know the product is toxic; they’re not going to get caught [financially].

Interviewer: And basically you think they’ve disposed of all the risk. They created it, they made their fees, and they got rid of the risk. Heebner: That’s right.”

- Kenneth Heebner, manager, CGM Realty Fund, Bloomberg video, Apr 12 (my transcription).
Heebner, a very experienced mutual fund manager, is one of the tiny handful of the absolute best out of many thousands. According to the Bloomberg video, his CGM Realty Fund had a 5-year cagr of 30%. CGM as a whole manages more than $6 billion, so this is real money, not economists’ forecasts.

So, when Heebner talks, serious financial people listen. He’s not a permabear. In fact, despite his strong views on the residential real estate market that I quote in the next section below, he said he currently doesn’t think this will lead to a U.S. recession.

“Heebner, manager of the top-performing real-estate fund over the past decade … co-founded Capital Growth Management in 1990 … known for making concentrated investments in a few industries. He sold homebuilders after owning them from 2001 to 2005, record years for home sales. He bet against technology and telephone stocks in 2000, correctly timing their collapse.”

- Bloomberg , Apr 12
On April 4 I posted an article titled “When Citibank Chief Exec Talks, Do People Listen: ‘A market correction is coming, this time for real’” link (http://www.itulip.com/forums/showthread.php?t=1187). Likewise, Heebner also has very important comments on real estate prices, which follow in the next section.

I chose to lead with the above quote because I wanted to focus first on the issue of the hyper-speculative nature of global capital markets, who wins, who loses, a major theme of my web site link (http://econotech.blogspot.com/). That issue is also taken up below with respect to private equity.

Heebner says that the creators of the “toxic” mortgage products, the largest investment banks, i.e. the Goldmans and Lehmans of the world, will not be the losers. They almost never are. Their motto for the rest of the world could be the proverbial, "Heads I win, tails you lose."
"I think it’s not only sub-prime, I think the Alt-A mortgages are going to default on a huge scale also … As we get a large amount of these two and half trillion of mortgages going into default … You’re going to see foreclosed houses dumped onto an already weak market where homebuilders are struggling to sell their spec houses. And so the price declines that have started will continue and maybe even accelerate in some of the hotter markets. I would estimate that housing prices in '07 will decline at least 20% in a lot of markets from where they are today … What you’re going to see is the biggest housing price decline since the Great Depression … The consequence of this is going to be a big decline in housing prices … … housing prices in the inflated markets, that’s California, Arizona, Nevada, Florida, and parts of the northeast, they have to decline a lot before it’s attractive to buy rather than rent … They’re [mortgage losses] going to dwarf those [Resolution Trust – S & L crisis of the early 190s] losses … It could easily approach a trillion dollars. That dwarfs anything that has happened. Enron was a hundred billion dollar loss, this is going to be far greater than that.”

- Kenneth Heebner, manager, CGM Realty Fund, Bloomberg video, Apr 12, 2007 (my transcription)

“...a new Bloomberg/Los Angeles Times poll … Most Americans remain sanguine about home prices, the poll showed, with more than half expecting homes in their neighborhood to hold their value over the next six months. Twice as many respondents said home prices will increase as those who predicted a decline. A majority said slowing home sales nationwide will hurt the economy.”

- Bloomberg, Apr 11, 2007
Here's the link (http://www.bloomberg.com/avp/avp.asxx?clip=mms://media2.bloomberg.com/cache/vvefEajX3Khs.asf) to the full Heebner Bloomberg video, a short ad appears first, and at times it has been unavailable.

(Editor: Below, excerpts of April 12, 2007 interview by Bloomberg of Kenneth Heebner, Manager, CGM Realty Fund.)

<embed src="http://www.vimeo.com/moogaloop.swf?clip_id=172501" quality="best" scale="exactfit" width="400" height="300" type="application/x-shockwave-flash"></embed>

See full Bloomberg video here (http://www.bloomberg.com/avp/avp.asxx?clip=mms://media2.bloomberg.com/cache/vvefEajX3Khs.asf).

