Regulation

Why Isn't the Government Hiring Short Sellers?

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Short seller good.

The Goldman Sachs Abacus fraud investigation is already losing the attention of a public ready to move on to fresh fields and scandals new. But one aspect of the story of Fabulous Fab and the hedge fund Paulson & Co. has gotten surprisingly little attention.

Specifically, the collateralized debt obligations that John Paulson advised Goldman to create were based on very extensive research about housing prices and specific subprime mortgage performance in particular local markets. Former Paulson analyst Paolo Pellegrini—who is best known for providing information to the Securities and Exchange Commission and for somehow being rich—discovered where the biggest bubbles had grown and which were in the process of blowing up. His bets against these bubbles, of course, turned out to be right. 

Pellegrini figured all this out using information that was readily available to anybody who was sufficiently motivated. You would think somewhere in the United States government there might be such motivated people. After all, we have an SEC, a Federal Reserve Bank, a Treasury Department, the formerly government sponsored entities Fannie Mae and Freddie Mac, the Census Bureau, many data collection and analysis agencies, and too many congressional committees. All of these entities have the stability of the economy as part of their job description. Yet all of them combined could not manage your money as intelligently as one short seller from Rome managed John Paulson's.

Pellegrini is an interesting figure not just for his good bets, but for some pretty idiosyncratic views on fiscal policy. From a Bloomberg profile:

He sees no reason why Americans should deposit their savings in private banks, since the government already guarantees those deposits… The public's cash, he says, can be held at accounts at the Federal Reserve. Loans can be made by nonbank lending institutions.

At a minimum, he says, there should be limits on bank profits—perhaps a 10 percent return on equity—to keep them from taking the kinds of risks that led to the housing bubble.

"You need a system where people won't be incentivized to take risks," Pellegrini says. "We don't need bankers to take risks with our money."

[…]

How has the U.S. central bank handled the crisis? "The Fed is printing money, as instructed by the financial services industry, so that they can stick all of us with the bill," Pellegrini says, slouching in a conference room chair in his offices in the former IBM Building in Manhattan….

And Federal Reserve Chairman Ben S. Bernanke? "I have zero confidence in what the Fed is doing."

Senator bad.

Pellegrini and Paulson are not the only people who made money by assessing the abundant evidence that the real estate market was bubbling over. (And just to be clear, I'm only talking about their role as overt short sellers, not Goldman Sachs' alleged misrepresentations to its clients.) But if Sen. Chrisopher Dodd (D-Connecticut), who heads one of the many committees that failed to identify the bubble, were serious about fixing the failures that led to the ongoing real estate correction, he'd be writing law that gets more people to act like these guys. A smarter regulatory approach would be to encourage the creation of these crazy derivatives and complicated bets against the market, because these contain information that the market needs and regulators could pay attention to. At the very least, Dodd's financial regulatory bill should not be doing more to suppress the information that bears, short sellers and other "speculators" provide.

Needless to say, the Dodd bill takes a different approach. It also continues to get worse. Yesterday Senate Democrats stripped out one of the few sensible things in it—an amendment to wind down the failed GSEs. (If you're keeping score at home, keeping Fannie and Freddie on life support has cost your grandchildren another $40.1 billion just in the last ten days.) The bill [pdf] does at least shunt short selling curbs into a "conduct a study" siding, but at the moment it's aimed at sharply reducing use of derivatives.

If the purpose of regulation is to prevent excesses in markets, how can anybody justify a bill that reinforces all the excesses that caused the bubble?

I owe the main ideas about Pellegrini above to Mike Alissi, who clearly just wants an Italian to be the hero of the story.

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87 responses to “Why Isn't the Government Hiring Short Sellers?

  1. You don’t understand. Short sellers are criminals. They should be strung up with middlemen, speculators, and usurers!

  2. You would think somewhere in the United States government there might be such motivated people.

    [insert obligatory “insufficiency of compensation’ argument]

    1. I don’t think it’s the insufficiency of compensation that’s the problem — it’s the insufficiency of consequences for people who don’t do their jobs.

    2. “‘Cuz they wouldn’t hire an assistant.”

  3. “using information that was readily available to anybody who was sufficiently motivated.”

    I don’t think that’s true. Good information is rather expensive. One must have motive and means.

    1. I don’t understand your point. You don’t believe the Federal Reserve, the Treasury and the SEC have the motiviation and the means?

