1/12/2009

AHAAA!

Almost fell out of my chair with that aha. My loyal readers, not you one time wannabes, will join with me in my aha.

Why aha?

I have been saying for months the response to our current economic issues from virtually all governments is straight out of the book.

What book?

Atlas Shrugged

Many thanks to ugly for finding this story.

Read the story, then read the book.

Oh yes, I almost forgot. No signals and no trades.

I'm thinking of taking up knitting, stamp collecting, needlepoint, shuffleboard, watching paint dry, anything other than watching these markets.

6 comments:

Anonymous said...

The current mess is because of DE-REGULATION.

Can you say "Enron" ? only at a massively larger scale.

yeah, so much for the "shrug".

it's a book for simpletons. Put it down before you damage your brain.

Solfest said...

Anonymous I'm am shocked and dismayed at your conduct.

Enron was a fraud, the perpetrators of which were sent to prison and the accounting firm that "missed" it was destroyed. Enron was no different than someone committing murder. The laws against it are there, they did it anyway, they got caught, and they went to jail.

The big de regulation issue is the credit default swap market. Trillions (they don't really know) of dollars in size and completely un regulated.

This was and is a mistake. It does not mean that we need the government to take over or bail out all failing industries in a massive over reaction to this mistake.

Business must be free to work within a legal framework, they must be free to make huge profits, and they must be free to go broke if they make mistakes.

Any attempt by government to interfere in this process will prove to be a massive mistake exacerbating what is already a giant mess.

Of course all this is coming from a "simpleton" so readers beware.

thelonelytrader said...

I see your rant against government continues. You know, anon has a point...although I disagree that the book is for simpletons. There is, simply, more to how this works than Rand is able to deal with in her prose, although Rand has some good points, too.

You know, I'm surprised at the WSJ these days. They have abandoned their pragmatic and factual approach for an ideology of their own. Much more so than in the past. And in counterpoint to the more left-leaning rags.

This is not a good time for anyone to get stuck in ideological ruts. Of course, as traders/speculators (and by definition most certainly NOT capitalists), we are suspect here. And many of the WSJ folks are suspect as well, in that they produce nothing of value to capitalism.

Lots of philosophical conundra here, in a conjectural sense.

Solfest said...

Ah Lonely, where to begin, where to begin.

It’s Sunday morning, I’ve got a coffee in hand and a good hour to kill, so brace yourself.

I tried producing the Solfest Manifesto a while back and it started out well with the comment; this will either look like a well planned document with rational headings and a coherent flow of information all leading to a brilliant conclusion.

Or.

The ramblings of a crazed dictator who has just taken over the nation's television broadcast system.

It became apparent rather quickly that it was the latter so I abandoned it. I have a feeling this will follow in those foot steps.

If I had to pick one regulation issue that hurt us the most it would be, as reported by 60 Minutes, the word swap.

Swap instead of insurance. According to 60 Minutes the fact that they called credit default insurance credit default swaps meant there was no regulation of the product. No reserves to cover this "swap".

Ka Boom!

So yes we need regulation and we need it done right, and this was done oh so wrong.

My "rants" against government are really a rant against weak businesses that can’t survive with out corporate welfare.

People get welfare, business go bankrupt. They have to or the system will collapse.

We need the government to do a few things in order for business to prosper in any country.

1) Create a legal, regulatory, and judicial system that provides a rule of law that all can see and understand.

2) Remove taxation from the corporate structure.

Why would we tax the only entities that create wealth in a country? A limited company is a separate legal entity under the law but it is not human. It does not enjoy the fruit of it’s labour. We take all that fruit, we the employees, shareholders, and government.

Companies provide all the wealth and take nothing in return. We take it all.

Taxes should only be collected from those who enjoy the benefits provided from those tax dollars.

Read that sentence again.

So if we want the government to "do something" they should remove all corporate taxes now.

The government can then say, look we have done all we can do. The rest is up to you.

If a company cannot survive in that framework then they go bankrupt, the strong companies in their sector come in and buy the assets from the receiver and life goes on.

Yes Lonely, (I can read his mind now) if companies didn’t have to pay taxes they might start to hoard cash and not deploy it. So there would have to be a punitive tax on a certain percentage of cash that sits in current assets for over a year.

The percentage of cash that is taxed could be based on its relationship with current liabilities. You bean counters could figure that out.

I'm no objectivism devotee, I read Atlas Shrugged and loved it because of the pureness of thought from the capitalists. I loved how every decision was based on rational thought, I loved the reaction of those who could not think that way. Watching the bureaucrats layer on bureaucracy as a cure for the previous bureaucracy.

Politicians think they are God. They think they can do anything, fix anything, and spend anything.

They can't.

Business is simple. If your liabilities are more than your assets you are bankrupt.

Period.

Now I know how Lonely feels after one of his 900 page rants, it cathartic, cleansing, I feel good.

thelonelytrader said...

Except that you misrepresent Rand. In her book, *all* income taxes must be abolished. And *all* regulation. And you misrepresent the nature of markets and the reasons for the taxation of corporate structures. And there is no notion of the commons at all in your exegesis. (I use that word deliberately.) And, on top of this, Rand misrepresents politics in the US -- for what are very understandable reasons (knowing where she came from). The whole thing is a characature, frankly. And I'm not surprised at who is taking sides. This is a dance as old as the industrial revolution.

You say politicians think they are God. We could also say the same thing about capitalists.

And how many large corporations have assets that are greater than their liabilities? Your assets > liabilities formula is not the formula de jour for capitalism and it hasn't been the formula since the existence of banks. The formula is something quite different -- and it was not arrived at by politicians. It was arrived at by...capitalists.

There simply is no reason to take such a hard line against politicians or capitalists. In democratic civil societies, they must work together and the process will always, always be messy. fThis means that all entities must pay taxes and be regulated. There is more to consider than economic growth per se in such societies. I'm sure you agree.

That was only 251 words, by the way. Now what was opulent, or capricious, or flaccid about that? :)

Solfest said...

Lonely Lonely Lonely...

I do not draw my views on capitalism from Rand. My view on her book was aptly stated in my previous comment. The WSJ piece was simply drawing parallels between the book and the multiple government reactions to our current situation.

A banks balance sheet is a different beast than everyone else’s as for them deposits held are liabilities and loans granted are assets.

I’m talking big picture here.

I can guarantee you if your liabilities are larger than your assets you are eventually doomed.

My views on taxes are quite simply correct. :)

They should be adopted by all immediately.

Or I will take over the nations broadcast system.

You will be assimilated, resistance is futile.