Read full Bloomberg story here (http://www.bloomberg.com/apps/news?pid=20601087&sid=aonDdgoWQ.pg&refer=home).

Private Quity Bubble Update

In addition to mortgage-backed securities, CDO’s, etc., that Heebner discusses above, private equity and M&A continue to be key issues in the global financial markets, with M&A reaching $1 trillion in the first quarter, a record on pace to top last year’s nearly $4 trillion.

Here is a recent comment on private equity from Michael Mauboussin, the highly regarded strategist for Legg Mason (e.g., see reviews of his books on Amazon at link (http://www.amazon.com/More-Than-You-Know-Unconventional/dp/0231138709/ref=sr_1_1/104-3385363-4504748?ie=UTF8&s=books&qid=1176657774&sr=1-1) and link (http://www.amazon.com/Expectations-Investing-Reading-Prices-Returns/dp/159139127X/ref=sr_1_1/103-8397445-5367042?ie=UTF8&s=books&qid=1176718078&sr=1-1)):

“The overarching question is why public companies can't do the same things [as private equity] to create the most value. That hasn't been satisfactorily answered by many executives. If there are ways to create value, why aren't they doing those as public companies? Why do they need to be private? Those are concerns that should weigh on public shareholders … That's the right word: incentive. Two things in particular make these transactions attractive to an executive. First, often the ownership stake or equity stake of the executives can rise quite a bit. They're more leveraged to the success of the operation, so they stand to do better financially. Second, there may be corporate actions, asset sales, downsizing or other capital allocation decisions that managers may feel are truly in the best interests of the value creation for the company, but there's a perception that making those moves as a public company would be unpopular. That's a perception, not a reality, but perception is important. So when you go to an executive and say the prospects are for you to have more skin in the game and do very well financially if this works out, and to have more latitude to make tough decisions, that's the one-two combination that draws executives.”

- Legg Mason strategist Michael Mauboussin, printed interview, MarketWatch, Apr 4, 2007
Mauboussin’s points seem somewhat similar, though more polite, than those I made in my Dec 19 article, “World Needs Better ‘Face of American Capitalism’ than Private Equity, Goldman Sachs” link (http://www.itulip.com/forums/showthread.php?t=724). In short, private equity is a leading symptom of massive under-investment in real innovation and productive capital:

“...my main criticism of private equity and the rest of the global hyper-speculators, such as hedge funds and investment banks like Goldman Sachs (mainly a very large hedge and private equity fund), is the economically unproductive ways in which they “earn” their extraordinarily high returns on leveraged legal looting (ROLLL) … If all this shareholder value enhancing was supposedly done by CEOs already, then after two decades of it, what could possibly be the role of private equity in now supposedly greatly providing even more of the same? However, if public companies haven’t enhanced shareholder value by such draconian actions and now need to be wholesale taken over by private equity, then the whole system of “free capital markets” and corporate governance that the ex-Goldman Sachs U.S. officials mentioned above are trying to persuade China and the rest of the world to adopt was perpetrated for the benefit of the very few who have become unfathomably rich. Even if the day of reckoning of the current immense wave of private equity deals were continued to be postponed another year or two, this unproductive use of capital already has greatly distorted global capital market flows, corporate incentives, and thus corporate allocation of scarce and critical resources, especially all-important human talent.”

- “World Needs Better ‘Face of American Capitalism’ than Private Equity, Goldman Sachs” link (http://www.itulip.com/forums/showthread.php?t=724).

“Income inequality grew significantly in 2005, with the top 1 percent of Americans … receiving their largest share of national income since 1928, analysis of newly released tax data shows … The new data also shows that the top 300,000 Americans collectively enjoyed almost as much income as the bottom 150 million Americans.”

- New York Times, Mar 29
I doubt this enormous concentration of income and wealth in the top 1/10th of 1 percent can be adequately explained by educational levels without significantly accounting for the effects of unprecedented unproductive global hyperspeculation.