      1. Paul, you are quite right that the U.S. government has the requisite means. Weather the government has the motive I don’t know. But not every private citizen w/ the motive + ability has the means + access. Hence, the assertion that the information in question was available to “anybody” is likely untrue.

        1. I’m pretty sure that was Cavanaugh’s point. He was being glib. “Anyoneone with… you know… motivation could have found this out”. Translation: The people and agencies (Feds) that the citizens employ to know these things should have known.

          1. Oh. Ok.

        2. “likely”?

          Meaning, you don’t know, but are assuming.

          Getting data on regional real estate price trends and mortgage lending concentration is not particularly difficult. The government itself, through the BEA (Bureau of Economic Analysis), the BLS (Bureau of Labor Statistics), local quarterly economic census reports, and many other individual sources, provides reams of data that anyone with the motivation could access and conduct basic analysis, if not build bulletproof models. There’s also a lot of free third party research available like the Case-Schiller index, as well as mortgage industry trade association reports. Then there’s also low cost ‘newsletter’ type research published by one-man-band analysts. Lastly, if you really make the effort, you can access bloomberg terminals and get investment bank research reports at many public libraries.

          Basically, lack of access to information is no excuse for most. The real problem is that most people really aren’t very good at reading data, and most “public” published analysts (for big investment banks or small research houses) are usually disincentivized from making strong short calls on anything. Hence the old saw that “Neutral” ratings often also means “Sell” when you read behind the lines of the actual content of reports…

          Your point may have been true pre-internet… (and I know, having been a research analyst before the internet was widely available; our firm used to have to subscribe to a wide variety of proprietary databases and secondary reports to do our jobs. There was a lot of xeroxing and use of highlighter.) … but today, any jerk with an internet connection and some basic ability to pick out trends in data and find anomalies can do most of what any professional research analyst can do. – with the main exception of having contact with other analysts and industry insiders, management of relevant companies, etc. There’s a lot of ‘soft’ information that tends to circulate, and sometimes that stuff is invaluable, but more often than not it simply creates herd-think.

          Just my .02

          1. What do you mean, hard to find information on housing? All you had to do was read the Economist magazine. It was running weekly stories about the housing price bubbles in America, Spain and elsewhere for at least two years before the crash — and placing significant blame on Greenspan’s refusal to consider asset price inflation when setting interest rates.

            It was not ignorance on the part of the government. It was the willful turning of a blind eye.

          2. “Meaning, you don’t know, but are assuming.”

            Yes. I don’t have proof. I apologize. My research remains incomplete. For some reason, it’s taken forever survey the !Kung tribesmen in Botswana, Nambia, and Angola. Plus, I’m missing six Dravidian-language questionaire responses from villages in the Vindyas. They might be lost in the mail. When I have concerete evidence to prove my assertion, I’ll amend the post.

  4. A smarter regulatory approach would be to encourage the creation of these crazy derivatives and complicated bets against the market, because these contain information that the market needs and regulators could pay attention to.

    Unfortunately, I’ve personally seen liberals progressives angrily argue against the notion that money and markets contain “information”. We have an administration that seems to largely hold this contrarian view. Money and markets contain no information, they merely contain power, and power that must be restrained and manipulated exclusively by the Federal Government.

    1. You’ve never heard of Larry Summers, Tim Geithner or Paul Volcker then.

      Quit listening to redneck AM radio. It makes you look stupid.

      1. You’re becoming an imitation of yourself.

        1. You’re just parroting Fat Rush (King of the Rednecks)…

          Obama has economic advisors that are 100% Free Trade/Market adherents (Summers, Volcker, Goolsbee, Volcker, Buffett).

          Learn to sift information for facts.

          You will benefit in the long run.

          1. Ok, now it’s gotta be a spoof. Otherwise there could be a thread about a gummed up Idle Air Control on a DC 3.7l throttle body, and shrike would crowbar Rush Limbaugh/AM Radio into the discussion.

            1. I like insulting teabagging redneck liars like Limpjaw.

            2. And Limbaugh despises Libertarians. Why should anyone respect him?

              1. So why exactly do you bring him up all the time around here? Are you attracted to Rush Limbaugh’s raw sexual power?

          2. “You’re just parroting Fat Rush (King of the Rednecks)…”

            Oh meant the guy who is infinitely smarter and richer than you will ever live to be.

