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Some statistics graphically and poignantly tell what's wrong with a society -- like a fever thermometer registering 107 degrees. Bloomberg News has come out with such figures. An oil trader on Wall Street with ten years of experience is likely to earn $1 million this year, while a neurosurgeon with ten years of experience makes $600,000. A Wall Street banker arranging mergers will bring home $2 million -- ten times what a similarly seasoned cancer researcher makes. The pay gap between finance and other professions widened between the 1980s and 2006, exceeding the record set before the Great Depression, according to a study by New York University's Stern School of Business. A four-star general with more than 34 years in the military makes $185,000 a year -- less than half the $498,246 average compensation and benefits package that Goldman Sachs paid employees in 2009.

Despite the yawning gap, you can hear Wall Streeters complaining about declining bonuses. The Bloomberg story did not mention that the big Wall Street houses paying such lavish compensation were bailed out by U.S. taxpayers. Nor did the story mention that many on Wall Street -- such as those arranging mergers and leveraged buyouts -- actually DETRACT from the economy, and others add nothing to it. This is just more evidence that the U.S. has moved from product engineering to financial engineering -- a one-way ticket to economic perdition.

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Comments

johnsd Jan. 14, 2011 @ 12:38 a.m.

I do not favor high marginal tax rates and believe it is dangerous when politicians start playing the envy card. However, Wall Street receives compensation that has minimal correlation to their economic value. You can get monopoly compensation when you own the political class in both parties and the media. The "too big to fail" is a con on the public. These people gamble with the taxpayer's money. The Frank-Dodd "reform" probably made the problem worse. It is like heads they win and tails we lose.

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Don Bauder Jan. 14, 2011 @ 8:06 a.m.

It's worse than "minimal" correlation to economic value. It's negative correlation. One of the big disgraces occurred when the Federal Reserve permitted the investment banks such as Goldman Sachs to become commercial banks, and thus able to get Fed money for almost free. If our leaders felt it was critical in the midst of the crisis, it should have been a temporary measure that was suspended quickly. There is no reason on earth why an investment bank should be able to borrow at near-zero rates from the Fed. And that's one of the major reasons why these traders rake in such obscene amounts of money. Who can't make money when you get your capital for nothing? Best, Don Bauder

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SurfPuppy619 Jan. 14, 2011 @ 8:58 a.m.

I agree with John and Don 100%-as do nearly all Americans. 94% of America were against the TARP bailout of Wall Street. These scammers almost wiped out the country and the world by their manipulation of the financial markets-and not a single person has gone to jail.

Question for Don-are the big banks still getting o% interest free loans from the Fed?? If so then I think it is time the Fed is closed down-like Ron Paul promotes. That is an outrage if true.

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Don Bauder Jan. 14, 2011 @ 10:53 a.m.

I haven't read that the big banks are no longer getting these cheap loans. Best, Don Bauder

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Founder Jan. 14, 2011 @ 8:29 a.m.

Great description of how Wall Street has taken over the Country with the help of the US Government at the expense of the populace! I believe that much of this is just another form of hush money, to keep the true picture of the US Dollar's decline hidden from the World.

If we are now in the First Financial World War, what better way to reward those in the know about money than to give them lots of money.

We are now seeing a major changeover from an "educational" based reward system (go to college and get a good job) to a "insider" based reward system (hangout with your Rich friends and get a good job).

Congress is now surfing the Greed-wave, because now, thanks to the SCOTUS, they are all able to accept "Donations" from just about everywhere and everyone! Anyone not a multimillionaire entering Congress will be one soon afterward. On the State level, our "local" leaders are all smiling because they also are surfing the Greed-wave, only in their case the waves are not as big...

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SurfPuppy619 Jan. 14, 2011 @ 9:02 a.m.

Founder, we are no longer America-we are a banana rupblic. Our courts are banana republic courts.

Our Constitutional rights are slowly being stripped away-little piece by little piece. Add it all up and we are basically no different than the totalitarian banana republics in South America.

The leadership has sold the country out-so the minority can become wealthy at the expense of the masses-the poor and middle class. Except we really don't have a "middle class" today.

Concerntrated benefits derived from taxes and scams spread out over the entire populace-forgot what they call that but that is what has happened to our country.

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Don Bauder Jan. 14, 2011 @ 11:06 a.m.

We're not a banana republic yet but we are getting there. The leadership, including the courts, has definitely sold out the country to the upper 10%. Main Street doesn't have clout. Wall Street does. That's one reason unemployment remains so high. Nobody gives a damn about the bottom 90%. This will backfire; it already is in the housing market. Best, Don Bauder

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SurfPuppy619 Jan. 14, 2011 @ 3:43 p.m.

We are so much closer to a banana republic than what were were 50 years ago, when as a country we had so much more going for us, that IMO we are a banana republic, we have veered that far off course.

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Don Bauder Jan. 14, 2011 @ 11:02 a.m.

