The Wall Street Con Job

Today’s blog has a tad bit of math involved.  But don’t worry, I have provided the answers.  All you have to do is follow along.

The stock market took an October “correction” the other day. I like that word — correction.  What were they correcting and who was it that was doing the correcting? I’ll explain. But first a simple premise.  The stock market has NOTHING whatsoever to do with our economy. If you think it does, you’re investing your money in the wrong place.

Now the questions: Who is correcting the market and what are they correcting?  The answer is quite simple.  The Seven Large Investment Banks and the one hundred super large mutual funds correct the market.  And by that I mean they are not making enough commissions so they move money to cause the market to go up and down. While doing so individuals and institutions will buy and sell shares accordingly, creating commissionable or “load” revenue for the financial institutions.

Take for example two stocks. Stock A was trading for $56.25 a share on Tuesday when at 11:00 am the correction took place.  Wednesday morning it opened at $44.00.  This is a huge international company that makes and sells large equipment around the globe.  What did management in that company do between 11:00 am on Tuesday and 9:00 am on Wednesday to devalue their worth of their company by roughly 22%?  The answer is nothing.  In fact they probably didn’t even have time to react to the shift in stock prices, other than call the director of investment relations and tell him or her to get a memo ready for legal to sign off on.

Now here is another real world example.  World’s largest oil and gas company announces the highest earnings of any company in the history of recorded finances. Let that sink in for a moment. They made more money in one quarter than any company ever did. And the next day their stock dipped five (5) points.  Really?  I don’t remember the percentages but 5-point swing in less than 24 hours on the biggest, most positive financial news ever and your stock price takes a nosedive!

See where I am heading.  The market, over all, is not a good indicator of a company’s worth.  Period.  Not in today’s electronically traded, high volume market. Not by a long shot.  Today the market is its own poker game.  The chips happen to be called Hershey or ExxonMobil or GE or IBM or Apple…but the real players and the real money are the Wall Street investment banks that you and I propped up with our hard-earned dollars starting in 2008.

Now remember that an investment bank makes its money when you buy and when you sell a stock. Which means that the ebb and flow, the ups and downs of the market make it most profitable for an investment bank.  So you see Stock A at $44 and you think, “Hey that’s a good deal.” You shell out your cash and add some sweetener to the deal for the commission for the honor of buying the stock. The stock runs up to $105. You’ve made money like a bandit.  You sell.  You get your money back plus some and les some sweetener called commission for the bank. And you are as happy as a clam.

One problem. The real worth of that company didn’t really double in that time. Not unless it was truly a start up and they discovered the cure to cancer. The market itself causes the inflation in that stock price.  There are millions upon millions of Baby Boomers trying to force as much cash as they can into the market for their retirements.  Only now, they are getting near the end of their push and they are soon going to be pulling money out of the market.  They are going to take that money and go to Belize or Switzerland or to Palm Springs.  As they do, the market needs to constantly readjust itself to keep correcting its volume.  That is a euphemism for the investment banks to move it up and down to make money for themselves. As long as they can manipulate the pressure on the market like this, it will show growth.

But it is not real economic growth.

It is a game.

In some states they call it gambling. But for the most part we turn our back on it and shrug and say, well that’s just how the market is.

So the next time someone points to the stock market as an indicator of our economy, remember this: five analysts (average age was 32) thought that the world’s largest energy company had not made enough money when it claimed the largest quarterly earnings of all time. And they maneuvered the company into a sell position.  They brought the stock price down. The company is still doing fine and hasn’t changed a thing in the interim.

That’s how the game is really played. It’s a con job. And sooner or later it has to stop.

Fear the Fear Mongers

Little, weak minds are swayed by fear. And Texas has a lot of them.

Dan Patrick, the Republican candidate for Lt. Governor, is using fear to bait the voters of Texas.  He claims ISIS is about to invade across out borders and only he can stop them, because only he has the right fortitude to stand up to the wishy-washy Obama administration.

First, this is very typical of rhetoric from a radio talk show host, which is what Patrick is.

Second, it is not true. 

There is no credible threat from ISIS at our southern frontier. None, according to the CIA director who appeared on talk shows last weekend. And if memory serves me correctly, the reason Perry called up troops (without pay by the way) was to stop the flood of children across the Rio Grande. Unless ISIS has been indoctrinating four, five and six year-olds in Central America, I am afraid that Dan Patrick’s announcements are just hot air.

But that is the way Republicans campaign.  FEAR.  They talk to an older, whiter American voter who is afraid to death of change — afraid to death that the government is failing to protect them at every turn.  Ebola is in my neighborhood in Dallas, I don’t blame Obama, but I do blame Presbyterian Hospital for some very poor procedural issues. But my god, read the right wing sites and you would have thought Obama sprayed us with the virus from his own personal drones."He is trying to kill us off."  that was an actual quote from one of the leading voices on the far Right.