          3. I wouldn’t call Buffett a free trade/market adherent.

            1. I wouldn’t call anyone who collects their paychecks from a regulatory agency a free trade/market adherent.

          4. (Summers, Volcker, Goolsbee, Volcker, Buffett).

            Which ones of them suggested ignoring bankruptcy law and taking over the car companies? Which ones of them suggested the Pay Czar? Which ones of them suggested government-run health care? Which ones of them think Cap & Taxing America into uncompetitiveness is a good idea? Which ones of them want to allow unionizing without secret ballots?

            Those must have been minor lapese in capitalist judgment.

  5. “We don’t need bankers to take risks with our money.”

    That is a brave statement.

    A bank CEO now has an incentive to take great risk (like out-of-the-money options) with deposits.

    Commercial banks have always been subsidized by the US taxpayer (since 1913 anyway).

    When banks risk deposit capital on derivatives they become a hedge fund.

    1. Where did you get your economics education?

      Box of cracker jacks?

      1. Chomsky University.

  6. If a stock attracts my attention, one of the very first things I do is check “short interest”.

    Guess why.

  7. one of the many committees that failed to identify the bubble,

    I’ve given up on the “failed” explanation. I can’t make it work. No pro is that dumb. There wasn’t anyone who knew anything who didn’t know there was a bubble on. I’m just Some Dick, with no finance business going at all, and I remember talking people out of buying houses in early 2005.

    There are 1) people who manufactured the bubble, popped it, and got paid for both, and B) chumps they stole the money from.

    This guy’s a 1). The “good cop” kind.

    1. Hear here.

  8. After all, we have an SEC, a Federal Reserve Bank, a Treasury Department, the formerly government sponsored entities Fannie Mae and Freddie Mac, the Census Bureau, many data collection and analysis agencies, and too many congressional committees. All of these entities have the stability of the economy as part of their job description.

    Uh, no. Their job description — and that of every government agency known to the public — is to get Congressmen and presidents re-elected. Recognizing, let alone reporting publicly, that the housing market was overinflated does not serve that goal.

  9. It wasn’t hard to figure out that there was a housing bubble in 2006. The reason I didn’t buy a house then (despite both having the cash and the timing being right personally). The hard part is having your blood-funnel stuck into the throat of the economic system, so that you can get your buddies at Goldman to let you rig some bets.

    The closest most people could come to “shorting” the housing market was to not buy, and stick their money somewhere safe…which is precisely what I did.

    1. I shorted Thornberg Mortgage (jumbo prime loans only) to zero.

      So much for the fairytale that “Fannie Mae caused the mortgage meltdown” since Thornburg originated only non-conforming (for Fannie) loans.

      1. So much for the fairytale that “Fannie Mae caused the mortgage meltdown” since Thornburg originated only non-conforming (for Fannie) loans.

        Yes, and since Germany didn’t bomb Pearl Harbor they had absolutely nothing to do with the U.S.’s entry into WWII.

        Fannie Mae was not the only cause of the mortgage meltdown but it was a very significant one. Subprime debt is not the only problematic debt; it was simply the last frontier into which our financial system was able to extend bad credit, after so much of it had also been pumped into the prime and Alt-A markets. If you haven’t been following the financial news, Fannie’s and Freddie’s portfolio of conforming, “prime” loans is melting down quite capably.

        1. To date, Fannie and Freddie have soaked up $140 billion of rescue capital.

          If that were the extent of the damage this would have been little more than a speed bump.

          Instead, trillions in unregulated private capital was wiped out.

          FT estimated total losses at $20 trillion.

          FNM/FRE were just bit players in the depression.

          1. To date, Fannie and Freddie have soaked up $140 billion of rescue capital. If that were the extent of the damage this would have been little more than a speed bump.

            But that’s not the extent of the damage, is it? They going to continue soaking up “rescue” “capital” and will only do so at a faster pace if the downtrend in housing prices resumes.

            How much capital would they have soaked up if not for the Fed MBS purchase program? How much would they have soaked up if the banks could not use mark-to-myth accounting and had to actually foreclose on homeowners not paying their mortgages? How much of the bad lending that took place in the non-GSE sector was driven by the perception that the government would backstop the mortgage market (and the lower yields that backstop helped to create)? How much higher did housing prices climb because loan originators knew there was a guaranteed buyer for any mortgages they created?

            FT estimated total losses at $20 trillion.

