Tuesday, December 13, 2011

In Direct Contrast

In direct contrast to Immersive to the 9s, a piece showing just how creative and innovative people can be regarding art, science and technology comes a piece showing just how venal and shortsighted people can be when it comes to finance and the art of crony capitalism as practiced by the corrupt minions at the Fed.

Capitalism's primary characteristic is that capital is put at risk for a gain/loss. If risk is off-loaded onto the Fed's bottomless balance sheet and the taxpayer via government-funded bailouts and guarantees, then capital is not actually at risk. Thus what we have isn't capitalism, but cartel crony-capitalism, a phony version of the real thing which guarantees private banking profits and socializes banking losses.

The Fed was recently revealed as having arranged billions in private gain via secretly backstopping the banks with $7.7 trillion. This highlights Bernanke and his buds' second catastrophically wrong policy, that of systemic opacity.

The acme of open markets is transparency. Without transparency, markets are not free or open, they are manipulated-- both to hide those who are benefitting from the destruction of transparency (monopolies, cartels, fiefdoms, kleptocracies, oligarchies, etc.) and to manipulate the market as part of a permanent propaganda campaign to "manage perceptions:" the market's up, everything's dandy.

Bernanke and his faithful banking-sector lackeys have destroyed transparency at every turn, refusing an audit (an audit smacks of--sniff--democracy--how distasteful), masking the $7.7 trillion in backstopping, and hiding the toxicity of the Fed balance sheet, which is loaded with over $1 trillion in distressed mortgage securities that the Fed lovingly took off the bankrupt balance sheets of its craven masters, the banks.

In other words, the Fed has massively rewarded the reckless and rescued the incompetent from the consequences of their actions. If that isn't the perfection of wrongheadedness, what is?

Transparency is key for without it, all things related to finance fail, a concept so eloquently voiced in the Charles Hugh Smith piece seen above and in  Transparency, Daniel Roth's nuanced argument articulating why less regulation is needed, not more, when transparency, combined with xbrl, is factored into the equation. In this writer's opinion, transparency should be a given in all aspects of governance, science and business as well because without it, things have a way of blowing up, as seen by the devastating impact the criminal activities of the Fed and Wall Street banks have had on the world at large.

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