The Unsinkable brian cork™

Brian Patrick Cork is living the Authentic Life

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May15

The Treasury Department has asked the Obama Administration for clearance to control the Derivatives Market.

In a two-page letter sent Wednesday to congressional leaders, Treasury Secretary Timothy Geithner said he wants to create a central electronic-based system that would track the buying and selling of derivatives. He also wants to ensure that financial firms selling the instruments have enough capital on hand in case they default and subject them to stringent standards of conduct and new reporting requirements.

Geithner wrote in his letter:

“All (over-the-counter) derivatives dealers and all other firms whose activities in those markets create large exposures to counterparties should be subject to a robust regime of prudential supervision and regulation.”

[…]

Obviously regulations, control and transparency sound great. However, Wall Street – and, certainly Global finance is most efficient when it’s manipulated and controlled by power mongers brokers and illuminati hand-picked insiders.

Look what a disaster Sarbanse-Oxley has been for the markets.

Seriously.

Wall Street began to second guess itself about the time socialist regulators began to enforce lop-sided audit controls. Sarbanse-Oxley became, literally, it’s own industry over night. Only some of you noticed that, as “options” for inside trading and the dissemination of related information became more difficult, short-sellers were able to step in and confound institutional traders.

Change and rules might be good. But, too much government is not.

The violent, lathe-like spinning of Ayn Rand in her grave threatens to throw the Earth out of its orbit, and hurl us screaming into the sun.”- Nick Milne

Note: I lifted that, in part, from Nick Milne (and, freely admit, changed a few words, and it’s very context) with naught but the best of intentions.

In any event…

Good or bad – and, always depending on where you stand in the equation, our national and the global financial markets have always been manipulated with the plan being steady growth, with most of the profits fueling a multitude of strategies that benefit a relatively select few.

When I am writing about things like this, it always takes me back to when Grandad would talk about “defending the mountains of Hemingway’s Spain”More on that later – maybe.

Obama likely means well (in a sophomoric sort of way). And, many people that support him (for now) were not the beneficiaries of that accumulated wealth and power. However, the system probably can’t work off of Democratic ideals for long (notice how Wall Street can’t get a sustained run going?) and global markets keep looking for excuses to put more authority in the hands of a shrinking number of banks.

This sets the stage for revolution.

Watch how in the next fifteen years key families, their familiars, and other elites work through certain banks (including the sinisterly named Bank of America) to amass wealth, and become more blatant about deploying it strategically.

I don’t know yet if Obama will go down in history as the Anti Christ; there are too many views, (in terms of cultural nuance) to define what that might look like. But, it sort of feels like a significant part of his legacy will be that of having set the stage for anarchy and the foundation for a greater Brazil-like gap between the wealthy and the desperately poor.

Gawd… The irony is almost delicious. It’s the aftertaste that will have me concerned.

To be more clear… What we see happening now appears to be common sense changes to equalize the financial process. But, global finance can’t work that way. The result will be a broken system that can only be righted through financially incentivized leadership.

So, ironically, more rules will result in greater chaos, and set the stage for a power elite that only Thomas Jefferson could have imagined when he designed our Constitution to allow for separatist (like) rules.

Peace be to my Brothers and Sisters.

Brian Patrick Cork

economic recovery: Full Steam Ahead

January23

It seems that everyone has a lot to say about the current crazy markets. Having not seen the crash coming, many pundits are now predicting the end of the financial world as if it’s a foregone – and logical – conclusion.

Meanwhile, the markets have gone (from my perspective) into a random twitching period where fundamental laws do not apply and technical issues produce violent swings. For example, foreign exchange is in chaos; no one can explain why the yen is so strong.

The Japanese economy is in trouble like the rest of the world. Interest rates are 0%, the carry trade unwound long ago, growth is shot and the deficit is massive. There must be a good reason the yen rallies and falls in huge swings, but it seems no one knows what it is. It’s a fine example of pure volatility.