            What’s the exact breakout on this? How much of it stems from collapses in equities which had soared to bubble heights on the back of the credit bubble?

            Far and away the greatest source of losses was the existence of the Federal Reserve, which for the past 50 years essentially guaranteed to speculators that there would always be a bid for their assets. Time and again the market’s attempts to liquidate bad debts — in 1987, 1994, 1998, 2001-2003 — were frustrated by Fed injections of liquidity, until finally so much bad credit had been extended that even infinite liquidity was unable to prevent a panic.

            1. Those are good questions – I can tell you are educated on the subject.

              The answers lie in the notion of the Fed itself as a lender of last resort.

              Prior to the Fed there would have been massive bank runs and subsequent failures as capital froze up. Tens of millions would be rendered homeless.

              Look at the Panics of 1893 and 1907. They were needlessly devastating as most banks failed and buried depositors.

              Today, no depositor should be wiped out thanks to the Fed and FDIC.

              We are better for it. We allocate capital more efficiently for it.

              Capitalism is better because of the Fed – bottom line.

              1. The Fed is our only line of defense against the Zionist Illuminati conspiracy to control the global money supply.

              2. Prior to the Fed there would have been massive bank runs and subsequent failures as capital froze up. Tens of millions would be rendered homeless.

                We had runs in 2008. They were on the new version of banking – hedge funds, mutual funds, etc. People saved their money in those because commercial banks pay diddly squat in interest thanks to Fed policy.

                We wouldn’t have tens of millions homeless without the Fed – you can’t have a homelessness problem when you have a massive oversupply of houses unless the government is doing something to prevent prices from falling.

          2. How much of that $20 trillion only existed on paper anyway?

            Why is it that every time the stock market drops 500 points we all talk about the trilliosn of dollars that have ceased to exist, even though none of the prices would have held up if people had actually attempted to sell at them?

            Anyway, Fannie and Freddie owned about half of all mortgages directly or indirectly, by 2008. Which is not bit player territory.

          3. Also, how many times did we hear in 2007 that subprime was only a $500 billion – $1 trillion problem, and would therefore be contained and pose no risk to the banking system? Since it was only 1/20 of the total losses I suppose it was a bit player also ….

      2. What fraction of people have ever shorted any financial asset? Probably less than one percent. It is not an option for anyone but serious investors. Even then, all you did is managed to double some little part of your portfolio, rather than make out like a 30:1 leveraged bandit who had the inside track.

        1. I short all the time using the ETF funds. It is a readily available option to ANY investor, provided they are willing to do the homework and not rely on an overpaid stockbroker.

    2. The closest most people could come to “shorting” the housing market was to not buy, and stick their money somewhere safe…which is precisely what I did.

      We will prop up housing prices to punish you for your anti-social behavior.

    3. It wasn’t hard to figure out that there was a housing bubble in 2006. The reason I didn’t buy a house then (despite both having the cash and the timing being right personally).

      Feeling there’s a housing bubble, and knowing are two different things. I felt there was a housing bubble in 2002. But prices continued up… up… up… up. So I shrugged and began to believe, that just maybe, housing prices were immune to ‘regular market’ forces.

      As a libertarian, I should have trusted my instincts.

      Not that I’ve lost a dime in the housing market, but it would just be nice to know exactly when the price of a thing is too high.

      Retrospective hindsight is a wonderful thing.

      1. Gah “Retrospective foresight” is a wonderful thing.

      2. But prospective hindsight would be even better.

  10. Obama has economic advisors that are 100% Free Trade/Market adherents (Summers, Volcker, Goolsbee, Volcker, Buffett).

    You’re a funny guy, Shriek.

    You should be doing standup in the Catskills.

    1. Those are free-market guys who have a body of work to back it up.

      Sure – they’re not Cro-Magnon Libertarians who want to “abolish the Fed” like the loopy Ron Paul.

      1. The fact that these guys, including Volcker can top-down reform the entire financial system calls their ‘free-market’ credentials into question.

        Sure they’re free-market… with a rather large portfolio of caveats behind them.

        A lot of these guys are ‘free-market’ they way Henry Paulson is ‘free-market’.

        Remember, just because you work for a large financial firm doesn’t mean you believe in broad economic freedom.

        1. Totally free market. Execpt for shoes. They like to set shoe prices with a committee of appointed experts. Well that, and money-rental rates. They like to set that with an appointed unaccounatble board of experts too. Because interest rates are too imortant to leave to free market, which they totally believe in.

