How much did you pay in taxes this year?

“There were many causes of the turmoil that ripped through our economy over the past two years. But above all, this crisis was caused by failures in the financial industry.” – Barry Obama

The news of the week has obviously revolved around Goldman Sachs and the recent capitol hill testimonies. Anyone with even a tertiary knowledge of financial history has known that bubbles are a part of life, they go up, and explode usually leaving behind a recession or some other economic slowdown as the excesses are worked out of the system. The ‘mob’ looks to point fingers, politicians smell blood, and usually the bankers are the scapegoats. Never mind the mortgage brokers, house flippers, lending agents, Fannie/Freddie, politicians which encouraged greater lending and hence lower standards, etc.

It has now gotten to the point where Jan put options, blow up options, like the 2.5, 5, 7.5 puts are BID. This happened in Bear Stearns weeks before they imploded. If short term credit lines are pulled (and usually due to FEAR of collapse rather then reality) then Goldman could easily go the way of the dodo. That of course would cause a chain reaction a la Lehman and bring this fragile economy to its knees. Do I believe the administration is that stupid? I give it a 1-2% probability, not likely but the prospect can’t be ruled out.

I sometimes ‘daydream’ what I would say if I was in front of one of these panels in the same or similar situation. As a daydream I obviously picture myself taking my shoe off and banging the table, telling the members of congress, “I pay your goddamn salary, you work for me! ” Or perhaps to the protesters, “You think this is helping? Dressing up like its Halloween are going to get people to buy more cars? Or pay their credit card bills? Good idea. Hey you look familiar, didn’t I see you at the “Down with Big Oil” protest in ’07. Man, those were great times!” LOL.

I encourage those people with time to check out Falkenblog. It’s written by a PhD, ex-banker, who not only has smarts but a huge dose of common sense and none of that elitist academic tone that many ‘smart’ people seem to have. I point to him because he makes very similar arguments but does it in a style and manner that I truly envy. My writing is atrocious in my mind, poor and disorganized but this writer has a great ability to get the point across using logical (at least to me) arguments.

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~ by largecaptrader on May 1, 2010.

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