One of the most interesting parts of this story is that the gap between Wall Street pay and Main Street pay is back to where it was in the 1920s, shortly before the crash. There is a reason for that: the market then was a Potemkin village. Since the 1980s, it has been similar in the U.S.: an artificial economy has been pumped up with debt. Best, Don Bauder

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Ponzi Jan. 14, 2011 @ 8:43 a.m.

Dig in dirt and that's what's you bring home under your fingernails. Dig in gold and that's what you bring home in your fingernails.

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Don Bauder Jan. 14, 2011 @ 11:07 a.m.

You might add: Lie down with the dogs and wake up with the fleas. Best, Don Bauder

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Don Bauder Jan. 14, 2011 @ 7:48 p.m.

The concept is not all that new. Best, Don Bauder

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Dennis Jan. 15, 2011 @ 4:56 p.m.

What is it that these traders do that makes them worth so much in salary/bonus? They produce nothing of value & get paid whether it's a win or a loss. If you listen to the WS Analysts they seem to be wrong more than right. Most of the trading on Wall St is done via computer, those guys on the floor are the buggy whips of this generation.

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Don Bauder Jan. 15, 2011 @ 8:35 p.m.

Those traders don't do anything to deserve those salaries/bonuses. It's just paper shuffling, done by computer. That's what we do in our economy. Best, Don Bauder

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MsGrant Jan. 16, 2011 @ noon

Dennis, I was on the floor of the NYSE on December 10th, and I can tell you with all honesty that the traders HATE what their jobs have become. They used to be able to use their brains and their intellect to conduct trades, and it is now all done on hand-held devices using algorithms. The Blue Room is completely empty, and the experience, while educating, was nothing like 2000. The investors have become so risk-adverse that even when the traders make their clients a boatload of money doing a trade based on instinct rather than the set mathematical formula, they run the risk of being given an earfull at best, and losing the client at worst. The overall sense you feel on the floor is one of nostalgia for days gone by, never to return again.

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Don Bauder Jan. 16, 2011 @ 12:15 p.m.

The high-speed computerized trading is well over half of all trading. That is scary. Best, Don Bauder

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MsGrant Jan. 16, 2011 @ 12:28 p.m.

Don, I could honestly feel the demise of the NYSE while there. That wonderful building is all for show now, and really unnecessary. It's basically a studio for news stations. And it WAS scary. All that intellectual property just going up in smoke. One of the guys that owns the company that hosted us told me that there was a sense of uselessness to them now. It was actually kind of sad.

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Don Bauder Jan. 16, 2011 @ 10:07 p.m.

Sort of a Potemkin village. Best, Don Bauder

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nan shartel Jan. 16, 2011 @ 1:05 p.m.

wouldn't it be funny (not ha ha)if all of Wall Streets Financiers and trading were replaced by robots made cheap in China

it would serve them right....

Bank robots next on the schedule....ones who don't speak English well and don't get bonuses

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MsGrant Jan. 16, 2011 @ 1:18 p.m.

It's already happening, nan. But here's something our host told me as well - his company used to sponsor a huge boy's and girl's club. They would pay for day trips and huge picnics and all kinds of stuff for these kids. The guys on the floor are different than the ones at Goldman-Sachs. They have heart and they are funny. One thing that they all struggle with is the villainization of them. The owner told me that NEVER would the press report on the good things they did. It sickened him that all press was relegated to so-called obscene profits. Sometimes when you are exposed to the humanity of the people that you think are the devil incarnate, you are most decidedly pleasantly surprised.

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Don Bauder Jan. 16, 2011 @ 10:09 p.m.

The computer systems on which the rapid-fire trading is done are probably made in a low-wage country, very possibly China. Best, Don Bauder

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jonesc Jan. 16, 2011 @ 1:28 p.m.

Hi Don,

Please bear with my relative illiteracy with things economic - a couple questions:

1) Where does trader compensation come from e.g.(charged interest, fees, lower dividends or return on investments, ?)

2) The $498,246 average compensation and benefits package that Goldman Sachs paid employees in 2009 - could this average be skewed by a relative few super compensated? Do you know how the median compensation/benefits for 2009 compares?

Thanks much - I greatly enjoy/appreciate your columns and blogs!

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SurfPuppy619 Jan. 16, 2011 @ 6 p.m.

The $498,246 average compensation and benefits package that Goldman Sachs paid employees in 2009 - could this average be skewed by a relative few super compensated? Do you know how the median compensation/benefits for 2009 compares?

It is absolutely skewed. Whne you have top level employees pulling down $10 million plus, or even $100 million, plus it throws all the averages off.

The median would be MUCH LOWER, about 1/5th IMO.

The mode would be another good indication of the mean income.

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Don Bauder Jan. 16, 2011 @ 10:14 p.m.

I would think the median would be a good deal lower. But remember, you have these jackleg traders bringing in $1 million to $2 million. Best, Don Bauder

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nokomisjeff Jan. 18, 2011 @ 5:36 p.m.

Don, why the invective calling traders "jackleg?" Name calling diminishes any hearty debate and is foolish. Shouldn't debates be in the Franklinian spirit of bonhomie?

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Don Bauder Jan. 16, 2011 @ 10:12 p.m.