FEAR.

FDR said the only thing we have to fear is fear itself…and today we have to fear the radical politicians who practice FEAR MONGEERING as their means to enter public office.

I don’t know much about Mr. Patrick’s opponent in this race, but I do know that she has to be better than this hot air bag.

Contraception. The next battle ground agasint women.

The other day I ran my car through the local dealership to get the oil changed and a wash and wax. Apparently the guy in charge of moving the car from point A to point B changed my radio station, so that when I got back in the car it was on a Spanish station.  I reached over and began to roll the dial when I discovered it was on AM radio. 

AM radio is a vast land of all kind of strange elements.

Am radio has Vietnamese radio, Indian radio (the kind from Bombay not Navajo; although in some places the Navajo might well have their own stations.) there is all sports radio, cooking radio and even children’s radio. As I tuned my radio across the AM dial, I cam across a speaker who was making a very interesting claim.  It went something like this:

“We have defeated the abortion movement in America by making it harder and harder for women on a local level to find access to those services, which would kill the innocent fetus. We have done it step-by-step rather than in large chucks. It many cases it has gone unnoticed.” True enough, you can see their strategy played out across America.  Here in Texas they have done it with a quirky new law that closes abortion centers that are not equipped as an ambulatory surgery center. Most clinical procedures done in oral surgery, dermatological surgery and others are not done to this restrictive a standard.  So why abortions?  To limit women’s access to this service, pure and simple. And as the speaker cheered, “It is working.”

Now here is the truly scary part.  He went on to add, “And now we turn that same strategy onto the elimination of contraceptives in America.”

The bold is my emphasis, but I am sure the speaker on the scratchy AM station would be proud that his words are highlighted. 

So let’s think about this for a moment. As contraception has become more and more readily available for women in the United States, the number of abortions has actually gone down. (Again my emphasis) See the correlation?  So if these people were really trying to wipe out abortions, they would be trying to enlist the aid of contraception in their fight, not diminish its availability.

So the real truth is out now.  Ava Maria and Hobby Lobby, aren’t really after the protection of unborn fetuses.  Neither are the laws past by Rick Perry and  the Christian Right and the Catholic Church. They are after power over women.

If you tell me you are against abortion (except for those in cases of incest and rape where the mother’s like is at risk) then I can accept your position, so long as you also make contraceptives available to the public. When you say, ‘No to contraceptives’, then what you really are saying is that we want to control the women in our society by not allowing them choices in their family planning.

This is a very male-dominated, religious-driven chauvinistic worldview. It reeks of, “we don’t want people to have sex, unless they are going to make children.”  I am sorry…this will never happen.  Not now. Not tomorrow. Not in the year 2525. (Who remembers that song?)

But the battlefield has been laid out before you.  The ultra right religious fanatics want a woman totally under submission of a man and her body under the submission of their rules and regulations. Try studying Sharia Law and not find a very interesting parallel. We are scared to death of the Islamic control filtering into the USA, but it is coming from our own churches and temples.

So the next step in their battle is to turn away from national campaigns to stop contraceptives, and move into local and statewide attempts to limit women’s access to birth control.

Yes you can hear all kinds of very interesting things on AM radio. That day, I heard the future of the fight for women’s rights.

As a footnote to all of this, the other night I had a meal with a friend who is a devout something or other. I don’t care to mention his religion for it will only give them free publicity, but needless to say, he is a radical about this idea.  He is so frothing at the mouth that when the discussion came up that the restrictions placed on abortion clinics would actually endanger women’s health he actually said, “Who cares about the women? We are saving babies.”

I asked him what if a woman is raped or there is a case of incest…he waved me off.  “Doesn’t matter. God’s will.”  That’s what the Arabs say when they behead a westerner. “God’s will.”

What if the woman’s life is in danger or there is a horrible deformity with the fetus that could cause still birth?  Again…God’s will.

So when people tell me that ISIS is a threat to our freedoms and liberties and the American way of life, I also remember we have a sect of religious freaks here in America that are doing the same thing. Instead of swords, machine guns and bombs, they are using the state courts and legislatures to craft their cunning little exploits.

So what comes after contraception? White, male landowners are the only ones who get to vote?  Or an end to public education?  I guess I’ll have to keep my radio tuned to the AM dial. At least there, they are upfront with their strategy.

I plead with you. I beg you. I implore you….give, give, give.

I have received countless letters begging for money from each political party. Perhaps it is because I have in the past supported both sides with contribution to individual candidates with whom I agree and like.

