Juggling Dynamite

On Tuesday, the House Financial Services Committee is slated to hold a hearing on the STOCK Act – short for Stop Trading on Congressional Knowledge Act.

The bill, which has languished since first being introduced in 2006, now has over 150 sponsors and the Senate held its first-ever hearing on related legislation last week.

“We’ve had a lot of recent converts now that the public knows what’s going on,” quips Peter Schweizer, author of Throw Them All Out, a book which — along with a subsequent 60 Minutes profile — helped focus the nation’s attention on the trading activities of sitting members of Congress.

You can view the clip here or see it below.

As mentioned in an earlier post, Nassim Taleb’s excellent article The Black Swan of Cairo offers important insight on why repeated efforts to intervene and prop up asset markets only makes our financial system more volatile, dangerous and prone to increasingly severe crisis.  It’s kind of like repeatedly acting to save our kids from all their bad decisions and consequences–they never learn good lessons and habits and eventually are likely to end up in a complete disaster.

We have seen this all over and most recently in Europe where central bank efforts to underwrite insolvent governments, their debts and banks have bought only fleeting respite to be followed by violently surging interest rates. This chart of the US 10 year treasury yield underlines a similar point where repeated QE efforts from the Fed, ostensibly to bring down borrowing costs, have in fact resulted in the opposite effect bringing a break out to higher yields each time. We the people must get the talking stick back off of bankers and bought politicians if we are to make any sustainable progress out of the current crisis.

Click here for a larger version of the chart. Source Cory Venable, CMT, Venable Park Investment Counsel Inc.

Bill Moyers offers this worthwhile essay on why plutocracy and democracy don’t mix and cannot coexist.

Bill Moyers Essay: Plutocracy and Democracy Don’t Mix from BillMoyers.com on Vimeo.

For those still saying that the rich have gotten richer the last few years because they are stronger and work harder than the masses, please wake up. Time to think and read some more, see:

• Hank Paulson’s Crony Capitalism, Rolling Stone
• OECD calls time on trickle down theory, Globe and Mail
• The Black Swan of Cairo, Nassim Taleb and Mark Blyth

In order to grow and rebuild strength we must stop propping up the weakest business leaders, assets and institutions at the expense of the rest of the population.  The costs of these old ideas and policies are sapping the good from our society.

Finally, see A Fool’s market rally authored by a very foolish Fed, to wit:

At present, global central bankers are the world’s sham doctors, constantly seeking to trick the global economy into feeling flush with interventions that will do nothing to stimulate the lone thing that will actually author recovery: production. It’s time for the world’s central banks to do what good doctors do, which is to allow the overmedicated patient to heal free of more cures. If not, as in if they continue to doctor the wilting patient, soon enough they won’t even be able to fool the fools.