Most all market pundits say the S & P is fairly valued to somewhat cheap. Aside from the fact that these same pundits make their living from recommending shares for purchase, do they know what the words "fair valued" and "somewhat cheap" really mean when the earnings of S& P companies are put in todays unreal context?
I have one question for this collective group. What are the earnings of S & P companies if the Fed wasn't buying one trillion of treasuries or mortgage backed securities per year along with the one trillion that congress spends per year that it doesn't have?
Showing posts with label wall street failure. Show all posts
Showing posts with label wall street failure. Show all posts
Tuesday, December 18, 2012
Monday, September 15, 2008
The Next Financial Shoe To Drop
Here's a quick tutorial on the root cause of the 1930's Great Depression since it increasingly looks like we will replay that whole episode in slow-motion. Sure the market crashed but the reason for the depression was the failure of the banks. The banks failed because they speculated in the stock market. E.G. Morgan Bank owned Morgan Stanley brokerage .Those speculations went south and people ran on the banks to withdraw deposits. The rest is history.
After the Crash and bank failures, legislation was passed that included the Bank Act of 1935 a.k.a. Glass Steagall. It prohibited banks from ever owning brokers or insurance companies. In 1999 , Glass Steagall was struck down. Banks then did the obvious and bought insurance companies and stock brokers. Also brokers bought insurance companies and banks.
" What could possibly go wrong?". Well first there was the failure of Bear Stearns which was bought by JP Morgan Chase and today Lehman Brothers went Chapter 11 and Bank Of America bought Merrill Lynch. Morgan Stanley and Goldman Sachs are in the wings looking for deep pocket partners i.e. some bank with fat deposits of unsuspecting civilians.
So we have gone full circle with banks now back in the brokerage business in spades. The next time the brokers fail they will take their respective bank owners with them. What's a civilian to do among these financial terrorists? First avoid any bank with a brokerage or insurance subsidiary. Limit all deposits to FDIC limits. Keep some cash at home and a weapon for protection.
Our society has resorted to money as the cure all and to that end we have printed literally bales of it. But like a house of cards, paper can't take much weight.
After the Crash and bank failures, legislation was passed that included the Bank Act of 1935 a.k.a. Glass Steagall. It prohibited banks from ever owning brokers or insurance companies. In 1999 , Glass Steagall was struck down. Banks then did the obvious and bought insurance companies and stock brokers. Also brokers bought insurance companies and banks.
" What could possibly go wrong?". Well first there was the failure of Bear Stearns which was bought by JP Morgan Chase and today Lehman Brothers went Chapter 11 and Bank Of America bought Merrill Lynch. Morgan Stanley and Goldman Sachs are in the wings looking for deep pocket partners i.e. some bank with fat deposits of unsuspecting civilians.
So we have gone full circle with banks now back in the brokerage business in spades. The next time the brokers fail they will take their respective bank owners with them. What's a civilian to do among these financial terrorists? First avoid any bank with a brokerage or insurance subsidiary. Limit all deposits to FDIC limits. Keep some cash at home and a weapon for protection.
Our society has resorted to money as the cure all and to that end we have printed literally bales of it. But like a house of cards, paper can't take much weight.
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