  1. The compensation comes greatly from profits generated by the trades.
  2. Yes, that $498,246 is greatly skewed by some raking in $50 million or so. But remember, that $498,000 also includes secretaries, runners, and probably janitors. Best, Don Bauder
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jonesc Jan. 17, 2011 @ 7:27 a.m.

Thanks for your follow up comments Don! Would I be correct in assuming that investors would benefit from lower trader compensation - i.e. more of the profits generated from trading would make their way to the investor instead of the trader?

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nokomisjeff Jan. 18, 2011 @ 6:02 p.m.

Investors only benefit from one thing....if they're right and make money. The diminishing returns argument cannot be made with any degree of credibility because no one knows how high a market would have gone if a trader made less money...Perhaps because the lack of the trader's participation would take liquidity out of the market and there would be less money on the table for everyone. Traders do not have a license to print money, although exchange members pay for the privelege to be at ground zero of the trade and get first crack...as it should be.

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Dennis Jan. 16, 2011 @ 4:58 p.m.

The stock is exchange is just one giant casino where everyone is gambling with other peoples money! The players make money no matter what happens with a stock & if they screw up really bad the Fed backs them up.

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Don Bauder Jan. 16, 2011 @ 10:17 p.m.

That's true. There could be another banking crisis coming -- this one caused by foreclosures and horrendous bookkeeping by banks. The courts cannot learn who really holds mortgages. The Fed won't back Main Street but will back the banks. That's because the Fed was created by and is owned by the big banks. Best, Don Bauder

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nokomisjeff Jan. 18, 2011 @ 6:10 p.m.

Don, do you really believe that the stock exchange is a giant casino where everyone gambles with other people's money? Have you been able to scientifically prove that "everyone" in stocks use OPM? If so, where can I trade exclusively with OPM and not have to put my capital at risk? I think I'd like that gig, but suspect that my clearing firm would not like me using OPM.

The markets are much more like a chess game, with the physicality and strategy of a rough squash game. A good defense is necessary, and succesful speculators mostly were atheletes, and were also the best kids on the block playing games of all sorts.

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nan shartel Jan. 16, 2011 @ 8:43 p.m.

it's sad that good deeds go unnoticed Lorie....but as a nation we just have no good news channel do we....i often wonder why all news media of every kind refuses to report good news

especially when we all could use hearing it so much lately ;-(

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Don Bauder Jan. 16, 2011 @ 10:18 p.m.

You don't read much good news here, Nan! Best, Don Bauder

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Ponzi Jan. 16, 2011 @ 8:44 p.m.

@ MsGrant. I respectfully argue that you were not on the floor of the New York Stock Exchange recently. They do not admit the general public and have not had public tours since 9/11. In fact the entire street in front of the exchange is closed, barricaded and guarded. I travel and stay to New York monthly and have a good friend who lives at Gramercy Park and works with the exchange. I asked him about this after reading your comment.

The only visitors inside the exchange are dignitaries and individuals who are there to open and close the market. They are both photographed. Unless you have a license for a seat or were a special guest of one of the companies that represented the opening and closing bell, your remarks about being inside are disingenuous. Or share the photo of you at the opening or closing bell.

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Don Bauder Jan. 16, 2011 @ 10:21 p.m.

My thought was that MsGrant was one who rang the opening or closing bell. Or might have been there for a media-related purpose. My father worked on LaSalle St. in Chicago. A few years ago (after 9/11), my wife and I wanted to go see the Board of Trade, which I visited occasionally in my youth. Of course, it was blocked. Best, Don Bauder

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MsGrant Jan. 17, 2011 @ 6:49 a.m.

Ponzi, why would I lie? I will send you a copy of my guest badge, if it makes you feel better. My husband works in the financial industry. And you can get inside, you just have to know somebody. Yes, the entire building is barricaded, and you have to call your sponsor at an allotted time. They come outside and get you and escort you through security. You then get photographed and receive a badge good only for the day your visit is scheduled. We spent an hour and one half with the owner of a specialist firm, but as I am sure you know, they are no longer called "specialists", but rather "designated market makers".

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Don Bauder Jan. 17, 2011 @ 7:47 a.m.

Let's hear from Ponzi. Best, Don Bauder

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Ponzi Jan. 17, 2011 @ 6:55 a.m.

It is a rare individual that is permitted into the floor of the NYSE. Even visiting the gold vaults of the Federal Reserve in NYC requires reservations weeks in advance, a modest background check and security screening upon arrival. The NYSE? It’s closed to all and more protected than a maximum security prison . The only way to get onto the floor of the NYSE as an outsider is with an invited group to open/close the market, be part of a study group that the NYSE sponsors for small media and investment groups, work at the Starbucks inside or as a janitor.

The odds of an outsider walking the floor of the NYSE today are greater than winning the California lottery. So although I will offer my apologies in advance if I am wrong, I still reserve my doubt. I’m just one of those people who call BS when I see it.

On December 10th, 2010, the opening bell was leaders of the community volunteers of Operation Hope ( to commemorate Financial Literacy Month), the closing bell was the chairman, president and CEO, and four executives of Southwestern Energy.