This wild volatility is not surprising, as the global financial engine has blown a gasket. Yet the bulk of the damage is done, and the engineers, however uninspiring, are nonetheless at work.

Seeing the famous-name banks trade, you might think you were watching financial Armageddon before your very eyes. But I believe the bottom’s been hit. The market is not going to free-fall off a cliff. The accident has happened and the patient is in intensive care.

I was a bit early to the party for the crash, and I can quite believe I might be a bit early for the coming rally, but it will come and it will be very strong.

“Just as most investors missed the market top, the bottom’s here now, and nobody seems to notice.” 

In crashes, a 25% drop is the norm and 50% is extremely uncommon. The next step down, 75%, is exceptionally rare and limited to massive bubbles like China and the dot-com boom. Frankly, however bad the current situation seems, the next phases will not compare with what has gone before or the worst-case outcomes that have been predicted.

What could happen next to knock the market in half again? The market prices in sentiment along with all available information; as such, it must be near bottom. Unless the world was to descend into war (which isn’t actually such an extreme prospect, but still something most people would consider highly unlikely) the only way is up. It’s just a case of when.

I’m stating this the same way I called the bear–loudly. I don’t see the point in hedging opinion, because, at this point, people want something definitive.

economic-recovery-cartoonIs there another crash ahead? I believe the answer is no. While lots of people think this crash has just begun, but I think it’s winding up to go bullish. That doesn’t mean there won’t be harsh economic times ahead for many, it just means the market will rally

The long term is a different matter, and there I think the markets will trade in a wide range for a number of years, reproducing the sort of boom-bust cycle we got used to in the ’70s. This will be caused by the triage of the central bankers and their titanic infusions of money.

We have already seen inflation fears flip into deflation terror and we’ll see it flip back again. This will save up plenty of crashes for later, but along with them will be huge upswings, as crude monetary easing will follow tightening–which followed the easing before–generating a massive swing-trade scenario in stocks.

It will take time, and strangely enough, many derivatives, to take the shaking volatility out of the world economy over the next few years. Derivatives that suppressed the risk for the last few years and then erupted will have a major role in restoring stability. Volatility is a blank check to the market; while it’s killing us now, it will soon become a lucrative business for traders to unload, and spreads will return to normal.

As the great men speak and plan their rescue of the rest of us, the real saviors will be the billions of individuals all working on their own bailouts. Right now, around the world, regular people are trying to work through this emergency of their own accords. This is the ultimate force that will overcome this crash.

In the end, we will push the world economy back from recession and into another round of progress. It’s going to take time, and after this financial earthquake, it will be tough. Even as the aftershocks have us running for safety, the recovery will be underway, and soon enough, its effects will be seen.

Bottom-line…

2009 is going to be awful for many people.  However, it should be pretty darn good for people that use their heads, make good decisions, leverage best-business-practices, and have a plan.  Stay focused. /1

Calling it as I see it – Stock markets call recoveries early.

Going into the weekend, consider “economy of mercy” by Switchfoot.

By the way…  I am, for the moment, deeply engrossed with The Clash.  So, let’s fire up “London Calling” if only because I think we should.

be to my Brothers and Sisters

Brian Patrick Cork

______________________

1/ NOTE:  Brian also has a business Blog that apparently fascinates world leaders and decision-makers alike (but, few others). It can be viewed and relished at: The Human Capital Blog.

What’s All This About?

"What am I looking at?", you might wonder.

Lots of stuff.

Meanwhile, here, I discuss events, people and things in our world - and, my (hardly simplistic, albeit inarticulate) views around them.

You'll also learn things about, well, things, like people you need to know about, and information about companies you can't find anywhere else.

So, while I harangue the public in my not so gentle way, you will discover that I am fascinated by all things arcane, curious about those whom appear religious, love music, dabble in politics, loathe the media, value education, still think I am an athlete, and might offer a recipe.

All the while, striving mightily, and daily, to remain a prudent and optimistic gentleman - and, authentic.

brian cork by John Campbell





photos by John Campbell

 

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