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« Weighing the Week Ahead: Bernanke's Next Move? | Main | Weighing the Week Ahead: A Search for Leadership »

June 06, 2012

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Hugh Manatee

Europe has been dead since roughly August, 1914. Ignoring the tens of millions slaughtered in two world wars, we have the subsequent attempt to unify disparate religions, languages, cultures and histories into one unified political/fiscal entity.

One at least has to ask just when in world history has this type of integration ever been tried when the system did not immediately begin to disintegrate? Catholic and socialist France will be in effect merged with Protestant and capitalist Germany? Add in a language barrier and toss in a history of conflict going back to roughly Napoleon and what would you assign as a probability of success?

There's a reason the Puritans left Europe and settled in America. It's in the news almost every day. Try to imagine the unrestrained ignorance of American leaders who believe we should emulate this disaster area.

Do we actually need a checklist?

Curt

"The bloggers and the commenters seem to think that being sassy and sarcastic makes them look smart. Even some good journalists fall into this trap."

I try not to be sassy and sarcastic to look smart, b ut it just is amazing to see the deceptions in finance.

The stock market makes no sense for the masses. It is for the masses just a transfer system from the less wealthy to the more wealthy. The efficient way to make this transfer system is a graduated income tax. Just change the slant of the curve and you can transfer money from the rich to the not so rich or from the not so rich to the more rich.

For instance Warren Buffet is said to be worth 50 billion or so. If his wealth grows by say 5% a year than he makes well 2.5 billion in a year. He paid what 17 million in income tax so his rate of taxation in a somewhat sensible world(snarky?) would be less than one percent. And if we wanted to help Warren then we could reduce that to say a tenth of percent.

That is a straight forward no nonsense way to make the rich richer.

But the stock market is mainly a place where people trade based on limited information. The wealthy or about to be wealthy have a lot more information and so get wealthier still. Your average person should never be in the stock market because they have no time to invest in getting the information. The only reason some small investors make money is they take from other poorly informed small investors. So it is a transfer system from the foolish to the less foolish.

So then you suggest that the foolish find a trusted advisor. How does a foolish person find a trusted advisor. Do you pay someone to find the best advisor and if so would not someone with more money outbid you?

So if you could find the right mutual fund you would be much better off, but won't the wealthy always outcompete you in getting the best mutual fund.

So on average the stock market is rigged against the small and not so small investor.

But you may say even though this is the case it is the best game in town. This is true if you follow history and if history repeats itself.

There is however a better game if people were more honest. That is social security in a slightly different form. I think it is foolish to think of social security as an investment in its current form.
It is a means of transfering wealth and I am not against that. So people should receive a minimum amount of social security regardless of what they put in so they can survive.

And further we must index the fund. Then let politicians decide how much the country can afford to subsidize the less afluent.

But then for those who want to save and invest, let them invest in America ( or other countries I suppose) with GDP bonds. You cuy can buy all the GDP bonds you want for your retirement and the government will pay you back based on how well the GDP is doing. If America does well you do well and if not you do not so well. This limits the inside information to guessing how well America will do in the future.

Then how do companies get funded. Basicly they take out loans from the big banks. If facebook needs money to get started and it is such a great idea let Citibank loan them the money. Or let a partnership of wealthy informed individuals loan them the money.

Now how does City Bank get the money? They borrow it from the Fed and then if Citybank was smart they pay the fed back.

What if the original owners of facebook want to cash out. Then find a group of wealthy people to buy the business.

But please lets not go thru all these games to milk the little guy. Just use the tax system in straightforward efficient milking system

Jack

Possible. But similar things were said just up to the subprime crisis, Lehman, etc. With all those smart, rational people at the helm, they wouldn't let the system crash then would they?. I think I agree with Casso.

Bill Casso

The banks in Spain need lots of cash, the Germans will not sign a blank check to help Spain and the others. Unless you think that Merkel will violate German Law and pledge more money without a vote by the German Parliament the European house of cards will collapse. There is simply not enough time for these politicians to act. You may have a good track record but I think you are the one that's going to be surprised by the endgame.

Greg

Excellent article. I agree that "Eurozone Leaders" are rational people who will not let the world fall apart as they sit on their hands. Sure, there may be a lot of brinksmanship and posturing, but at the end of the day there won't be a total systemic collapse because that outcome is simply in nobody's interest. Unfortunately, that notion doesn't sell newspapers.

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