(7:25am ET) Yesterday, I made the point that a move was afoot by Interventionists to suppress concerns over the logical result of the Great Reflation Era, that being extreme inflation, and there were comments from people who believe that printing all this money would not head off the coming deflation. All I can do is keep the discussion simple in that if there is a massive action, I expect a massive reaction.
Let's leave it there because it is not a discussion that traders give two hoots about. We're not investors in products that have long-term life cycles. We trade prices, which change minute to minute, day to day, week to week.
But, I find it interesting that so many people call themselves traders and then get hung up on matters that are so long-term oriented. That is ground the Interventionists control. They have the funds to effectively manage the media to buy into their long-term story and spread their gospel, and they also have the power to use taxpayer funds to buy or sell billions of dollars of instruments like Treasury bills that have a direct and immediate impact on prices.
What traders ought to be concerned about, then, is why is there a lack of transparency when these actions are taken each day; and why is it that certain parties in the private sector get to know in advance the day-to-day open market operations of the Fed, to the detriment of the rest of us.
Let's stick to discussing what's truly important to us.
I also wrote yesterday about the new White Paper on Financial System and Capital Market Reorganization that the Obama Administration will be delivering today or tomorrow. I have yet to hear any discussion about the most important point in the Obama Plan, which is that financial elites in the private sector will be given regulatory powers over the rest of us. In other words, Obama has been bought. He's a puppet; and it's up to Congress to reject his plan, and to the taxpayer and we traders to reject the election of those representatives to Washington who are receiving direct patronage from a demanding Wall Street.
As Simon Johnson, chief economist of the International Monetary Fund in 2007 and 2008, points out in his essay entitled The Quiet Coup, politics is behind every financial crisis and the obstacle of effective solutions. The politicians have allowed – in fact, enabled – power elites within and connected to Humungous Bank & Broker to overreach, take on too much risk, bring about a financial crisis and then turn to the taxpayer for a bail-out. The crisis facing America, Simon says, is no different at the root or in the attempts to resolve it than all those that occurred in emerging market countries.
The American people as a whole don't yet want to think the unthinkable, which is that the financial sector is a pied piper leading the nation into becoming a banana republic, largely due to the ease of passage along the Wall Street-Washington corridor, where financial oligarchs operate in their own interests. But it is a fact.
When you next hear Obama trumpet the financial power elite, giving one small group of unelected bankers the government role of financial regulation over the rest of us, think, think, about the implications for social equity.
This is a watershed issue. There is no way I would accept a Jamie Dimon JP Morgan Chase-led regulator. But, if Congress would legislate the take-over of the Federal Reserve Bank, assuming all positions on the Board of Directors, required to be members of Congress, elected by the people, working in the interests of the people, that would be a different story. The Constitution cleverly directed the separation of private and public matters, without which leads to the conflicts of interest that are pulling us under today.
Anything less than that, you will not likely hear another positive word from me about this person Obama or this Congress.
As for the market today, the Bulls are struggling to hold the support, which we have been saying is S&P 920 and DJIA 8600.
Have a good day.