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Don Bauder Jan. 17, 2011 @ 7:50 a.m.

You have offered to apologize if you are wrong. What will it take to prove you are wrong? (I am taking no position on this dispute. I do not know, obviously, what happened.) Best, Don Bauder

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Ponzi Jan. 17, 2011 @ 7 a.m.

Traders don’t have time to entertain guests on the floor. That is a fallacy. The only way people were able to visit was to view from the gallery (now closed) or to be part of the NYSE sponsored study group (which have limited enrollment and only visits the floor once). “Guest badge?” Yes, please post a link for us to view. I won’t hold my breath.

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Don Bauder Jan. 17, 2011 @ 7:52 a.m.

Traders have plenty of time to be interviewed on TV -- Bloomberg and CNBC. (I have never seen the Fox program on the market.) Best, Don Bauder

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MsGrant Jan. 17, 2011 @ 7:09 a.m.

Ponzi, my husband (who has been in the securities industry for over 25 years) is laughing out loud at your comments. You are sadly misinformed about access to the floor of the exchange. I am aware of who was there that day. I was fortunate to be among them. I will reiterate - if you have connections, you can get on the floor. My brother-in-law and his family have been on the floor. Two of our good friends have been on the floor. All post 9/11.

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Don Bauder Jan. 17, 2011 @ 7:54 a.m.

I have seen a number of outsiders interviewed on Bloomberg or CNBC. They got on the floor one way or another. Best, Don Bauder

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MsGrant Jan. 17, 2011 @ 7:23 a.m.

Not a great picture of me - my husband requested I cover my real first name.

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Don Bauder Jan. 17, 2011 @ 7:56 a.m.

I don't have time to look at it. I'm sure Ponzi will. Best, Don Bauder

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SurfPuppy619 Jan. 17, 2011 @ 3:44 p.m.

. http://s747.photobucket.com/albums/xx120/PickleCat01/?action=view&current=Badge.jpg .

Ponzi-time to eat crow buddy, the date and Ms Grant's pic are on the badge......LOL. That is backing up what you post and giving a smack down at the same time.

hahhaha..I just noticed this-the badge is proped up againt Ms. G's laptop with this blog thread up, on post #36......hilarious!

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Ponzi Jan. 17, 2011 @ 8:36 a.m.

OMG, well you are special. I really am surprised because those passes are as rare as hens teeth. I am wrong (in your case) and apologize.

Most people only get on the floor in after-market hours events. They through some spectacular parties using the NYSE as a venue. Even those events are difficult to get into.

I would say it's on the par of attending a Super Bowl (at least post 9/11) to get on the floor of the exchange. Although there are many people that do, they are few and far between. Congrats on your visit. The internet and crazy blogs have made me way more skeptical these days.

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Don Bauder Jan. 17, 2011 @ 1:54 p.m.

It looks like the air has cleared. Best, Don Bauder

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MsGrant Jan. 17, 2011 @ 12:07 p.m.

Apology accepted. It was a very cool experience. I was going to tell you about how I ran into Donald Trump in the lobby of Trump Tower (I actually did and he said hello to me!) but I thought you would demand proof ;)

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Don Bauder Jan. 17, 2011 @ 1:57 p.m.

If I saw Trump, I would turn my head the other way so he couldn't say hello. Best, Don Bauder

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MsGrant Jan. 17, 2011 @ 2:03 p.m.

Is it because you were "The Donald" first? I understand. Not everyone is a fan of the guy, and with good reason. I think he's a bit of a buffoon, but as far as celebrity sightings go, that was a doozie!

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SurfPuppy619 Jan. 17, 2011 @ 3:51 p.m.

If I saw Trump, I would turn my head the other way so he couldn't say hello.

There is a LOT to admire about him, the problem is his ego and attitude-it is too big for anyone else on the planet.

H. Ross Perot is the same way. When these business men/women are successful (and many times by pure luck more than hteir brain power) it can go to their head..... well, it does go to their head in the majority of cases.

I would like to meet Trump, but his ego would stand in the way and I would have to smack him back down to planet earth if he popped off to me! I have the same problem with judges. Big egos.

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SurfPuppy619 Jan. 17, 2011 @ 3:47 p.m.

Apology accepted. It was a very cool experience. I was going to tell you about how I ran into Donald Trump in the lobby of Trump Tower (I actually did and he said hello to me!) but I thought you would demand proof ;)

================== Did you greet Trump with "Well hello Mr Clown Hair" by chance??

No, just kidding.

I was surprised at how SMALL the lobby and atrium of Trump Tower were. It is a beautiful building, but the lobby is small.

BTW-how tall is Trump?? He looks fairly tall standing next to others-like well over 6', maby 6'2 or 6'3????

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MsGrant Jan. 17, 2011 @ 5:27 p.m.

