Juggling Dynamite

Naomi Klein has called the Trump administration a “corporate coup.” For more, we speak with world-renowned political dissident, linguist and author Noam Chomsky.Here is a direct video link.

We are living through a financially suicidal time. A time where people who sell risky financial products and collect commissions and fees on transactions, are revered as gurus and followed for investment recommendations.   This Royal LePage ad is textbook of madness masquerading as ‘strategy’ today.  Utter lunacy.
It should remind thinking people of similar tactics used by the broker/dealer/on line trading companies that urge viewers to ‘be brave’, ‘aggressive’, ‘confident’ in trading one’s savings, ‘playing markets’ and all manner of other reckless disregard for untenable capital risks and negative return prospects.

The intelligent approach is not to take wild bets driven by greed or fear, but rather to make rational mathematical assessments, based on probable outcomes, full consideration of downside risks, yields and valuations, relative to previous cycles.  If we aren’t doing that, we’re gambling.  If we chose to gamble, the appropriate question as always, is how much of our savings can we afford to lose?  That should be the limit on our capital wagered.  Instead, the masses are running the table with their retirement savings and leveraging their homes to buy properties and financial assets at manic over-valuations.  This crazy, perilous time is likely to cost our nation for years to come.

As reiterated in a March report from Ryerson University, City Building Institute:

“…as housing bubbles are allowed to expand, many are hurt or drawn into unsustainable financial situations… When housing bubbles unwind, there is major collateral damage, and people are hurt through little or no fault of their own.  And the historical record is that they do unwind, essentially without fail.

As Mianand Sufi (2014; p. 9) put it: “Economic disasters are almost always preceded by a large increase in household debt. In fact, the correlation is so robust that it is as close to an empirical law as it gets in macroeconomics.”

While we are at see:  ‘Corrupt elite’ laundering money in Canadian housing:  Report

This is a theme I have been writing about for 15 years, and the problem is now of crisis proportions.  As computers have grown faster–transactions and markets more complex and opaque–cheating, tricking, skimming and stealing by hedge funds, insiders, politicians and other financial intermediaries has become widespread. As this group continues to rake in billions in ill-gotten gains, they have become more activist, emboldened and dominant of our capital markets. Meanwhile their profits are at the expense of legitimate would-be investors and has eroded confidence and stability in our markets and the global financial system on which we are all reliant and vulnerable.

While some make off like bandits, every one else is paying a heavy price.  From ETFs, fundcos and brokers selling their client order flow to skimmers and front-runners, to security exchanges selling unfair advantage to some players at the expense of the rest, to banks driving their employees to extract more and more fees from vulnerable customers, to revolving door regulators and politicians, and a legal system that lets criminals inside corporations get away with it all…

This discussion with Kolhatkar is far reaching and worthwhile.

Sheelah Kolhatkar, former hedge fund analyst and staff writer at the New Yorker, thinks hedge funds have enjoyed enormous unfair advantages for far too long.

In her recent book Black Edge: Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted Man on Wall Street, she details out how many hedge funds use financial engineering and accounting tricks — even illegal insider information — to fill their coffers at investor expense. And then they use those ill-gotten gains to influence politics.

In this podcast, Chris and Sheelah discuss the racket the hedge funds run, and as a case study, give close examination to the US government’s tortured (and ultimately, unsuccessful) efforts to convict hedge fund kingpin Steve Cohen of SAC Capital on insider trading charges. Given their vast resources and paid influence, these modern robber barons remain practically untouchable.Here is a direct video link.