Of course, love him or hate him, Jim Cramer can be counted on to be brutally frank and honest, more so than any other recognized name on Wall Street. Here’s his recent take on private equity:

"They [private equity firm Cerebus Capital Management] have to break the union. The key strategy behind everything they’re doing is to crush the unions. That has to happen … the Goodyear model is the model for Cerebus … Cerebus is a very smart company. The lynchpin of the strategy, I believe, is to break the union … I’m pro-union, I’m against manipulation."

- Jim Cramer, "Wall Street Confidential" video, Mar 29, 2007 (my transcription, on Cerebus' strategy in the U.S. auto sector)
This is a very old story, several decades old, that’s almost finished, union busting came into vogue at least as early as one of President Reagan’s very first acts as president in breaking the air traffic controllers strike (emulating the City of London's Margaret Thatcher).

Very Brief Update on Global Financial Markets: Risk of "Volatility Shock"

In my Apr 4 article link (http://www.itulip.com/forums/showthread.php?t=1187), I noted: “...each [global major index] ETF has rebounded from the decline that started at the end of February 2007 and is now nearing or at its previous high. Should they take out those highs, especially EEM [emerging markets], perhaps in another manic run along with rising commodities like last April, this might then trigger another sharp decline, like last May-June.”

For now, that scenario seems to playing out, especially in the continued enormous speculation in China’s equity markets, now up more than 50% this year, and any commodity that feeds into China’s economy. I also noted the recent loss in relative strength in India’s equity market as a possible cause for concern, and that also continues.

I also noted there that updated data plugged, by a major investment bank, into a leading economic indicator developed by a Fed researcher, while not yet signaling recession, was well on the way to doing so. Since 1962, on six of the seven occasions when it has reached the March level, it then went on to continue moving up through the signal threshold and correctly forecast a recession (when the indicator was at this level in early 1984, the threshold was reached but not breached, hence the indicator has correctly forecast 6 of 6 recessions, with no false signals).

I would like to add two things regarding this. First, as I’ve discussed elsewhere (e.g. the section "Why I Like Charts and Leading Indicators" in my Sep 26 article, "Global Markets Hope 'Mid-Cycle' 'Soft Landing,'" link (http://econotech.blogspot.com/2006/09/926-global-markets-hope-mid-cycle-soft.html)) while I greatly prefer leading economic indicators to economic model forecasts, since the latter usually miss the turns, I much prefer charts to both, trying as best I can to stay aligned with their main trends, as I’ve mentioned several times before.

Second, I have a great deal of respect for the work of perhaps the top provider of leading economic indicators, Economic Cycle Research Institute (link (http://www.businesscycle.com/)). While ECRI stopped posting a chart of its Weekly Leading Index (WLI) on its web site a few years ago, it still does post media comments, such as follows:

“We’re hitting bottom on the economic growth and we should expect more positive surprises as the year progresses,” said Lakshman Achuthan, managing director at the Economic Cycle Research Institute … Achuthan says it’s normal to have “a lot of confusion” during this time. “We don’t have any recession here, I think those fears are largely being laid to rest by a lot of the data coming out,” he said. “But we’re still having of [sic] what seems to be a cyclical bottoming in the growth rate in the economy, and when you’re at a turning point like that, you’re going to get mixed data.”

- CNBC, Apr 9, 2007
Just look at how confused Wall Street is as it flip-flops almost daily, indicated by futures contracts, on its what is the Fed going to do guessing game. My advice for a "big picture" is to follow leading indicators (e.g. Conference Board and OECD provide others), but most especially key longer-term market charts as closely as you can.

And critically, especially in periods like this with extremely low but slightly increasing financial market volatility, do NOT underestimate the very real possibility of financial “volatility shocks” mentioned here by the IMF, which markets and forecasters always underestimate (in part due to human psychological nature, part to huge vested interests), but which can do great damage to capital preservation:

“Against the backdrop of continued global growth, none of the individually identified risks by themselves threaten financial stability. However, with volatility across asset classes close to historic lows and spreads on a variety of credit instruments tight, investors may not have adequately factored in the possibility that a “volatility shock” may be amplified given the increased linkages across products and markets. Institutions may well be acting in accordance with their own incentives, but collectively their behavior may cause a buildup of investment positions in certain markets, possibly resulting in a disorderly correction when conditions change. For instance, the rapid growth of some innovative instruments, the rise in leverage in parts of the financial system, and the growth of carry trades suggest that market participants are expecting a continuation of the low volatility environment and that a sustained rise in volatility could perturb a wide range of markets.”