Surf, his hair is worse in real life. We were joking about seeing him in the lobby, and then we got split up in a crowd (it is smallish and gets packed). I turned toward the elevators, and he had just come off the elevator and was striding out with a friend - we almost smacked right into each other! I looked up (yes, he is very tall) and stammered something along the lines of "and THERE you are! How are you?" He looked down at me with a little smirk and said "hello" and continued through the lobby. I reunited with my husband and told him "I just saw him AND he said hi to me!". He was like "yeah, right". So I pointed him out and he just said "Oh my God, it is him". Surreal. He was wearing a long camel hair coat that matched his hair exactly.

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SurfPuppy619 Jan. 17, 2011 @ 7:19 p.m.

LOL..that is funny! If he did not have that crazy hair color it would not be htat bad-but WHAT IS HE THINKING?????? It is liek Arnolds= clown hair red.

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nan shartel Jan. 17, 2011 @ 1:57 p.m.

hahahahahahahahahaha...Ponzi ur busted as arrogant cynic....and i mean that in the nicest way possible!!! ;-D

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Don Bauder Jan. 17, 2011 @ 2 p.m.

Nan, there are no cynics -- and certainly no arrogant cynics -- on this blog! Best, Don Bauder

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nan shartel Jan. 17, 2011 @ 1:59 p.m.

Trump has a good side i think....we've just not yet found it Don

i kinda like the person he is that i don't know yet....what do u think Lorie?

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MsGrant Jan. 17, 2011 @ 2:04 p.m.

The guy's got charisma, that's for sure!

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Don Bauder Jan. 17, 2011 @ 3:45 p.m.

Charisma, schmarisma. Best, Don Bauder

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Don Bauder Jan. 17, 2011 @ 3:44 p.m.

Just ask the beleaguered bondholders of his bankrupt casinos about Trump. Best, Don Bauder

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MsGrant Jan. 17, 2011 @ 5:29 p.m.

A genious at losing Other People's Money.

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nan shartel Jan. 17, 2011 @ 2:07 p.m.

no i don't read much good news here Don...but early on i found u were all good hearted semi reasonable people of sincerely passionate discourse.....

who kindly put up with my shennaogans

and as Winnie the Pooh once said

“You can't stay in your corner of the Forest waiting for others to come to you. You have to go to them sometimes.”

and so i do hunnypies ;-D

~~then of course there's the momentous crush i have on...er..um..did i say that???~~

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Don Bauder Jan. 17, 2011 @ 3:47 p.m.

When there is truly good news to report, you will read it here first. Best, Don Bauder

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nan shartel Jan. 17, 2011 @ 2:09 p.m.

and he's smart as a whip Lorie...grounded in his high finance world...we could do a lot worse the Donald Trump :-o

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Don Bauder Jan. 17, 2011 @ 3:49 p.m.

When it comes to passing the consequences of his mistakes to others, such as his bondholders, Trump is smart as a whip. Best, Don Bauder

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nan shartel Jan. 17, 2011 @ 2:14 p.m.

nah Ponzi...my bad...just jokin' wid ya!!! ;-D

i'm just kiddin' Don...Ponzi knows that cause he's as smart as a whip 2...hahahahahaha

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Don Bauder Jan. 17, 2011 @ 3:52 p.m.

Ponzi's namesake was smart as....as....as... Madoff. They both wound up where they belonged: in the pokey. Best, Don Bauder

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nan shartel Jan. 17, 2011 @ 4:10 p.m.

crap everyone here is smart as a whip!!!

what in the hell am i doing here???

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Don Bauder Jan. 17, 2011 @ 9:05 p.m.

General Custer asked the same question: what in the hell am I doing here? Best, Don Bauder

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Don Bauder Jan. 17, 2011 @ 9:07 p.m.

It's just that I don't trust men with hairpieces. Best, Don Bauder

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Ponzi Jan. 17, 2011 @ 8:52 p.m.

My skepticism about Ms. Grants stroll into the NYSE was measured by this. First, this is the internet. Secondly, I found it to be a rare circumstance that someone from San Diego, who also posts on The Reader, just happened to be in New York recently and get into the NYSE. Thirdly, I do not follow every poster on The Reader, so I did not know much about Ms. Grant.

I have followed Don Bauder for almost 30 years, and I know there are some intelligent and interesting characters who continue to follow him on The Reader. But with Ms. Grant I have a new respect for the quality of the people who participate in these comments. It’s hard to articulate how I feel, but it was not shame or disappointment, but a feeling of more respect for the community of commenters of Mr. Bauder’s blog. The fact that Ms. Grant had access to the NYSE and shared her experience on Scam Diego makes the column even more special and the connection with the people who banter about more valuable.

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Don Bauder Jan. 17, 2011 @ 9:10 p.m.

MsGrant definitely adds cerebral content to this blog. Best, Don Bauder

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SurfPuppy619 Jan. 18, 2011 @ 7:54 a.m.

The fact that Ms. Grant had access to the NYSE and shared her experience on Scam Diego makes the column even more special and the connection with the people who banter about more valuable.

X2~!

That is pretty cool.

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nan shartel Jan. 17, 2011 @ 9:21 p.m.

It's just that I don't trust men with hairpieces. Best, Don Bauder


or comb overs....hahahahahahahahahahahahaha ;)

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Don Bauder Jan. 18, 2011 @ 7:32 a.m.

