Gimme the next bubble!




After a long sequence of not doing the right thing-s, our western world is headed if not down then lower. " Down" is probably too sudden relative to how history evolves and the preparedness of the Chinese, or lack thereof.

The "low," as I see it, can be described in terms of under-, and un-employment, but one can think of many other metrics.

In the US, even if the ever shifting targets of the (now) $700Bn TARP are reached, how does this address the more real problem of jobs creation? For the time being, the voices one can hear, from the House Speaker Pelosi to ├╝ber-investor Buffet, sound optimistic about the financial prospects of the system and pessimistic about jobs.

So, one gets the feeling that the government has extricated itself from several of the responsibilities associated with running the state. We've come to rely on Wall Street to sort out most society decision-making needs--from pensions to child-care, from environment to efficient allocation of resources, from war to peace.

That free markets have more in common with flea markets than financial markets is a fact we painfully reckon with periodically. And, re-adjusting for such facts, read bailing the system out, is probably a tax on our beliefs (e.g. in smaller government) and hope that the next bubble will rescue ME. Somehow, the growing problem with Wall Street is that it needs more money each time it's crying for rescue.

Bush tried to privatize social security for he most probably learned about the real problem in the economy 8 years ago to these days. Failing to privatize social security, and succeeding only moderately to stimulate jobs growth with the Iraq War, he had given free hand to the bankers.

Yet, for people like us, the recession started in 2000-2001. By “us” I mean people who have not worked in: defense, real estate, healthcare (insurance, included), banking. Now, one can only wish the military Keynesianism had been applied towards national infrastructures instead of sand castles in Iraq…

Most probably, the upcoming elections will effect a kind of Keynesianism different from the one characterizing the last 8 years. If this is going to be the case, healthcare automation and alternative energy would be two areas where bubblets, if not bubbles, are likely to develop.

As a side issue, the huge size of our economic/financial actors has dealt these days' near fatal blow to our system, yet nobody seems to notice that most all solutions lead to even further size increases and fewer players.

2 comments:

Anonymous said...

Hedge-fund manager quits on high
October 18, 2008 - 8:31AM
Andrew
Lahde, the hedge-fund manager who quit after posting an 870% gain last
year, said farewell to clients in a letter that thanks stupid traders
for making him rich and ends with a plea to legalize marijuana.

Lahde, head of Santa Monica, California-based Lahde Capital
Management, told investors last month he was returning their cash
because the risk of using credit derivatives - his means of betting on
the falling value of bonds and loans, including subprime mortgages -
was too risky given the weakness of the banks he was trading with.


''I was in this game for money,'' Lahde, 37, wrote in a two-page
letter in which he said he had come to hate the hedge-fund business.
''The low-hanging fruit, i.e. idiots whose parents paid for prep
school, Yale and then the Harvard MBA, was there for the taking. These
people who were (often) truly not worthy of the education they received
(or supposedly received) rose to the top of companies such as AIG, Bear
Stearns and Lehman Brothers and all levels of our government.


''All of this behavior supporting the Aristocracy, only ended up
making it easier for me to find people stupid enough to take the other
sides of my trades. God Bless America.''


Lahde, who managed about $US80 million, told clients he'll be
content to invest his own money, rather than taking cash from wealthy
individuals and institutions and trying to amass a fortune worth
hundreds of millions or even billions of dollars.


''I do not understand the legacy thing,'' he wrote. ''Nearly
everyone will be forgotten. Give up on leaving your mark. Throw the
Blackberry away and enjoy life.''



Request for Soros


He said he'd spend his time repairing his health ''as
well as my entire life - where I had to compete for spaces at
universities, and graduate schools, jobs and assets under management -
with those who had all the advantages (rich parents) that I did not.''


He also suggested that billionaire George Soros sponsor a forum in
which ''great minds'' would come together to create a new system of
government, as the current system ''is clearly broken.''


Lahde ended his letter with a plea for the increased use of hemp
as an alternative source of food and energy that segued into a call for
the legalization of marijuana.


''Hemp has been used for at least 5000 years for cloth and food,
as well as just about everything that is produced from petroleum
products,'' he wrote. ''Hemp is not marijuana and vice versa. Hemp is
the male plant and it grows like a weed, hence the slang term.''



'Innocuous Plant'


He added, ''The evil female plant - marijuana. It gets
you high, it makes you laugh, it does not produce a hangover. Unlike
alcohol, it does not result in bar fights or wife beating. So, why is
this innocuous plant illegal? Is it a gateway drug? No, that would be
alcohol, which is so heavily advertised in this country.''


Lahde said the only reason marijuana remains illegal is because
''Corporate America, which owns Congress, would rather sell you Paxil,
Zoloft, Xanax and other addictive drugs, than allow you to grow a plant
in your home without some of the profits going into their coffers.''


Lahde graduated from Michigan State University with a degree in
finance and holds an MBA from the University of California, Los
Angeles. He worked at Los Angeles-based hedge fund Dalton Investments
before founding his own firm two years ago with about $US10 million.


Lahde wasn't available for comment. A woman at his firm, who asked
not to be identified, confirmed the authenticity of the letter.

LAS, Redmond, WA said...

Working America has seen an economic crisis coming since as early as 2001. What did we experience? First it was internal corporate reorganizations more than once a year. Then it was our coworkers posting the daily insider trading web news in the break room bulletin board. Then it was the collapse of telecom stocks, and people who thought they had $750K in their 401Ks suddenly had $75K and our stock options were worth less than a losing lottery ticket. Then we saw the mass layoffs of 2001-2003. Then we saw the high tech jobs transferred out of the US and the H1-Bs taking away the jobs of people over 50. Then the purchase of a home became unaffordable for a young couple or a single person. Then we visited the houses our acquaintances lived in and wondered, "how can anyone with that occupation afford that house?" In the fall of 2005 we saw virtually no job openings, and now we have to go from one temporary contract to another. People who used to work or socialize together are now spread out in Texas, Michigan, Boston, midwestern colleges, or the West Coast. Working people were not surprised at the Wall Street shenanigans; we all witnessed the telco shenanigans. Accountants and personal finance websites were warning us of trouble ahead, of home price declines and migrations of professional people out of the expensive cities. Working America knew a crisis was coming, but the leaders would not listen and still refuse to listen. We need localization (stable, permanent jobs with companies having a stable presence and sense of civic responsibility in local neighborhoods), not globalization. Labor unions are just about the only source of real stability people have.

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