And you should be ashamed, Joel - if only for trying to capitalize on this failure of government to promote your ultimately even more dangerous agenda.

Dave

If they had the capacity for shame they wouldn't be where they are. Perhaps late at night, alone with ones conscience, the awful shame of ones deceits and crimes can creep into ones consciousness, but we are practiced deceivers in public.

Why should millionaires and billionaires who made it big in the corporate world be ashamed? It's not as if they won these positions or responsibilities in a lottery. I work in a corporate environment and it's no picnic even within low and mid-level management positions. But the stakes are much higher, and the responsibilities much more hazardous in the executive (and beyond) ranks. This is not a place for the squeamish, nor for slackers. It's cut-throat politics and one wrong decision away from getting put out to pasture.

In any event, what difference does any of this make? Whatever happened to making the most of one's self? Rising to the challenge? Believe it or not Joel, this is tradition, it's patriotic, and (oh yeah) it's legal.

So what, we're supposed to lay on our couch and bitch about how bad this country is, that no one has a fair chance to make anything of themselves, and that the government should take care of us? Take a good hard look at some of the 3rd world impoverished socialist countries around the globe; is that your version of American nirvana?

Since when is making a profit and creating your own wealth something that is politically incorrect? That's what this country was built upon. Ever hear of the Industrial Revolution? How the hell do you think this country got to be one of the most - if not the most - powerful nations on earth? By waiting for the faceless unelected bureaucrats to come up with solutions for solving the problems and generating a healthy economy for this country?

No. It got that way through entrepreneurship, innovation and (GASP) - capitalism. So take your Marxist and Socialist ideas with you as you exit the greatest country on earth (please), where the opportunities abound for those WILLING TO PAY THE PRICE and MAKE THE EFFORT; as so many penniless immigrants that have come to this country and made their fortunes continue to prove year after year.

Good luck with all of that.

Jeff, it's one thing to profit through hard work, it's another thing entirely to profit through fraud.

Fraud, Jeff, and playing "Pass the economic hand-grenade" with the pin pulled assuming that it isn't going to go off in your hand, then demanding that the taxpayers sew you up when it does.

It is something to be ashamed of.

I have to agree with Cannonshop.

The indudstrial revolution in the United States made it the most powerful nation on earth. But the same greed that created the industrial revolution there, and all the dislocations it brought, also unmade it.

The last three decades have seen huge dislocations as America's industrial base has been dimantled, expoerted and a technological base allegedly installed. And thousands of executives have been given golden parachutes for ruining lives to increase the value of a given stock one dime or less.

That is not wealth creation - that is fraud.

The technology that the American economy hangs by is a thin thread of sand with electrons running through the thread. Blow up a few good nukes in the upper atmosphere and you create a High atmospheric Electromagnetic Pulse - and all that technology ceases to function.

After a while, something that hangs by threads of sand will fall and utterly crumble to bits.

Stop deluding yourself, Jeff. The day is approaching soon when all those pretty pictures of Ben Franklin will be nothing more than that, and will be worth less than toilet paper. Maybe people with glue will be able to turn them into wallpaper - but they won't turn them into wallpaper because they won't want to be tortured with the mementos of riches lost, riches once enjoyed in an era that will be dead and gone.

Actually, Ruvy, I think you're overstating the case, and using the wrong example-because it won't take a HEMP to crash the economy. It just takes People.

We've seen (once again) what happens when you combine unethical pricks in the boardrooms with idiotic idealists in Washington D.C., a great many of whom are also unethical pricks.

(and not to forget the unethical pricks in Tel-Aviv as well, who are so ethically challenged that they're giving away what their fathers and brothers bled for to curry favour with unethical pricks in Washington D.C. who are, in turn, trying to appeal to and curry favour with unethical pricks in Geneva and New York.)

The REAL problem, is that we have had two generations of "Leaders" who've forgotten what it took to build the companies they now control. Bear Stearns survived the Great Depression, Lehman Bros. survived a civil war, three depressions, two world wars, the cold war, and Jimmy Carter.

The people that have brought us to this crisis did not engage in Entreprenuership to get their positions, they engaged in cut-throat-bureaucracy,fraud, bribery, and office-politics to get where they are today, and the results are plain to see.