Comb overs don't make me suspicious. Best, Don Bauder

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nan shartel Jan. 17, 2011 @ 9:23 p.m.

MsGrant definitely adds cerebral content to this blog. Best, Don Bauder

****u betcha Red Ryder...hahahahahahahaha....unlike the clowns that congregate here....;-D

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Don Bauder Jan. 18, 2011 @ 7:34 a.m.

We don't have that many clowns. Best, Don Bauder

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nokomisjeff Jan. 18, 2011 @ 6:03 a.m.

Don said, "I would think the median would be a good deal lower. But remember, you have these jackleg traders bringing in $1 million to $2 million." I've been in the trading business for years and have seats on several exchanges. You are pretty misinformed about traders in general. 90% of traders don't make a million and we have our own capital at risk. If a trader was to make a million after tax on his own, he would have to make roughly two million pretax in NYC. To make the kind of returns Warren Buffet makes, a trader would have to have at least 8 million in his account, always at risk. That's a lot of capital tied up. And I'm not even talking about losing years and drawdowns. Shuffling paper, as you call it, is the engine of liquidity in the economy. Shuffling paper evens out the seasonal variations of commodities and makes the price of a loaf of bread stay constant. Shuffling paper ensures that a farmer will be able to get a stable price for his crops at harvest time, and not get punished because all of the crops are coming in at the same time. Shuffling paper allows an average person to get a mortgage without a call provision. Shuffling paper ensures the government can market it's debt, the insurance industry can write a policy, and that we can buy and sell foreign goods. The sad thing is that most people but up on the traders because they are greedy and get burned in the market because they see easy riches. The markets are very hard to make money in, extremely hard and I'm a pro. Your mention of algos ignores the fact that algos are wrong most of the time, only making a very small profit around 62% of the time and the profit might be a penny a share in these days of decimal trading. The general public expects to buy a stock and have it go up.They think a "greater fool" will come around when they are ready to sell and will pay a higher price. The average citizen thinks that part time, they can beat me(a guy who spends 60 hours a week on markets) out of money. For the system to survive, it is essential that the general public lose. It is essential, for those high temples of finance in Downtown Manhattan to exist, for the the whole system to exist, that the general public is always buying at the top and selling at the bottom. That's the price of liquidity. However, even with the flat prices the last decade, the stock market is the only market in the world that has a pronounced upward drift. A good example of this is on July 8, 1932 the DJIA closed at 41.22, andnthe DJIA closed at 11,787 last Friday, and I'll leave it for you to do the math of the average annual return. Hold good stocks in good companies, reinvest yuour dividends, don't trade, keep your winners and sell your losers and you will make moneyJeff

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Don Bauder Jan. 18, 2011 @ 7:43 a.m.

Yours is a most interesting post. I have heard the arguments before -- some of them back in business school (in the 1950s). Let me focus on one statement: "For the system to survive, it is essential that the general public lose." But it was the general public that bailed you and your confreres out in the 2008 crisis. Best, Don Bauder

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SurfPuppy619 Jan. 18, 2011 @ 7:46 a.m.

Shuffling paper, as you call it, is the engine of liquidity in the economy.

100% baloney. "Shuffling paper" is nothing but churning.

Providing working capital to businesses, both small and large, should be JOB #1 for Wall Street investment banks.

Today Wall Street doesn't do any business financing, it is all about moral hazard with OPM.

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Don Bauder Jan. 18, 2011 @ 10:27 a.m.

Yes, Wall Street is all about moral hazard with OPM -- and then when it collapses, it's the government's money. Best, Don Bauder

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nokomisjeff Jan. 18, 2011 @ 5:10 p.m.

Puppydog, I don't use OPM. I solely trade my own account and put my money at risk.

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SurfPuppy619 Jan. 18, 2011 @ 7:51 a.m.

However, even with the flat prices the last decade, the stock market is the only market in the world that has a pronounced upward drift. A good example of this is on July 8, 1932 the DJIA closed at 41.22, andnthe DJIA closed at 11,787 last Friday, and I'll leave it for you to do the math of the average annual return.

More BS.

How many stocks today were in the DJIA on July 8, 1932?? How many from July 8, 1932 are BK??? Nothing but spin.

You are playing spin games, games that won't work here-as Yogi would say, we are smarter than your average bear.

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Don Bauder Jan. 18, 2011 @ 10:30 a.m.

Funny, SP, I thought of that, too. This would make a really enlightening study. Take the stocks in the Dow Jones at that date in 1932. Figure that you bought 1,000 shares of each. Trace what happened to each stock. My guess is you would not be in great shape today. Best, Don bauder

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SurfPuppy619 Jan. 18, 2011 @ 11:37 a.m.

Don, I started thinking which stocks could have been in the DJIA back when it started, the only possible stock I could think of was GE, and that was just a guess. I just researched it real fast on Google and GE was one of the original DJIA stocks. It appears there were 12 originally. I think today it is 30 (??). The railroads are still around, although mergers have changed the names of most.