- “Global Financial Stability” semi-annual report, April 2007, IMF
What Private Equity, I-Banks and Hedge Funds Taketh Away, Can Philanthropy Give Back?

“Wealthy philanthropists have the potential to do more than the Group of Eight leading nations to lift Africa out of poverty, according to Jeff Sachs, special adviser to the United Nations secretary-general … "There are 950 billionaires whose wealth is estimated at $3.5 trillion [$3,500bn]. An annual 5 per cent 'foundation' payout would be $175bn per year - that would do it. Then we don't need the G8 but 950 people on the Forbes list," said Mr Sachs. "Maybe private philanthropists will champion solutions to individual problems rather than the G8," he said. He was speaking as the OECD reported last week that aid from rich countries to Africa remained static last year even though G8 leaders promised in 2005 to spend $50bn more each year to 2010 on aid, with half the rise going to sub-Saharan Africa. The so-called Gleneagles commitments were championed by Tony Blair, the prime minister, and Gordon Brown, the chancellor.”

- Financial Times, Apr 9, 2007
I have enormous respect for the almost super-human efforts of Sachs in this area, along with incredible philanthropy such as that of the Gates’ and Buffet. That said, my take on this in my April 4, 2007 article, “When Citibank Chief Exec Talks,” link (http://www.itulip.com/forums/showthread.php?t=1187):

“Rajan [ex IMF economic counselor] does make a key point that I have tried to make far less well several times on my web site, i.e. low interest rates are not mainly the result of a so-called “savings glut,” a la Bernanke, but rather also due to under-investment (I would argue massively so) in real productive assets, in my formulation to meet the needs of most of the world’s population, resulting in what Rajan calls a “financing glut,” what I consistently label global hyperspeculation. And, btw, the unprecedented amount of philanthropy directed at these needs by Gates, Buffett, etc, which is incredibly worthwhile and extremely admirable, is not enough, what I would argue is that what the philanthropists consider to be a "market failure" itself ultimately must be directly addressed as such and changed.”
Once Again, Whither China?

Since Goldman Sachs and other i-banks, private equity, hedge funds, etc, have long ago captured the global capital markets in the "developed" world, that battle is mainly being fought in "emerging" markets, most particularly China:

“Carlyle Group's bid to buy part of Chongqing City Commercial Bank will be rejected as China stiffens opposition to buyout firms, especially in the $5.6 trillion banking industry, three people familiar with the matter said …The regulator is also mulling plans to make it harder for private equity companies to purchase stakes in banks. It is the latest setback in China for Washington-based Carlyle, which was forced last month to scale back a planned takeover of Xugong Group Construction Machinery Co. The Chinese government is concerned that buyout firms seek short-term profits and don't improve companies they buy enough, the people said.”

- Bloomberg, April 4, 2007
As I put it in my Dec 19, 2006 “World Needs Better ‘Face of American Capitalism’ than Private Equity, Goldman Sachs” link (http://www.itulip.com/forums/showthread.php?t=724):

“China is in the midst of a multi-year effort to try to reform its financial system. The U.S., led by ex-Goldman chief Treasury Secretary Paulson, is strongly trying to influence it in the direction of the American-Anglo “free market” model, rather than perhaps the more traditional Asian one of state dominated banking systems that produced remarkable results in the industrial rise first of Japan then later S. Korea, both under authoritarian regimes. China going from the huge problems of its own state-dominated banking system to the Wall St-City of London hyper-speculative “free capital markets” model would be somewhat like jumping from the frying pan into the fire, but that limited choice is the way the issue is always framed.”
And in my “Whither China?” section of my Oct 27 article “Global Strategic Bargain” link (http://econotech.blogspot.com/2006/10/1027-global-strategic-bargain-positive.html):

