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Before the Stroke of Midnight

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  • #16
    Re: Before the Stroke of Midnight

    Capitalism? dead and buried. Name one capitalist you know.

    Capitalism died long ago.

    Capitalism was replaced by something that at the time of replacement looked like Capitalism - a "pod person", if you will, or a "pod personification" (to mix metaphors and analogies and murder both in the process)

    The pod person that replaced capitalism is called OPM - other people's money.

    How does this work?
    CEOs stack the board and all rob "shareholders" (other people) of their money,

    stockbrokers team with IPO underwriters to rob shareholders of their money,

    hedge fund managers conspire with bankers to make huge bets with OPM - if the manager loses, the Other People lose all their money - if the manager wins, the Other People lose outrageous management fees)

    .... and on and on it goes.


    Originally posted by Thallid View Post
    This reminds me of some graffiti that I saw on a building in Berlin in the early nineties (not too long after the fall of the wall): "Sozialismus ist tod und Kapitalismus ist nicht weit hinten."

    Translation: "Socialism is dead and Capitalism isn't far behind."

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    • #17
      Re: Before the Stroke of Midnight

      Originally posted by Spartacus View Post
      The pod person that replaced capitalism is called OPM - other people's money.

      How does this work?
      CEOs stack the board and all rob "shareholders" (other people) of their money,

      stockbrokers team with IPO underwriters to rob shareholders of their money,

      hedge fund managers conspire with bankers to make huge bets with OPM - if the manager loses, the Other People lose all their money - if the manager wins, the Other People lose outrageous management fees)
      I would agree this is how a very large part of the market works. You could also say that investment banks lever up their assets to buy more assets with loans from other banks (central banks too?)

      However, I firmly believe in investing long-term in companies that have shown good track records of not doing what you are saying. A good, solid management with a board that has shareholder interests first and foremost is rare, but companies like that are out there. There is a reason that many people follow Warren Buffett, and many people who have have profited handsomely.

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      • #18
        Re: Before the Stroke of Midnight

        Originally posted by DemonD View Post
        I would agree this is how a very large part of the market works. You could also say that investment banks lever up their assets to buy more assets with loans from other banks (central banks too?)

        However, I firmly believe in investing long-term in companies that have shown good track records of not doing what you are saying. A good, solid management with a board that has shareholder interests first and foremost is rare, but companies like that are out there. There is a reason that many people follow Warren Buffett, and many people who have have profited handsomely.
        I passed this to Eric earlier today:

        Forget the bears, a new kind of bull will drive markets:

        http://business.timesonline.co.uk/tol/business/columnists/article2163758.ece

        One last thought, when we think of the FED, do we entertain the idea that the biggest player in the money markets driving the huge numbers of daily turnover....... is the FED itself?

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        • #19
          Re: Before the Stroke of Midnight

          Originally posted by Chris Coles View Post
          ...
          One last thought, when we think of the FED, do we entertain the idea that the biggest player in the money markets driving the huge numbers of daily turnover....... is the FED itself?
          I don't have the link handy, but the NY Fed trading desk admitted to trading over $100 billion per day of TBills and TBonds at least 2-3 years ago.
          http://www.NowAndTheFuture.com

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          • #20
            Re: Before the Stroke of Midnight

            And how many FED trading desks are there in the United States?

            And, add to that all the other "desks" of all the other countries such as the UK and Japan and what do we have?

            So now we can see that this is not a matter of the "private" exchanges, but instead of the federal and all other governments being the main vested interests. One could argue that that will maintain stability as none of them can go `belly up' on the rest.........

            The downside is that if the US FED does go beyond their credit limits then yes, the whole lot will tumble and instead of private banks being bankrupt, the governments will be in a hole they will not be able to climb out of.

            Perhaps this is why, instead of a stabilising influence from the FED we can see this turning into the classic case of the trader who cannot stop trading and just has to go on down the hole until his organisation runs out of cash to support the positions.

            We can bet on the reaction..., "What, us?.... never knew a thing about it gov.......news to me!!!!

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            • #21
              Re: Before the Stroke of Midnight

              Originally posted by Chris Coles View Post
              And how many FED trading desks are there in the United States?

              And, add to that all the other "desks" of all the other countries such as the UK and Japan and what do we have?

              ...

              Dare I?... hmmm... RIMSHOT! :eek:


              The other Fed locations do so little that it's not worth mentioning, and may even do zero now.
              http://www.NowAndTheFuture.com

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              • #22
                Re: Before the Stroke of Midnight

                Originally posted by Chris Coles View Post
                I passed this to Eric earlier today:
                Forget the bears, a new kind of bull will drive markets:
                http://business.timesonline.co.uk/tol/business/columnists/article2163758.ece
                Thank you. If you want to sum up Armageddon, thats it. Unfortunately all the arguments this article makes why its NOT going to happen are wrong.

                "As this column has repeatedly argued, the long-term trend in asset prices will change from up to down, when and only when one of three conditions is satisfied. The global economy must move into recession, decimating corporate profits; or interest rates on government bonds must rise sharply, to well above the long-term economic growth rates; or stock markets must get so overvalued that equity prices start to fall of their own accord, even without any pressure from high interest rates or weaker profits. At present, none of these conditions is satisfied for broad stock market averages in most leading economies"


                "Secondly, it is argued that Asian and Middle Eastern central banks and sovereign wealth funds will recognise their folly in providing easy financing for leveraged private equity bids. As a result, oceans of liquidity will be drained from Western stock markets, contributing to the inevitable collapse. Again the premise is probably right, but the conclusion does not follow. It is true that asset prices around the world generally have been buoyed by liquidity created by reckless banks and credit market lenders, including hedge funds, pension schemes and sovereign wealth funds. The bears believe that this liquidity will be drained out of the equity markets as hedge funds go bust, bank balance sheets are decimated by credit losses and institutional lenders realise that they have been taken for a ride. I am not convinced. While I believe that there will be less money available for leveraged transactions, there is no reason why overall flows into equity markets should dry up."

                "Finally, the bears contend that falling asset prices and receding liquidity will aggravate the troubles already evident in the US housing market and condemn the US economy to a long period of stagnation. Some even predict a Japanese-style vicious circle of defaults on leveraged transactions, widening credit spreads, imploding bank multipliers and more liquidation of balance sheets. The problem with this argument is that all the economic indicators point the other way. The US economy has passed its low point and while we do not expect it to return to trend growth of 3 per cent plus for another six months or so, all leading indicators suggest that a gradual acceleration is under way."

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