  11. The closest most people could come to “shorting” the housing market was to not buy,

    You could have shorted WaMu. Or Citi.

    1. But nooooo, I had to go long on WaMu.

    2. Again, shorting is not an realistic option for the vast majority of investors.

      1. Come on, you can do it from an E-Trade account. Sure, some financial advisors will try and scare you away from it with nonsense like “your risk is UNLIMITED” and “the stock could go to INFINITY,” but bad advice is par for the course when it comes to stock investing.

        Granted, shorting is generally not available to 401(k) investors … one more way that the 401(k) is one of the crappiest, most overpriced investment vehicles ever created.

        1. Again, let me repeat: it is not a realistic option for most investors, even now….and less so a few years ago.

          Very few people have a speculation pool where they should be playing the markets. The vast majority of investors are and should be buy-and-hold, for damned good reason.

          1. Very few people have a speculation pool where they should be playing the markets. The vast majority of investors are and should be buy-and-hold, for damned good reason.

            Shorting is no more or less a speculative undertaking than going long, so to the extent that investors have any money in the market at all (which most probably should not), there is no fundamental reason why they should be willing to go long but not short.

            Today investors are “buy-and-hold” because they’ve been convinced by idiots like Jeremy Siegel that because the market goes up on average over a 200 year period, it’s a perfectly safe place to put their retirement savings. Never does it occur to these academics that, for example, the market often tends to take a dive right before you need the money you put into it, during a depression, for instance.

            1. I disagree. Shorting is very different from going long, for a very obvious reason: shorting is, on average, a losing proposition. It is very little different than playing blackjack at the casino. Being long, on the other hand, will on average lead to profits.

              It has been shown again and again that buy-and-hold is the better strategy for retail investors. You can’t simultaenously believe that markets are efficient, and yet believe that anyone (let alone most people) can beat them. I find this cognitive dissonance among traders rather astounding, actually.

              Again, shorting is not a realistic option for the vast majority, even when it is technically possible.

              1. You can’t simultaenously believe that markets are efficient, and yet believe that anyone (let alone most people) can beat them. I find this cognitive dissonance among traders rather astounding, actually.

                Luckily I don’t suffer from this cognitive dissonance because I don’t believe markets are efficient. Anyone who has read even one page of financial history knows of their tremendous tendency to boom and bust.

                “Buy and hold” is a bull market mentality and it works in bull markets, which is why it always reappears when those trends are becoming mature. If you try to apply it before or during a bear market you get your ass handed to you. If you manage to keep your job and can add to positions at washed-out prices, then great. Most investors are not that lucky, which is why most lose money in the stock market.

                1. What the facts show is that amateur investors are terrible at timing markets, and those that try “get their asses handed to them”.

                  Shorting, by its very nature, is a very short term bet. It is absolutely and utterly the opposite of what 98% investors should be doing.

              2. Tell that to the Japanese.

            2. they’ve been convinced by idiots like Jeremy Siegel that because the market goes up on average over a 200 year period

              Well you don’t need a 200-year period. If you had put your next egg into an S&P index fund in 1990, you’d still be up more than 300 percent. If you’d been making defined contributions all that time, you’d be ahead too. And if you’re ready to retire this year, you should have started saving before 1990 anyway. Yes, most of what you’d done since 2000 would have gone in a circle, but dollar cost averaging and all that stuff is not total bullshit (even if the magical properties are overrated).

              I don’t understand all these people who claim to have had their retirement fortunes wiped out in 2008. Did they start saving for their retirements in 2006?

              1. don’t understand all these people who claim to have had their retirement fortunes wiped out in 2008. Did they start saving for their retirements in 2006?

                I estimate that to be the case.

                On the other hand, I think some of them may be claiming their expected retirement incomes were wiped out.

                In the 80’s, they were expecting a comfortable, modest income. In the 90’s things started to heat up, and retirement started to look like there was going to be extra gravy. In the early 2000’s, they became convinced they were going to be traveling the world while sipping Dom Perignon. Then the recession hit, and they found themselves back around the modest, comfortable retirement.

              2. If you had put your next egg into an S&P index fund in 1990, you’d still be up more than 300 percent.

                But real estate never goes down.

