The indictment of the Bear Stearns' hedge fund managers and the government's stinging loss at trial (The conviction rate in Federal Court is 94%. This includes grey area cases, not cut and dry 10 Commandments stuff... and you better be RICH, because there is NO JUSTICE in Federal Court, only multi $$$$$$ million dollar trials) was a very unusual thing in that innocent people were found innocent - but only because they had the money to fund their defense.
There is a WITCH HUNT going on in the U.S. securities markets (this poor sot is going to jail because his clients lost money, not because he STOLE money - folks, if you invest in the stock market you are taking a risk. Who does not know that? This guy pled guilty because he lacked the money to defend himself and there was no way he was not going to be convicted at trial, even though he committed NO CRIME. Americans think our jury system protects you, and nothing could be further from the truth.) In fact, I withdrew my membership in FINRA (Financial Industry National Regulatory Authority) late last year, returned my clients capital to them, and told them flat out: I cannot be held responsible for YOUR money at this time - there will be more conflagrations in the U.S. financial markets, and I will be no better at seeing them in advance than you are. The U.S. equity market enjoyed one hell of a run in the second half of 2009 for a number of reasons - but in my opinion, positive fundamental change was not among those reasons. Too, although I believe deflation will carry the day initially... inflation may in fact win.
Should I go to jail for making a wrong market call? Should my children grow up without their father because the government needs someone to blame? Should I spend their college funds defending myself? No, thank you. Before the market blows up and the boyz in D.C. need another victim to feed to the Roman Mob... I decided I would rather work at a car wash than run a brokerage firm or brokerage accounts (at least for the time being... and yes, I still run my hedge fund, but that is for big boys only).
This is a time to be very, very paranoid. People ARE going to lose money, that's what happens in deflation AND high inflation. Not to worry though... some nice, ambitious prosecutor (Mike Nifong, anyone? The Duke LaCrosse players got LUCKY - many others innocents are sitting in prison RIGHT NOW) will be happy to spill your blood all over your family's living room if it helps to advance their career or make a constituency happy. (I think back to Ruddy Giuliani and his prosecution of Wall Street in the 1980's... here's a fun fact to know: Each and EVERY conviction was overturned on Appeal! In other words, those juries were only too happy to lynch people they hated irrespective of their innocence or guilt! "And Justice For ALL!!!")
If you work in the financial services industry you should heed this warning. It might be your a$$ burning at the stake next.
12 comments:
Greg,
Nifong got convicted and spent ONE day in jail for his abuse. HA!HA!
peace
Did he spend a day? Wow...
He was attempting to murder these young men under color of authority using institutional violence... and he got a 1 day...
Great...
Not surprising in a world where bubble credit gives bubble expectations of 20-30% return on your money. Some of the slower,dumber ones are gonna take the risk and get burned. Isn't that what Darwin's all about?
Yes, but it is no longer academic to this poor guy - they needed to make an example out of this guy...
What's next? Life sentences for surgeons if their patient dies? Or for police that let the bad guy go? Or teachers whose students fail? This is a VERY slippery slope, and considering the level of anger out there, I would not count on the jury system to protect you.
Keep your head down.
Greg-
Do you feel that it's reasonable to be converting many or most financial assets into hard assets- pms, ag land etc? And possibly IRAs/401ks also?
Well...
At the moment, I am a deflationist... that means I think the currency is going to go UP in value.
HOWEVER, I always hedge my bets. I own precious metals in bullion form, some farm land, and some commodity futures contracts.
Let me also say that I am not right all of the time!!
And much depends on how old you are and how much wealth you have (and how many people are depending on you).
I like farmland at this time, but I am not adding to precious metals as yet.
I like Ag futures, but I am hoping for better prices there, too.
My biggest holdings are 4 to 10 year Treasuries... but that can change on a dime.
I have equity positions in my fund, but they are usually Long/Short. Long ABC and short XYZ...
You must know one or two lawyers in your life. Are they idiots? Do they waste their time on cases where what is "right" is not being pursued? You yell about me being empiricial -- evaluating energy/finance stuff based on empirical/anecdotal/headline evidence. I really don't think all these highly-schooled highly-paid lawyers ignore all the evidence and conduct witch hunts for fun. There were a LOT of people gaming the system and pocketing millions in the last decade -- mostly legally, some not. The nation is in a bad place right now, and something has to be done. Stop blaming the courts, lawyers and even the bureaucrats. We aren't all morons. Maybe they get 94% cause they only spend their time prosecuting people who are guilty.
Bureaucrat:
The Bear Stearns Hedge fund case was poltically driven - no more, no less. Some very smart guys wasted their, and the tax payers, time trying to put innocent people in jail for a VERY, VERY long time.
The Giuliani record speaks for itself - the only convictions that stuck where the guys who took a plea because they did not have the money to defend themselves: 100%!!! 100% of the jury convicted cases were turned over on appeal - about 25 prosecutions... 0 and 25! You don't need my overwhelming talents in statistical analysis to get the magnitude of that.
in most cases the accused are guilty of some of the indictments. I say "some" because our system allows prosecutors to "over-indict". That strategy is used to consume the resources of the defense - and it works.
Why bother? Why not just round them up with SS type goons and shoot them at their office? Its the same thing, really.
The problem is that after one works in that system for a while you see everybody as a "scumbag", to be locked up "till they rot". People that work in slaughter houses become inured they say... By all accounts the guards at the Nazi camps became inured to human suffering...
Greg, the more I read your stuff the more it just keeps me fired up. This is the type of stuff that should be posted over in the MSM for the financial guys to take note.
Keep up the good work!
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