When you hire a man to run your company, shouldn't his pay and severance reflect good management, rather than the ability to gleam a kewl severance package (golden parachute)? As a holder of common stock, I watch these bozos augur companies into the ground, walk away with millions, and the cheifest thought in mind for me, is that the Boards that hired them must be staffed by self-destructive idiots. Upon gazing at the stockholder votes, and looking up the names, I then realize these are the exact same people. Paying one another off with millions for what amounts to catastrophic mismanagement on a truly epic scale.

I'm left to wonder how these guys get their jobs-and upon looking at their backgrounds, I come to realize that the phenomena of the Educated Idiot is not merely one affiliated with untalented engineers who need a calculator to discover the number of inches in ten feet.

Watching companies violate the principles that made them successful (such as positive control of Engineering and/or supply chains, researching securities before purchasing them, and only making loans to credit-worthy recipients), I'm left with the shocking understanding that not only am I no stupider than the guy from an Ivy-League school, but I may, in fact, be somewhat smarter, as I do not spend more than I take in, and only take risks that benefit me over the long run, rather than worrying about a mythical "quarterly return" that will be eaten up in the debt I'm accumulating to make the books balance in the short term.

I find this truly dismaying, as I know myself NOT to be a "Leader" and certainly unqualified to run a multimillion dollar enterprise...yet I also know from observation that I likely would NOT take certain risks (such as, say, announcing a new product line without a working product, or farming out so much of my supply line to a single-source supplier that they, not I, dictate the terms and timetable to such an extent that delays from their shoddy work result in delays reaching over a year and counting and I can't do a damn thing about it.) Actions in corporate that BLEED with stupidity, in other words. The current mess is compounded by a culture of bribery in government that has resulted in the ability of these same incompetent, unethical pricks being able to railroad a bandaid bailout. A Bandaid that will NOT SOLVE THE PROBLEM. short-term, or long-term, but only buy time for said pricks to rig their golden parachutes and dash off to a safe place when the whole edifice collapses.

You don't need a scientific or technological device to do this, Ruvy-we've got Managers.

Cannonshop,

(and not to forget the unethical pricks in Tel-Aviv as well, who are so ethically challenged that they're giving away what their fathers and brothers bled for to curry favour with unethical pricks in Washington D.C. who are, in turn, trying to appeal to and curry favour with unethical pricks in Geneva and New York.)

Truly a man after mine own heart - one who comprehends what I've been saying for nearly three years here.

Now, let's not get too hard on managers - I used to be one, and I was a reasonably competent one, too. Of course that competence meant that I did not get a golden parachute upon exiting the Burger King franchise where I worked. And right now, I could use one - and I do mean RIGHT NOW.

The reference to the HEMPs (not the drug) was to demonstrate how fragile the American economy really is - even without unethical pricks to mess it up.

Let's use our esteemed politcs editor for an example. Dave Nalle is in the fonts business. A HEMP would put him out of business, unless he not only had his data backed up, but also buried several feet below the ground. Seeing as he seems relatively well off, he could spend more time on radio shows (if the internet got back up) or on chasing the coyotes that seem to malinger near his compound. But eventually, he would have to get back to work. Since the HEMP would cripple his economic frame of reference (at least so far as fonts go), he'd have to find another line of work - like boring people with economics lectures, or trying to run for office. But if his economic frame of reference (and those of his customers, not to mention a good part of the American economy) got destroyed, who would have the money to pay him to gab away? More to the point, if the money was no good, what would they use to recompense Dave for the store of wisdom under his bald pâté pate? My analogy is not perfect, but it should make the point.

A bit of advice for you, Cannonshop, from a man who wishes he could follow it himself. Ditch your stocks, stock up on some gold coins, and buy a troy scale. At over $900 a troy ounce, it is a pricey investment, but considering what a stock certificate may be worth in the near future, it may turn out very handy when Ben Franklin's picture is good for wallpaper for those strong enough to stand constantly looking at mementos of a prosperity they have lost. Also, buy a few guns and plenty of ammo. You may need it.

This is exactly how I feel.

*sigh*

The article and most of the comments above contain both truths and overstatements. Little is so great about our system as Jeff would have us believe, but neither are things so bad as Joel and others insist. Ruvy has been poised to seal the sarcophagus over the U.S. for some time.