“Thus, with very limited domestic and international opposition, that basically leaves China and Russia left standing in the way of total global domination by the hyper-speculators, two states which the U.S. government can not currently strongly influence, to the obvious chagrin and anger of those pushing U.S. hegemony in the current hyper-speculative version of globalization (there is a good version), hence the trotting out of Paulson's and Rice's current “soft cop” approach to China. The U.S. is not really interested in “free trade," it no longer has much that countries like China seem to want to buy, except Boeings and soybeans, since as noted above U.S. industry has long since been hollowed out, as opposed to Japan's and the EU's, which are more slowly getting there, to their great dismay. Rather, what the U.S. mainly wants from China, and everywhere else, is unlimited capital mobility for its mega- global financial institutions, so it can ROLLL (again, return on leveraged legal looting) over them as they have the rest of the world. Both China and Russia seem aware of this, and their elites are playing a fascinating game with the global hyper speculators … One of the most important areas to focus on is control of the financial sector. Huge Western financial institutions have made significant investments on very favorable terms in China’s four main banks, but China is clearly reticent to give up too much control of its key financial institutions and its nascent capital markets, as with Citigroup's efforts to take a stake in Guangdong Development Bank … As it did with its industrial state-owned enterprises, China is using the club of foreign competition to do much of the politically unattractive dirty work, so to speak, to shake up its four large banks and the financial sector. In the long term, the Goldman’s will ultimately need China far more than China needs the Goldman’s. China is at the center of East Asian production networks that generate real savings/capital, which the U.S. currently does not. It is critical that China continue to channel its capital where it is needed, into China’s internal development, not into very low-yielding U.S. securities, it holds $1 trillion in foreign exchange reserves, that are just being printed up in massive amounts to control and confiscate real wealth. “

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04-17-07, 12:02 PM
"Investors shouldn’t go anywhere near is a CDO or residential mortgage-backed securities rated triple-A by Moody’s

I see Moody’s ratings as a good indicator to get out of a product just when they tell the public (herd) to get in.
Now Moody’s going to rate unsecured hedge fund debt in preparation for a predicted rush to the public debt markets by alternative investment firms.
The smart money must be exiting the hedge fund debt and the general public will fill the vacuum.


04-17-07, 02:31 PM
On the real estate front, here was an article from the San Francisco Chronicle - <a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/04/17/BUGCQP9MBO1.DTL">
Foreclosures, default notices hit 10-year high
Sluggish sales, rising adjustable mortgages blamed for 802% increase from previous year in homes lost

Chris Coles
04-18-07, 08:44 AM
As with any such, the great problem is that nothing will change until the current protagonists get badly burned and everyone has to look at the current ideals of the financial system in a new light. Until a collapse, nothing will change, simply because nothing has to.

04-19-07, 09:02 PM
Why is it that when those who facilitate the movement of capital make money, it's looting? And why is intellectual capital removed from the equation when we want to describe the US economy as "hollowed out".

Capital is big business right now because there are a lot of opportunities for capital right now. But if you really want to deny the value of what's been produced with this capital, I suggest you visit Jim Kunstler's site, you can wallow in it over there.

Do you really think that the State can allocate capital better than Goldman? You bet.

04-19-07, 10:58 PM
Why is it that when those who facilitate the movement of capital make money, it's looting? And why is intellectual capital removed from the equation when we want to describe the US economy as "hollowed out".

Capital is big business right now because there are a lot of opportunities for capital right now. But if you really want to deny the value of what's been produced with this capital, I suggest you visit Jim Kunstler's site, you can wallow in it over there.

Do you really think that the State can allocate capital better than Goldman? You bet.

the profits are accruing to paper shufflers building towers of debt and derivatives. government is as [ir]responsible for what's going on as any private actor. the fed and bank regulators overlooked, and in fact encouraged, the crazy and irresponsible lending [and borrowing] that went on in the housing market. the housing market is a good example, though, because the risks now lie with the borrowers and the pension funds and other holders of the paper [mbs, cdos, and so on], while the goldman's keep the profits from the fees generated from slicing and dicing subprimes and alt-a's and primes, too, most likely. for example, about 96% of subprimes got chopped up and repackaged as aaa [moody's and s&p being strongly conflicted arbiters of quality].

intellectual capital is important, and google and, prior, microsoft are the best examples of that, but even the most intelligent bullish writers of whom i'm aware, the gavekal folks, use their "platform company" model to point to the export of manufacturing jobs, and a resultant sharp increase in income inequality. we could probably live with the inequality, but the fear is that there is instability embedded in the debt and derivatives, and that a lot of people are going to get hurt.

