Sunday, October 5, 2008

Wall St. Slush Fund

I've practically been living over at The Big Picture, as well as my own IRA account the last couple of weeks. The Treasury Give-Away Act of 2008 has gotten me off of politics and looking out for number one. It doesn't matter who wins the election, it's time for survival mode.

Over on Market Edge where I do my research, they divide the market into 92 groups (sectors). Every single one of them is down. Two pages of nothing but red numbers. It's been that way every day for 2 weeks. When President Bush said "You can run, but you can't hide.", I thought he was talking about Bin-Ladin.

What really set me off today was this, courtesy of Financial Sense. It's an actual investigative report, the kind the old media used to do before they became TV celebrity game show hosts. It details how former Goldman Sachs CEO and current Treasury Secretary, Hank Paulson, funneled $138 billion to JP Morgan/Chase (JPM) to cover their Lehman Bros (LEH) losses after Lehman was already in bankruptcy court.

Here's how it worked: A few weeks ago, LEH owed JPM $138 billion for mortgage debt obligations. When LEH declared bankruptcy, that left JPM holding the bag. The Treasury Dept. then manufactured $138 billion out of thin air, at taxpayer expense, and forwarded the money to JPM who then passed it on to LEH. LEH then asked the judge to grant JPM "special status" as a first served client. The judge agreed and LEH then sent the $138 billion back to JPM. LEH has $138 billion subtracted from their bankruptcy debt obligations, JPM unloads $138 billion of toxic paper at the original purchase price, and we taxpayers get the bill. Thanks to our congress granting the Treasury Secretary "discretion", it's all perfectly legal. Nice work if you can get it. And oh BTW, JPM has another $8.1 Trillion of this paper. Yes, TRILLION!

I try to be optimistic. I really do. And, patriotic too. I've never shorted anything, and I especially wouldn't short the dollar. It just wouldn't be right. I skipped the whole China stuff just because they're authoritarian. I rarely buy gold, but I bought some last week. I'll probably be buying more.

I started this blog thinking it would be partly about investments. Investing used to be fun, even when I lost. I followed the market like some guys follow the NFL. It was interesting and mostly profitable. But, now it's rigged. It's rigged against us. Today I feel the same way I did when I found out pro wrestling was fake, or that roller derby wasn't a real sport. What did the average Roman do when Nero fiddled and their city burned?

4 comments: said...

What did they do? They changed their government.

You can't separate the market from politics; they are intriniscly intertwined.

That we are going through what we are going through was quite predicatble if most has just read 43's bio in 2000. May I recommend McWhacko's for your reading (dis)pleasure?

Local So-and-so said...

Thank you, but no. I prefer fiction. It's more realistic. Besides, I'm just voting for Palin. She's the forlorn hope.

Seriously, do you really read that tripe? I wouldn't make it past page50. said...

To tell ya the truth (wink) I was more interested in your thoughts (wink) and skipped the links as i detest golf (wink).

Why is it so hard for the AK gubber to pronounce y..o..u. My five year old granddaughter can do it.

Local So-and-so said...

Thar ya go agin! Had ya read the links, you'd a seen it's Sec. Paulson causin all the fuss.

Ya tellin me that fella Barack's book would be better? YOU bet cha.