All of us in this country share a certain amount of blame for our current state of affairs. Collectively, we created an economic and political system wherein the inmates run the asylum. But even nutballs have their moments.

What makes it so difficult to oversee or control both government and the economy is its size and complexity. Few of us - including many of those in lofty positions in the corporate world and the mucky mucks in politics have any kind of meaningful handle on things, or are able to comprehend the "big picture."

The situation in economics and government is not unlike that in science. Science has, for the most part, become so complex and specialized that say, a nuclear physicist may have little or no grasp of molecular biology. Yet, it's all part of the whole. One does have connections with the other, but few may have any notion as to how, or how that relates to other disciplines.

The same is often true in the running of government and the economy. The left hand doesn't know what... yada, yada, yada.

Also, as noted above, the stakes get so high and the pressures so great that people take on a wholly defensive mode, bent mainly on covering their respective asses. In that regard, it then becomes a "me first" situation. Cooperation and compromise are engaged only in so far as they work for "me." The higher echelons of business and politics truly reflect a survival of the fittest mode which, given human nature, promulgates dishonesty.

Just look at the typical campaign add - especially of the negative variety. Generally, charges made against a political opponent are no more than nominally true - situations misrepresented, statements or actions taken out of context, particular circumstances ignored.

That given, and out of necessity candidates staunchly stand by the veracity of these ads. They are forced to support, even embrace half truths and lies, a means to what they are convinced is a greater end, and, is therefore, justified. Many of us then adopt and repeat the same charges - that Obama is a muslim, or that McCain was brainwashed by the Cardassians (which we know to be only partly true.)

Yet, wholesale changes in the system that some people seem to believe necessary could be catastrophic. A total disruption of our government and economic systems would have a ripple effect across the world and chaos would likely reign. As terrible as war has been throughout human history, given the sophisitication, global reach and destructive power of today's weaponry, the death and devastation of past conflicts would pale by comparison.

B

It's interesting how many people outside the U.S. regard the prospect of this country's possible collapse with a certain amount of glee. While things are bad, I think we are a long way from such an end.

We have, I believe earned some disdain from without, but, if the shit does hit the fan here, it will likely splatter on about everybody else out there. It won't be pretty, but will be decidedly not fun for most.

B

You need to have a very broad definition of fraud to include most of what has gone on in this situation in that category. Greed and incompetence play a much larger role than actual fraud.

Dave

I don't know, Dave, lying to shareholders, customers, regulators, AND employees strikes me as fraudulent behaviour.

I'm buying large capital stocks. It may be a little unscientific, but the precipitous drop seems a little overdone. Unless it was grossly over valued to start with, there would seem to be value in the S&P after a 25% decline in less than a year.

Remember, that a 25% decline is nearly equal to a 34% ascension. That's a lot of give back.

The dollar soared against the Euro today, gold fell substantially. Europe is doing worse, and people are just now noticing it. All we have here is a liquidity crisis.

Buck up fellow Americans. The housing crisis is just another failed socialism scheme perpetrated by government, with the usual suspects skimming the creme. As they do from time to time.

The bagholders will once again toil away to refill the bag with created wealth. The people who do this to us know that they can't kill the goose, and besides, they've got theirs now anyway.

Unemployment, at 6.1 is still low though unhearlded. The second quarter surprised everyone with over 3% growth. The media want's their recession. Badly. But technically it's not here yet.

Thouse who've panicked and bolted stocks don't have anywhere to put their cash. Nothing else is producing. There is a lot of cash on the sidelines. They'll be back. And when they begin, it will likely be a frenzy.

But don't construe this as advice. Be safe if you need to be.

It's interesting how many people outside the U.S. regard the prospect of this country's possible collapse with a certain amount of glee. While things are bad, I think we are a long way from such an end.

Baritone,

There is no Schadenfreude (ask your son what that is if you do not know) in what I write. My 82-year-old father-in-law, who worked like a dog all his life to raise four children and managed to get into the middle class, will be reduced to penury if the economy crashes here. My 78-year-old sister will be reduced to penury as well. My nephews will be effectively isolated in suburbs and reduced to the same penury.

There is no glee in Ma'alé Levoná-ville. None at all.