Anyway, it looks like only GE still in the DJIA out of the originals. Here is the info;

Dow Jones company, publisher of the Wall Street Journal, presented its first average of U.S. stocks on 3 July 1884. Twelve years later, the editors picked 12 stocks that were intended to serve as a proxy for the market as a whole. The index is reassessed every few years to ensure that the average reflects the "blue-chip" sector of the market.

The original Dow Jones Industrial Average, or DJIA consisted of 12 stocks, and the list gives a great insight into the nature of the economy at the time:

American Cotton Oil American Sugar American Tobacco Chicago Gas Distilling and Cattle Feeding General Electric Laclede Gas National Lead Tennessee Coal & Iron North American U.S. Leather U.S. Rubber

The Dow Jones Industrial Average was founded by Charles Dow on May 26, 1896, and represented the dollar average of 12 stocks from leading American industries. Previously in 1884, Mr. Dow had composed an initial stock average called the Dow Jones Averages, which contained nine railroads and two industrial companies that appeared in the Customer's Afternoon Letter, a daily two-page financial news bulletin which was the precursor to The Wall Street Journal.

. http://www.wisegeek.com/what-were-the-original-stocks-in-the-djia.htm .

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nokomisjeff Jan. 18, 2011 @ 5:14 p.m.

But if you rolled over to keep the same stocks in the mix, you would be making outside returns. Surfpuppydog and many others are wrong when they think the Dow and S&P haven't performed well, the equities market has a pronounced upward drift and no other market has that quality.

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MsGrant Jan. 18, 2011 @ 9:17 a.m.

Jeff, I hope I did not give the impression that your jobs were based entirely on algos now. If so, I apologize. I saw firsthand how difficult it is to work for an increasingly unrealistic public. It was a very humanizing experience. You sound like a smart person - I will take your advice.

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Don Bauder Jan. 18, 2011 @ 10:31 a.m.

I don't remember Jeff saying his job was based entirely on algos now. Best, Don Bauder

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MsGrant Jan. 18, 2011 @ 10:42 a.m.

Me neither, I just wanted to be sure that was not the impression I gave. I sometimes overgeneralize.

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Ponzi Jan. 18, 2011 @ 7:24 a.m.

I tried that with Enron, WorldCom, Tyco and it did not work. :(

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Don Bauder Jan. 18, 2011 @ 7:53 a.m.

Despite the Enrons and WorldComs, the stock market does well over time. But there are disagreements about just how well it does. Nokomisjeff takes the Dow from its low its the 1930s to its current price. However, he doesn't mention that the Dow and the S&P 500 and other indices are regularly adjusted to comb the dogs out of them. Studies that adjust for that suggest stocks can make 8 to 9% yearly over time. Bonds don't do so well. But you get back to the question: which stocks? Here's another thing to chew on: beginning in 1982, stocks and bonds entered big bull markets, as interest rates came down. Stocks crashed in 2000-2002 and again beginning in 2007. They began recovering in early 2009 but still are around 20% below their 2007 peaks. Bonds continued to rally. They slowed down last year, and are having a tough time this year, but are still doing OK. The Nasdaq is still down about 50% from its 2000 high. In Japan, the Nikkei peaked at 39,000 in the late 1980s and is still around 10,000. Best, Don Bauder

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SurfPuppy619 Jan. 18, 2011 @ 7:57 a.m.

In Japan, the Nikkei peaked at 39,000 in the late 1980s and is still around 10,000

Wow, I did not know that! I remember those days when the Japanese were buying up every trophy property in CA. we had a huge RE bubble from that.......then their market crashed and looks like it has still not recovered....

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Don Bauder Jan. 18, 2011 @ 10:25 a.m.

From 39,000 to 10,000 is a pretty significant plunge -- and yes, those stocks have not recovered. Neither has the Japanese economy. San Diegans fleeced the Japanese buyers by dumping commercial real estate on them in the late 1980s at ridiculous prices. Fortunately, it didn't touch off World War III. Best, Don Bauder

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nokomisjeff Jan. 18, 2011 @ 8:57 a.m.

Ponzi, Although the indexes are adjusted, they still remain a monetarily equivalent. I'm sure that you are familiar with the exact weighing and formula they use for both indices.

Surfpuppy, no spin, and I'm sure that my intellect doesn't match up to yours and your gravitas must be admired. Incidentally, discussing markets usually turns into a penis measuring contests among many males, and I don't have time to get into this with the general public so I bid you adieu. I gave you the facts...all you know is what you read from the WSJ or CNBC. Successful traders cannot look at the data through the lens of a financial reporter, one who is compelled to put out inches of columns everyday whether it's true or not. When they say that, "Stocks went on rumors," "Stocks went down on Japanese concerns," "Inflated expectations buoy bond market," and stuff like this, who can tell if the this is true or the reporter is just filling space. Y'all listen to that and have your heads filled with nonsense, while I will look at my live, hard data Bloomberg feed. By the way, real news is expensive, like $2,000 a month or more and the shelf life of real news is about 30 seconds.