Chris Coles
04-20-07, 04:47 AM
Take a look at the original value of the shares being traded, some of them are for less than one cent. So, that was the amount of capital per share that was actually invested in the productive capacity of the company. Yes, the successful have shares of a value many times that single cent, some into many dollars. But that value has been completely retained within the hands of the Institutional Investors, (II), not invested back as productive capital creating new industry.

The II's trade their assets between themselves, I believe recent reports show that these trades are at the level of as much as the total capital base of the United States in one day. Each little trade bringing in a tiny profit to the II but at the level of trade described, the total income becomes many millions per day. But the turnover is not from investment into the local community, such as productive jobs, local industry and the like, instead it is inside a system that totally excludes the local community.

But it gets much worse. The II's own your industrial groups who in turn, driven by the relentless search for profit at any cost have moved the majority of the manufacturing capacity of the United States to Asia. A good example is that I gather that the majority of the United States steel industry as suffered a steep decline over the last decade as all the manufacturing capacity of the US has been exported to China. You do not believe me, talk to the City fathers in Pittsburgh, or my business bank manager also in PA. I gather something like 800 small steel mills have disappeared. The next time you buy anything, take a close look at the label. I will bet my right arm it will say: Made in China. Try a Dewalt angle grinder, probably the single most important item in any shop making something from steel. Yes, made in China.

A recent report about the state of the oil industry and its troubles with poor maintenance lifted into view the small fact that the United States does not have enough certified welders to do the work.

Innovation, inventions, new industry do not come from II investment as they do not provide any funding for any independent new industry. You have to be a line manager inside an existing company who does not mind moving the production to the lowest value location to make a small personal profit inside a timescale of a few years.

The idea of local community equity investment into new productive capacity led by outstanding individuals who will be left in ownership of their business is laughed at. They will not answer a simple email nor even pick up the phone to talk to you. PERIOD.

That is the instability. All the capital of the nation has instead been shifted to the business of bolstering the value of fixed assets. When they ran out of MBO's they moved on to M&A and when that started to dry up they then saw the chance to lend to home owners and the whole financial system gathered together and drove, under the full knowledge of the Federal Reserve and the Bank of England, to drive up the value of the one thing that defines the based overhead of any nation; the price of a home for your family.

Now, stuffed with artificial value, your priceless house has become a huge burden on the overhead of the nation.

Madness. Utter madness. But so many have made great fortunes out of this stupidity, they sit there and call us idiots for not following them into the huge artificial market they created.

Even more galling; when the whole edifice collapses, as it must; the protagonists will not lose a penny of their fortunes, as they do not have anything but money in the bank to lose. And the banks are going to be saved by the FED bailing them all out.

The real loser is the next generation, the young people who, as here in the UK, have seen the price of the home they will work all their lives for priced into the stratosphere and out of reach. Their measly income from selling the products marked made in China never giving them the necessary income to be able to afford a home.

Institutional Investors can posture all they wish, but reality is about to come crashing into their lives as the local community values from hard and productive work disappear and their cherished nation collapses into ruin.

New, local, privately owned productive businesses are the great river sources of any nations vitality.

Today, you all live in a financial desert downstream of Institutional Investors holding back the nations capital from local productive investment and who have no allegiance whatever to those local community values. They are led by a similar group at the highest level that have not demonstrated one jot of responsibility for what is going on before our eyes.

That is the problem and who cares?

04-20-07, 08:30 PM
Do you really think that the State can allocate capital better than Goldman? You bet.

Yawn (http://www.nowandfutures.com/grins/yawn.wav)... wrong question.