Will All This Even Make a Difference In Three Years?

It's getting nose bleedish out there if you ask me. I'm not trading tomorrow but if I was, I would have been inclined to get a little short the S&P and the financials. Back in the day the mantra was "never bet against the Fed", now you just print money when you bet against the Fed. In this case I have no problem betting against the Fed, the G-20, the IMF and the global economy. The difference now is that I just have more unqualified henchman on a global scale to mock and criticize.

Hank Greenberg, AIG'S former patriarch was on the Hill today belly aching yet again, to anyone who would listen, about the atrocities against AIG. Today it was the big bad bulge bracket firms that made way too much money buying his toxic junk. He claimed their bids were too low and resulted in huge profits for the banks, He went on to say that the reason the banks have had this brief kiss with profitability is greatly due to those trades. I guess he wanted a bidding war? Hank let it go, please, it's over, go play golf. Enough.

Are we on the brink of the death of Capitalism as we have always known it? I'm feeling that we have seriously lost what matters. Is the current administration enabling that end? Here is a quote from the Poul Rasmussen, the former PM of Denmark and the current President of the Party of European Socialists. It was an op-ed that appeared in the Wall St. Journal today:

The job losses, repossessions, uncertainty, fear and misery faced by the people of Europe, the United States and Japan are a terrible stain on the consciences of those bankers and politicians whose doctrine of neo-liberal markets plunged us all into this crash. But the effect of the crisis on the Third World is of an entirely different magnitude. While developed countries scramble to save their economies, half of humanity languishes. For many, this means hunger, disease and death. In Europe, we have been protected from the worst effects of the crisis thanks to welfare states built up over the past 60 years to cushion citizens from the threats posed by the free market. We can all count on state health care, social housing, education, unemployment support and other universal, tax-funded services. The simplistic dictum of more markets and less government -- championed by Reagan, Thatcher and their ideological heirs -- has failed on a momentous scale. In the White House, President Hope has replaced President Tax Cuts for the Rich. As we go into the G-20 meeting in London, even European conservatives such as Nicolas Sarkozy and Angela Merkel are calling for a new global financial architecture, better financial regulation and a crackdown on tax havens. The previously unimaginable idea of a "Global New Deal" is suddenly on many people's lips.


This rhetoric is alarming, it's not a surprise but scary nonetheless, and it will be interesting to see where we will be as a country in three or four years. Regulation suffocates capitalism, that I know for sure.

G-20

Unfortunately this is the attitude of the masses across the pond. Denial isn't just a river in Egypt. I guess they don't realize that almost every country is practically on the brink, especially those with massive unsecured loans to Eastern Europe. Countries like Sweden, Switzerland and the U.K. have huge chunks of their GDP in loans to Eastern Europe, Austria alone has 70% of their GDP in loans there. What happens when they default? It's coming. The housing boom in countries like Italy and Ireland makes the U.S. boom look like a teeny tiny blip. The underpinnings that are collapsing in that area are coming home to roost, and in a huge way.

In my opinion the G-20 is like the United Nations but with checkbooks, equally inept and irrelevant. George Soros, whether you agree with him or not, said the other day that if things don't work out at G-20 we will fall into a Depression. Think he's short?

Lot's of opinions for sure on this topic, the market will be the final arbiter.