Crony Capitalism Puts Us On The Losing Team!

When Lucy keeps changing the rules and the yardage required for Charlie Brown to move the ball down the field changes on every play, the incentives change just as they do in economics.  Rules that provide advantages for some over others and protect against the true end results enable irresponsible behavior.  In the end we suffer.  Crony Capitalism is rampant in the financial markets and in every system particularly our capitalistic system.  No longer can one succeed in business by providing a great product or exceptional service.  Hard work and due diligence today are not rewarded!  We live in a new abnormal world. So where does one put your money to insure its safety? 

During the years leading up to the Great Recession monetary policies with easy credit, subsidies and protections in financial activities were in place which fueled wild speculation and profit.  Competitive advantages were available for some sectors which led to less competition in those markets.  Then the crisis materialized and those highly leveraged and even those who weren’t saw their businesses fail, some 440,000 of them.  Their home values plummeted and their stock values evaporated.  In the end only a few profited and famously well! 

Today, five years after the government created the crisis, those conditions are being again replicated to steal even more from the populace.  Many, in their euphoria over regaining what they lost during the Great Recession, are back in the markets expecting things to end differently. 

One of my gold clients has been regularly lamenting how he wants to sell and get back into stocks.  Repeatedly, I have written about the timing of the bulls and the herd that follows.  Those who lead the bull, Wall Street traders with insider bankster’s information, tested the water after 2009 and jumped back in immediately after the storm had passed.  Today, in the fall of 2013 when stock markets traditionally tumble, is not the time to jump back in!  They have only set up the system to get you to jump in with both feet and all you have left. 

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Oh, I have been wrong.  Angela Merkel was just re-elected even though her constituency is against continued bail outs to the Euro zone.  This FDIC rule dated Dec. 2012 regarding “Systemically Important Banks” hasn’t resulted in Cyprus styled bail in either and the new hundred dollar bills appear to be rolling out, not as a useful tool of the hair cut of 50% I had suggested might happen if banks are deemed important and allowed to be bailed in with shareholder/depositor funds.  I broke that information April 15^th while I see Russia Today just announced this fact in late August! You can read the regulation here again if you haven’t already.

http://www.fdic.gov/about/srac/2012/gsifi.pdf

The bills rollout date is Oct. 8^th if you want to secure a few more of the old bills that are not traceable when spent before that date.  Currently the government is not requiring that the old bills be turned in for exchange, which has a lot of people breathing easier.  They don’t have to call me to buy precious metals under duress, at least not yet.  The old bills may even become more valuable one might think.

Did you know that? Panama’s banks instituted a five day shutdown Friday Sept. 27^th claiming that they are updating their systems yet no one was given any forewarning!  Paychecks were unable to be cashed on payday and those without cash on hand will suffer through a long 5 day weekend.  I hope there aren’t free “haircuts” coming but then there is no such thing as “free” is there?  Could this happen in the U.S. over Oct 4^th weekend or the long weekend of Columbus Day here in the U.S. when American truckers are scheduled to shut down for two days?  The regulation has been written, they are telling us what they can do yet few pay attention.  They are too busy watching Monday night football, Dancing with the Stars and other nonsense.  I guess we will all have to wait and see what happens Oct. 1^st in Panama when their banks open for business as usual! 

So where do you put your money? Do you put it in the banks, stocks, bonds, land or precious metals?  The answer is obvious to me but… you can count on Americans to do the right thing…after they have tried everything else!

Our financial structure could be decentralized and a strong capital base instituted with market accountability. This would make the industry responsive to the market as the cream would rise and succeed and others would fail the essential basis of pure capitalism but the bankster’s own the Fed and they won’t let that happen and have felled exceptional presidents in their cause.