Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Lessons Learned

By -

This is going to sound like another one of my pissy little rants, but it's not. I truly believe what the world has learned from the past six months is as follows:

  • Investment banks can give away whatever bonuses and compensation suits them;
  • The same banks can take whatever risks like that without really taking any risk, since the taxpayer will be given the bill;
  • At the same time, they will be entitled to keep all the profits (many of them tax-free and offshore);
  • There is no reason for anyone to get spooked about punitive taxes, as AIG was. The handful of executives that blinked and gave their bonuses back were suckers. The others wisely waited for the American attention to move back to Britney Spears and kept their bonuses;
  • The United States Government views it as their business to prop up equity markets, since so much of the voting public has a stake in them;
  • The SEC and other regulatory agencies will do everything in their power to help the long side and damage the short side of the markets;
  • As long as the average American has a working color television, they're not going to cause any real trouble, at least not for more than a day or two.

This is the reason I gave up on being a Libertarian years ago – – – the idea that most people are sensible and self-reliant is foolish. Likewise, I was foolish to think the playing field was even.

It's going to take a long time – – many years – – before the U.S. house of cards collapses. China and the U.S. are in a new cold war (this one, financial), and the same rule of Mutually Assured Destruction applies.

Until things blow up, I think the above lessons are going to create a very meaningful floor to any downdrafts. Yes, I still think at some point some softness will take place, but my cynicism – which was already pretty deep – has quintupled since I've finally gotten the above facts through my very thick skull.

The public is easily fooled. Washington knows this. Wall Street knows this. Thinking otherwise and trying to fade a rigged system is a good way to lose money. To make money, one has to understand the snowing is going to continue until it is simply impossible to keep the charade going.

So shame on me for thinking people had learned anything. They haven't, and they won't. My bad. I wish I had known better and acted accordingly. I feel really naive for behaving otherwise.

We Hold These Truths to be Self-Evident

By -

  • Printing up trillions of dollars of fiat money is no way to save a crumbling economy;
  • A soaring jobless rate is not a basis for optimism about the prospects for equities;
  • The fact that Goldman Sachs was able to snooker the public (again) by pushing the market higher 1 quarter out of 7 does not mean a new bull market has appeared;
  • Dumping tens of billions of dollars into the completely failed US auto industry at taxpayer expense is not a wise move;
  • Throwing trillions of dollars at insolvent banks, which spend most of their attention lining their executives pockets with enormous bonuses, is imprudent;
  • Pretending that the Medicare and Social Security System aren't headed for certain collapse is disingenuous
  • Peach cobbler with two scoops of ice cream can make a delicious noontime treat.

Congratulations, Slopers. The trading week is over. You won.

The Outrageous SEC

By -

A number of months ago, a Sloper reached out to me to tell me his story of how the SEC had charged him with insider trading and how he had to defend his innocence (a seven-figure legal expense) in a preposterous case in which the SEC finally relented. I met him face-to-face, and we even briefly discussed co-authoring a book on his story. I was amazed at the things that I heard – including tales of outright fabrication of evidence by the inept and corrupt organization which we taxpayers fund – and was distraught to learn that the pressure of the entire ordeal had also destroyed a lengthy marriage.

Then yesterday I read this article in the New York Times which seemed awfully familiar. It tells of Richard Kwak, now 72 years old, who similarly faced a charge which he vowed to fight to his last breath. He spent over a million dollars defending himself, and – once again – was acquitted of charges. Here's a small excerpt from the article:

Mr. Kwak’s life is now in tatters. He is around $1 million in debt and
suffers from emotional problems. He has struggled to stay out of
bankruptcy. Although he is still a broker – he certainly can’t afford
to retire – he long ago lost his job with Morgan Stanley, where he had
spent several decades without so much as a hint of impropriety.
Needless to say, his business is a small fraction of what it once was.

The article is well worth reading in its entirety, so I urge you to do so. The main point of the article is that the SEC gets its jollies out of pursuing little people on pretended charges, because little guys can't really defend themselves and make easy prey for the career bureaucrats at the SEC. Whereas firms like JP Morgan, Goldman Sachs, and good people like Bernie Madoff go utterly ignored, because (a) that's where better careers than the SEC are housed, and (b) big fish can afford to fight the SEC.

Yesterday, a Sloper wrote to me and encouraged me to provide a link to Zero Hedge's post called the SEC Needs Your Feedback. Tyler Durden, the author, seems appropriately ticked off at our good friends in Washington. So, here again, I urge you to make this part of your reading today.

Long-time readers know that my libertarian roots run pretty deep, and I'm not fan of government. But the SEC brings the lousiness of government to a new low. I'm sure the day will come when they take advantage of us bears as well, attacking those who are going to profit from the coming collapse of the equity markets, so I usually don't make a point of saying anything – – but this morning, even in the beautiful paradise of Fallen Leaf Lake, I felt the need to write something about it.