                The problem of course is that 98% of the people aren’t investors, they are trying to save money for retirement. But I’d argue that people who started working in the last 20 years have been steadily cajoled into investing in real estate – which is similar to putting all your money into one stock instead of an index fund. Also, many 401(k)’s apparently have too much single-stock exposure.

                In other words, your index-fund thinking has been deemed old-fashioned by idiots.

          2. Wow, Gnad. You have no fucking clue what your yammering about. STFU.

        2. Aren’t there SEC rules demanding that your account can cover ‘X losses’ when you short?

          Also, don’t some brokerages demand you’ve been trading or have done ‘x’ trades with them before allowing short positions?

          1. Yes. You have to hedge short sales by holding the capital to cover the spot price, which means that you could be forced to cover if the price increases beyond your reserve, even if you are still within the term of the short contract.

            1. Sorry, assets not capital. Could be other stock, but must be designated.

      2. Nonsense.

        There’s nothing stopping anyone. What you mean is that “the majority of investors” arent “investors” at all, but people with some form of pension fund like a 401K, an IRA, Annuity, or whatever. Thats not the same point at all. You are mixing 2 points.

  12. You would think somewhere in the United States government there might be such motivated people. After all, we have an SEC, a Federal Reserve Bank, a Treasury Department, the formerly government sponsored entities Fannie Mae and Freddie Mac, the Census Bureau, many data collection and analysis agencies, and too many congressional committees. All of these entities have the stability of the economy as part of their job description. Yet all of them combined could not manage your money as intelligently as one short seller from Rome managed John Paulson’s.

    When you factor in “the superior education and experience of government employees” it almost seems impossible.

  13. The Goldman Sachs Abacus fraud investigation is already losing the attention of a public ready to move on to fresh fields and scandals new.

    Morgan Stanley? That’s yesterday’s news.

    Today it’s Citi and Deutsche.

  14. Do you really want the Federal Government speculating in derivatives?

    Get real. [Think Barings Bank x 1000.]

  15. The government will never hire shorts for the simple reason that the voters want to vote their stocks higher.

    Nobody is going to vote for someone that wants stock prices to fall.

    1. Any drop in prices represents a market failure.

    2. Any change in the market represents a market failure. This is why we need market regulation.

  16. The CDO’s and CDS’s involved in the bubble didn’t convey any information because they were all done OTC. OTC contracts are opaque. Even now no one really knows how much is tied up in these instruments (some estimate as much as 500 trillion) or you owns what.

    1. Even now no one really knows how much is tied up in these instruments (some estimate as much as 500 trillion) or you owns what.

      Please let that be a typo!

  17. OH wow, very good question dude.

    Lou
    http://www.anon-posting.tk

  18. just love that picture of dufus Dodd, talk about your blatant political douchebaggery…

  19. A smarter regulatory approach would be to encourage the creation of these crazy derivatives and complicated bets against the market, because these contain information that the market needs and regulators could pay attention to.

    I’m going to kind of disagree. The derivatives you are talking about don’t provide useful information to the market because they are one-offs between two parties that generally no one else knows about.

    Now, if we had exchange-traded derivatives for credit default swaps and the like (which we decidedly do not), there would be some valuable information generated.

    Also, its hard to say that we need more of these OTC derivatives, when there were tens or hundreds of trillions of dollars of them created. If that many OTC derivatives didn’t “generate information” or “send signals” that would mitigate a bubble (and they clearly didn’t) then I’m pretty comfortable saying that no amount would.

  20. Would somebody please shove a dead Kennedy into Chris Dodd’s pie hole?

  21. I think the guy has a great point about abolishing banks. Why is there an intermediary (banks) between me and the money they print? I would like to get loans near 0%!
    Oh…whats the arguement for banks???…invest captical….yeah, in people who don’t repay loans and paid 10X what a house is worth, with the added benefit of completely distorting capital allocation. O, and now I get to pay taxes, and owe taxes to infinity, to bail them out!!!
    As we no longer have profit and LOSS, lets just get rid of the banks.

  22. What a brilliant comment on Capitalism. With profit incentives, short sellers work hard, study and figure out reality. With nothing but job protectionism as incentive, government entities figure nothing out. Long live Capitalism!

  23. The worst is yet to come for the banking industry,,,see the $500 Trillion in Claims filed with the SEC by the Infinite Freedom Foundation against the US banking industry:

    http://victoryinvictoria.blogs…..chive.html

    http://michaeleugenepower.blog…..-king.html

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