But the sheer volume of mail and email that is crossing my desk and computer screen is unbelievable.  And both sides are screaming the same thing.  THE OTHER SIDE IS OUTSENDING US.  THEY ARE GOING TO BEAT US IN NOVEMEMBER.  GIVE. GIVE. GIVE. OR AMERICA WILL FALL. 

I suppose this means the parties are running out of resources at an alarming rate because the races are so very tight. In Texas there is a real fight for the governor’s mansion as well as the Lt Governor’s seat at the head of the legislature. Even local district races are close.  And when races are close both sides pour money into them.  Win at all costs. 

In a recently poll, I saw that Wendy Davis had closed the margin to a very tight gap with her challenge to reining Attorney General of Texas, Greg Abbott.  And that is good. Because the two couldn’t be further apart on issues.  Finally the Democrats and Republicans have candidates (and both are quite articulate) able to identify and proclaim differences in their stances that are meaningful to voters. So don’t give me the old saw there is no difference in the two parties.  There is a world of difference between the Democratic Party and the GOP of today.  Huge differences.

The democrats represent the notion that every man and every woman are important and need a voice in today’s society. The Republican believe every corporation needs a voice in the government.  It really is quite that simple.

In Kentucky the polls are close for the U.S. Senate race between lifetime right-winger Mitch McConnell and his Democratic opponent, Alison Lundergan Grimes. This time last year, Old Mitch was a shoe-in for returning his turtle scowl to D.C. But  Grimes came along and sang the right notes to the right song and the numbers say she is actually in the lead in this close dance.  And that has cash pouring into the state.  This from USA Today:

            LOUISVILLE — In May about 40 executives of the Wall Street investment firm          Blackstone wrote checks totaling more than $170,000 for the re-election     campaign of Kentucky Republican U.S. Sen. Mitch McConnell.
            And in late June, more than 100 trial lawyers with the firm Morgan & Morgan          gave at least   $106,000 to the campaign of McConnell's Democratic       opponent, Alison Lundergan Grimes, at a fundraiser near Orlando.
            Money is pouring into Kentucky from across the country in what some           experts predict will be the most expensive election in U.S. history for a U.S.        Senate seat.

The article calls out that Grimes gets more money from in-state than does Mitch.  Part of this is the fact that he has worked the NY-TX-CA fund raising circuit. It was like when Hillary was running for Senate in New York and she came to South Texas, a typically strong Democratic fund raising area, to get an infusion of cash for her charge to D.C.  I didn’t like that, either.  Who do Mitch and Hillary represent?  Who will Grimes represent?  If most of their funds come from outside the state to whom are they beholding?

 Not sure how I feel about all this cash from all over rolling into a state for political purposes. I like the money that is earmarked against McConnell, but even that doesn’t feel right when you consider it comes from other states. But then again, the argument may be made that the office of a U.S. Senator is more national than local when one considers the influence he or she wields in D.C. on all kinds of matters.

More from the USAToday article:

            A (Louisville, Ky.) Courier-Journal analysis of $37 million in identified    contributions supporting the two candidates so far in the race shows about 85% has come from out of state.

(bold my addition.)

So, money from New York, Texas and California, as well as PAC’s in D.C. is actually at war in the Commonwealth. Not right.  Citizen’s United needs to be overturned. (But that is for another article on another day. Perhaps the entire Supreme Court needs to be overturned…but again another topic for another day.)

With all of this spend-to-win mentality, the pleas and promises are flowing like beer after a Baylor Football victory: quietly in the background, but still at a great quantity.  In the time it has taken me to draft today’s blog, my email has gone off a dozen times from both the left and the right pleading that I open my American Express card and donate, donate, donate.

Instead, I am going to stay on the sidelines. My money is resting and waiting for the 2016 run for the White House. I don’t have a horse in that race yet. I have already given to the candidates I wish to see win in this mid-term election. And I am not giving any more.

And no, Mitch didn’t get one red cent from me. But then again, neither did Alison.

Unless we change the laws about campaign finance in this country, I might have to rethink this retirement thing.  It is getting too expensive fending off the Cock (sic) Brothers and their buddies.

There is too much money floating around the campaigns today.

France has the right idea.  Six weeks of campaigning for all offices. And the top offices are limited in their spending. That’s it.  Ready, set, go. There is only so much media you can buy in six weeks, and with limited and controlled funds, only so many hands in your pockets once you win.

The excessive money flow into elections has to come to a screeching halt.  Now. Mitch McConnell doesn’t like this. And neither does Greg Abbott or most Republicans who have deep, deep PAC pockets from which to draw funds.  But let them lose this election and watch them clamor for campaign reform. It always happens. 

I say, may the best party win.  Not the best funded party. I want the one with the best ideas for America. And you can’t buy creative thinking with your PAC money. It actually takes brainpower.

My new book comes out today.
The story of a tainted food supply
and a corrupt government. Sound familiar?