How It's Done

By now everyone has seen the Jon Stewart/Jim Cramer interview (if not, it's here, in unedited form.) It's amazing to me that, as far as I know, the only place in the media where such a revelation has occurred is on a comedy show. (I give Cramer credit for showing up!)

The central point -- and one of which I'd say I was vaguely aware but had never formulated so clearly -- is that there are two investment worlds. The one that such networks as CNBC hype is the one in which most of us think we are participating: find good companies, or funds, invest in them for the long term. Solid, careful, thought-out. And then there's the other, about which those same networks clearly know, in which the monies thus invested are taken into the back room and morphed into shady deals, highly leveraged, risky business, making the players fabulously wealthy, using our hard-earned and hopeful money as their means for quick and massive enrichment. At our expense, making off with millions. With us taking all the risk. Unknowingly, for the most part.

Sure, it's more complicated than that, and "we" are not exempt: we've become convinced/duped that money can be made out of thin air, twenty, thirty percent a year, getting rich doing not a damn thing. Ignorant of, or ignoring, the house of cards -- imaginary cards -- on which it's all been built.

Maybe the most perfectly encapsulating comment in the entire show was when Jon Stewart, having shown clips of Cramer the hedge-fund manager baldly (!) talking about how he manipulated markets to make quick money, said "I want the Jim Cramer on CNBC to protect me from the Jim Cramer in those clips." (Or words very close to that.)

Stewart asked, but was not really given an answer: who is the audience of those financial shows and their talking heads, from their point of view? What do they see as their mission? Ginning up the substrate for their friends in high places to play with, winking all the way; or letting consumers know what's going on? And there's the problem: to lift the curtain would be not only to drain the brown bathwater in which they bathe; it could be an end to the quick-buck thinking that got us where we are today. Make people reconsider their whole raison d' etre.

Which is way too French.

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Does A Bear?

Well of course the stock market is driving me crazy, swinging wildly nearly every day, with no particular rhyme or reason. But what's maybe even more insane than the market itself, is seeing headlines like these, a mere sampling from Monday, or very recently:

Dow loses 679.95 as economy, Bernanke revive fear

Stocks fall sharply on consumer spending worries

Dow Plunges 680 Points as Recession Is Declared

Stocks slump as U.S. recession is officially called and signs point to a prolonged slowdown.

Dow falls amid fear over car makers

The Dow falls 679, fear has set in now.

Here's my point: DUH!!!!

What's different today, from yesterday??? Are enough people waking up each day from a year-long slumber to notice something? JFC, people!!! This has been going on for a LONG time!!!

Fully retired for the first time this year, dependent entirely on savings, it's been a little tough. And scary. Not to mention infuriating. I've always been pretty thrifty: my car is nearing 200K miles. Same house for twenty six years, paid off long since. Own one suit which I haven't worn in fifteen years. Travel too little. Never made anything near what most general surgeons make (owing to my career-long loyalty to a large clinic with a larger overhead), despite doing twice as much surgery as the national average. Nor have my investments been greedy or crazy (stayed out of the dot-com boom. And bust. A buy and hold sort of guy). So it's disheartening to have seen half of it disappear.

But it's literally crazogenic to be buffeted by these daily gyrations and to realize that my future is dependent on the whims of idiots, who seem to have no sense of proportion, nor to know what's going on on a daily -- let alone yearly -- basis. If I weren't so old and stupid, I'd go back to work. If the economy didn't suck so bad, maybe I could even find a job.

Meltup

Today's advance in the stock market says, in ways more obvious than the many others out there, how far from relevancy George Bush has taken the US. (And, by extension, since he agrees with the essence of Bush's foreign and domestic policies, how much further McCain would lead us.)

George Bush fumbled around and came up with a plan (agreed to both by Obama and McCain) that was by most accounts better than nothing but which missed the mark; at least, one could say, that was the judgment rendered by the markets, which tanked. Henry Paulson has looked confused (though not as much as McCain.) It took the leaders of Europe, guided, it appears, by the leftist Gordon Brown of England, to produce a plan that engendered confidence. At least the US plan had in it, one infers, some flexibility; because now it seems the approach has changed in ways which make it similar to that proposed across the pond: injecting capital and taking a stake in some banks, instead of buying up "toxic debt."

In no way is economics my strong suit. It seemed obvious that something had to be done (and that John McCain, taking credit for the passage and then for the failure of the bill after the bill, was of no help at all) but I had no basis for knowing what it might be. (I have been asking people I know who might have a clue, why buying up debt was a better use of the money than providing capital directly, and got not much of an answer.) It's reported that it was Paulson (and, therefore, Bush) who insisted on the US plan as proposed and that Ben Bernanke was for the European approach (I read that this morning, and now I can't find the damn link). Under the crisis scenario claimed by Bush, et al., the Congress felt great pressure to act rapidly. They may have done better, it turns out, to have thought a little longer. All of them. Nevertheless, it's impressive that when it was clear the crisis was spreading to Europe, those folks acted with diligent speed and came up with something far better received. George Bush, once again, looks wrong-headed. Our congressional leaders, not a hell of a lot better.*

A one-day rally does not recovery make. How long the tunnel is, and whether that's actually a light at the end of it remains to be seen.

[To those who'd point out that Obama was party to it, I agree. But -- as opposed to John McCain who showily injected himself into it and then flopped flopped like a grounded fish -- Senator Obama acted like a Senator and not a president, which he is not, yet. He came, he spoke, he voted (McCain voted but didn't speak), leaving the process to those in Congress whose job it was. Were he President, I think he'd have played a very different role. And, given his prescient vision on the matter, I'd guess he'd have handled it differently from Bush.]