Wednesday, April 28, 2010


28 April & 15 May 2010

I wish to comment only briefly on this topic.

The US Securities and Exchange Commission (SEC) is charged with regulatory oversight of the US financial system.

For the entire 1982-2007 bull run in US stocks, the SEC did essentially nothing to safeguard investors, who have been massively exploited throughout the entire period. Among its more notable failings, the SEC failed to blow the whistle on the lax and indulgent practices of the ratings agencies (Moody's, Standard and Poors, etc.). "Tape painting" (buying stocks in your mutual fund or other portfolio at end of month and end of quarter closing to run up performance numbers) was never touched.

The only real action taken by the SEC was to target short sellers, who have a critical role in balancing the financial system. Let's be honest, the US market was far more justifiably sold short than long, particularly during the latter years of the 26-year over-hyped bull market. So the SEC tried to take down the only honest guys on Wall Street while acting as cheerleaders for the so-called bull market.

So long as fraud and mismanagement resulted in stocks going up, the SEC did nothing.

In fact, the SEC is one of the primary culprits - along with the Federal Reserve and US elected representatives - in indulging the 26-year feeding frenzy on Wall Street which was conducted at the expense of hapless and unwary mainstream investors.

As an enforcer of the law, is not the SEC utilizing tactics more familiar to the KGB in its assault on Goldman Sachs?

Others have analyzed the issues better than I, but suffice it to say that Goldman Sachs had far less to do with causing the financial meltdown than did the SEC itself. In essence, by tackling Goldman Sachs as its "fall guy," the SEC has trained its sights on the last man standing, in order to divert attention from its own culpability!

I would be better persuaded as to the sincerity of the SEC's mission if it first of all addressed its own regulatory missteps and outright complicity during one of the greatest and most irresponsible multi-bubble periods in human financial history.

Imagine this... if the tables were turned, and the largely quite competent managers at Goldman were instead grilling the members of the SEC, then far more truth would be told than will ever be revealed through the current diversion.

My call, in brief: SEC = felony, Goldman Sachs = misdemeanour (at worst).

Let's keep the story in perspective as the media circus unfolds... down at the Coliseum!

And, if you want to invest where the sharks won't eat you alive, consider the gold and precious metals sector rather than the still overvalued stock and bond markets. Most everything else is potentially hazardous to your financial health, in large part because of agencies such as the SEC, who did not do their job when action was needed, and are failing to do it now, by targeting their action against the shrewd financial managers at Goldman Sachs - the individuals who were best able to game the system that the SEC itself had helped to rig!

Not only is gold the best investment category in today's world of Alice in Wonderland finance, it is presently in a renewed positive phase, so those who buy now will very likely be rewarded sooner rather than later:

The above chart is available for subscribers to The Aden Forecast. I strongly recommend that you subscribe, and will add that their (annual) rates are quite reasonable!

And from Mark Lundeen - a little more of what is actually going on:

Due to policies promulgated by US elected representatives and the Federal Reserve, and fostered by the SEC, debt and money printing have grown out of hand - like Topsy!

So let's all focus on Goldman while the charts above (of US debt expansion and the correlated US dollar gold price) climb to the sky....

Once again, by the way, David Shvartsman at Finance Trends Matter has covered this topic as thoroughly as can be imagined, with links to comments by such as Peter Schiff and Marc Faber. Suffice it to say that the contrarian community has comments on the topic which coincide well with my own perspective on the matter.

15 May 2010: Here's a nice (brief) critique of the SEC decision from The Business Insider. It is reported that one SEC commissioner stated, "I have serious doubts about the evidence of fraud." Two of five SEC commissioners voted in opposition to the obviously politically-motivated decision to proceed against Goldman. You might want to consider the SEC a "perpetrator protection" agency. This story also links to more detailed coverage in the WSJ (you must be a subscriber to view this story).


  1. right on! its great living in a semi-failed state [ga/us] with everyone having no clue. im just working on building up my capital reserves to take advantage of the current situation. what a great time to be a young post-collegiate american in 2010.

  2. Unfortunately, the US is failing right on schedule, consistent with all other historical precedents. A century of global leadership is more or less about all one nation gets - moving from exceptional productivity to disorganization and decline in the space of a century.

    As Britain did well in many ways long after the fall of its empire, I hope the US can too. I'm not saying the US is "bad," but it is severely off-track, deeply divided, and pushing the wrong buttons to fix the problem!

    If Jim Rogers is right, you can multiply your savings several times over during the next 8-10 years by investing in commodities and precious metals. Hang on for the long term. I hope this goes very well for you!

  3. Here's how I introduced this post on Facebook:

    "I'm a little tired of all the Goldman bashing, and finally decided to say a little something about it. OK, nobody likes Goldman Sachs because they are successful at a financial game that we know is rigged. But who rigged it? The SEC was at the top of the list. The SEC is playing dirty now because their rigged game stopped working, so they are punishing the winners. Who is guilty here? Goldman Sachs - maybe not at all - they played by the rules that were set by the SEC. The SEC? Guilty of complicity in trashing the global financial system. Read all about it, here...."

  4. On an entirely different (but related and timely) matter, here are some interesting numbers on the sovereign debt crisis - currently focused on Greece and Spain, but look out Ireland and others....

    Country Name, Gross External Debt, GDP, percentage of external debt vs. GDP

    1.Ireland – 2.386tr, 188.4b, 1267%
    2.Switzerland – 1.338tr, 316.7b, 422.7%
    3.UK – 9.087tr, 2.226tr, 408.3%
    4.Netherlands – 2.452tr, 672b, 365%
    5.Belgium – 1.246tr, 389b, 320.2%
    6.Denmark – 607.38b, 203.6b, 298.3%
    7.Austria – 832.4b, 329.5b, 252.6%
    8.France – 5.021tr, 2.128tr, 236%
    9.Portugal - 507b, 236.5b, 214.4%
    10.Hong Kong – 631.13b, 306.6b, 205.8%
    11.Norway – 548.1b, 275.4b, 199%
    12.Sweden – 669.1b, 344.3b, 194.3%
    13.Finland – 364.85b, 193.5b, 188.5%
    14.Germany – 5.208tr, 2.918tr, 178.5%
    15.Spain – 2.409tr, 1.403tr, 171.7%
    16.Greece – 552.8b, 343b, 161.1%
    17.Italy – 2.31tr, 1.823tr, 126.7%
    18.Australia – 891.26b, 800.2b, 111.3%
    19.Hungary – 207.92b, 196.6b, 105.7%
    20.US – 13.454tr, 14.26tr, 94.3%

    The problem is that Greece and Ireland can't print their own money (they're in the Euro). Unlike the US, UK and others, they actually have to solve the problem or opt out of the European monetary union. Based on past levels of responsibility alone, I have to predict that it's "Good-bye EU," rather than fix the problem - that is unless their bonds collapse. Then fixing the problem - or eternal bailouts - are all that remain!