The deceit and fraud was encompassed by the creation of Credit Default Swaps, which were really nothing more than bond insurance.

CDS's were simply unfunded insurance. They were sold by people who did not have the means to payoff if the underlying bond failed. That seems like fraud to me, maybe it does to you, too.

It would be a federal crime to sell such insurance except that insurance is specifically exempted by the 1945 McCarran-Ferguson Act from federal regulation. Also, the CDS peddlers deny that it is insurance.

Thus, they have a swindlers paradise. And swindle they did, and still are. This trillion dollar gift will put them back in the swindling business, still unregulated and still exempt.

How can they do it? What is the business model?

The guys who sell CDS's don't intend to keep them. They expect to sell the CDS into a secondary market, quickly, and cash out with a profit. Basically, they are a sales outfit. If they get caught with a claim during that window of time when they are liable, then they'll simply declare corporate bankruptcy and go back to selling used cars or Chinese stereos.

The problem isn't just the CDS, it's the principle that allows such unregulated financial vehicles to be created. The government and industry can create a regulated and transparent market for CDS's just as we have for stocks and stock options, commodities, etc.

But then an enterprising swindler with ingenuity will simply create a new type of vehicle for his frauds.

We need something to regulate all financial vehicles.

A place to start is to make all insurance subject to federal regulation.

A place to start is to make all insurance subject to federal regulation.

This strikes me as being reasonable, provided the regulations work.

RE: # 15

For those who want more info on derivatives (which includes CDSs) see Warren Buffet, who said in 2002:

"The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear. Central banks and governments have so far found no effective way to control, or even monitor, the risks posed by these contracts. In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.

Now that the horrendous financial meltdown is well underway, here's the latest catastrophe with it's freight of shame:

AFP


US report says Afghanistan conflict rapidly worsening

10 hours ago

WASHINGTON (AFP) -- The situation in Afghanistan is liable to get worse in 2009, the chairman of the US Joint Chiefs of Staff has warned, amid reports of a bleak draft US intelligence assessment that details a slide into corruption, drugs and insurgent violence.

"The trends across the board are not going in the right direction," Admiral Michael Mullen told reporters at a breakfast in Washington.

"It will be tougher next year unless we get at all these challenges."

The New York Times said the draft National Intelligence Estimate (NIE) casts doubts on the ability of Afghan President Hamid Karzai to stem the resurgence of the Taliban militia.

A spokesman for the Director of National Intelligence would not acknowledge the existence of such an NIE, while a US intelligence official told AFP the assessment process was still in its early stages and "its conclusions are premature."

US Secretary of State Condoleezza Rice said she expected to be briefed soon on the classified assessment, which represents the consensus view of 16 US intelligence agencies.

"I would just cite that Afghanistan is a difficult place," Rice said. "It has made progress since 2001. We have all talked about new circumstances that have arisen there, and we are doing a review to see what more we can do."

A US military official, speaking on condition of anonymity, told AFP that the downbeat "tone and direction" was not unexpected.

"We heard about this for several weeks, and were not surprised by the tone it conveyed -- that the situation in Afghanistan was getting worse, certainly not better, and that a lot more attention was needed to try to remedy what is going on," said the official.

...

Another brick in the wall of shame that accrues to this morally, ideologically, financially and militarily bankrupt administration.

"Another brick in the wall of shame that accrues to this morally, ideologically, financially and militarily bankrupt administration nation.

Much closer to reality that way...

No, I don't agree. Bush had a bare majority (if any!) in each election, and he systematically lied (as did his appointees and supporters) so his voters, about half the nation, can be blamed. But the other half are relatively untainted, unless one claims that they failed their civic duty by not creating a civil uprising to force action by a compromised Loyal Opposition.

Trying to spread the blame around to everyone is like saying "everyone thought that Saddam had WMD..." which is both cowardly and untrue.

Bliffle

I beg to differ about your vote count totals. The fact of the matter is, Bush and company stole both of the last two elections, in Ohio and in Florida. The evidence is overwhelming and has been written about in depth and at length. If your not familiar with this I would be happy to point you in the right direction with relevant urls.

...actually the news from Afghanistan is encouraging - we're going to need a draft to keep all the soon to be unemployed bastards off the streets...and some meatgrinder to send them to

500000000 or bust