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Don Bauder Jan. 18, 2011 @ 10:35 a.m.

I agree. Every day the financial media say, "Stocks rose on good news about consumer sentiment," or "Stocks declined on bad news about the euro." This is silly most of the time. Best, Don Bauder

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nokomisjeff Jan. 18, 2011 @ 9:13 a.m.

Oh yeah, Don, to get the facts right, oil traders aren't on Wall Street. Wall Street trades equities and bonds. If you want to trade oil, you need to go to the NYMEX which is on West End St in Battery Park, on the Hudson.

And Don, you said, "Providing working capital to businesses, both small and large, should be JOB #1 for Wall Street investment banks." You are so naive....the purpose of Wall Street is for the members of the exchanges, the ones who pay a million bucks for the privilege of being in the front of the line, to make money. There is no altruistic purpose for Wall Street, there is no benevolence, there is no level playing field. It's easy for you all to criticize when you have no skin in the game. Enough said, you all are quite an unfriendly bunch when challenged with facts. I will not be back,and that's a shame as I always thought even though the boards were pretty left leaning, that opposing opinions would get a fair shake, especially from those not in the know. Frankly your telling me about markets is the same if you had the hubris to tell a neurosurgeon how to remove a deep seated brain tumor. You really don't know.

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Don Bauder Jan. 18, 2011 @ 10:44 a.m.

Let me clarify. When I talk about Wall Street I am not simply talking about that area around Broad and Wall Sts. in the NY financial district. I am talking about the activities that take place there, and in similar locations such as LaSalle St. in Chicago. Incidentally, I did not say that providing working capital to business is Wall Street's job. I believe SP said it, but I agree with it. Maybe we are naive. But maybe we have a point that you should ponder: financial engineering has now become 20% of the U.S. economy while manufacturing has gone from 28% to less than 10%. We don't think you should be altruistic, or ever would be. We just feel that your kind of gambling has come to dominate the U.S. economy, and that our taxpayer money should not subsidize it. Best, Don Bauder

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nokomisjeff Jan. 18, 2011 @ 5:31 p.m.

Don, frankly I don't cafre which way the market goes as long as it moves and I get a crack at it. And I did not buy my seats at the CBOT, KCBOT, CBOE, and MGEX to provide some public good, I bought them to make money for myself and suspect that no exchange members bought their seats to fufull a public need or be charitable. And with the financial sector of 20%, there will someday be a correction of epic proportions, as that number is too high. Something on the level of 1873, which would provide many opportunities for the sagacious investor, wring out all the excess fat, and from the ashes the phoenix would arise stronger than before just like after tha panic of 1812,1873, 1929,1987, et al. For a good discussion and history of US markets, you ought to read Henry Clews book. http://www.archive.org/details/twentyeightyears00clewrich Clews book also has the best system for making money in the market either in the beginning of chapter 2 or 3. You need a good panic to transfer assets from weak hands to strong hands. The markets are telling you what exactly is happening, and offers a degree of predictability and one look at the metals etc is more than enough info. Problem is that most people expect the government to help them out, change the inevitable business cycle and people forget that markets are much bigger than governments as the last 25 years has shown.

Another book I heartily recommend is Fergusson's book "When Money Dies." It's a history of the hyperinflation in the Weimar. http://www.wolf1168.us/misc/Articles%20of%20Interest/When%20Money%20Dies.pdf

History may not repeat itself but it rhymes.

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Don Bauder Jan. 18, 2011 @ 9:50 p.m.

Quite true: traders want action, up or down. Brokerage houses (now called banks) want volume. They make money going either way. Goldman Sachs has gotten tongue-tied trying to explain both concepts. Best, Don Bauder

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nokomisjeff Jan. 19, 2011 @ 5:26 a.m.

Traders want ptice movement not action. Action is gambling, price momevent is good. Brokerage houses need volume because commissions have gone down so much. 40 years ago it would cost the general public $80.00 to buy or sell a hundred shares of a hundred dollar shock...now anyone can get that trade down for $0.60 at IB. Costs have gone down. And I agree that GS is evil, with their stacking the deck in the markets and their rotating ex-employees at the treasury and Fed. They are all friends, have personal relationships, their wives hang out, their kids go to the same schools, and they naturally look at serving their friends and ignoring the needs of the public. That being said, there's nothing you can do about it so the best plan is a playing a good strong defense and don't worry about what the other guy (the government) is doing. Unfortunately 95% of people aren't aware of the concept of thrift, money management, self reliance, rational critical thinking, etc. They expect the government to protect them from hazard, while I want the government to stay away. Most people spend more time making a decision on a new suit or dress than how to allocate their investments.

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SurfPuppy619 Jan. 18, 2011 @ 11:22 a.m.

And Don, you said, "Providing working capital to businesses, both small and large, should be JOB #1 for Wall Street investment banks." You are so naive....the purpose of Wall Street is for the members of the exchanges, the ones who pay a million bucks for the privilege of being in the front of the line, to make money. There is no altruistic purpose for Wall Street, there is no benevolence, there is no level playing field. It's easy for you all to criticize when you have no skin in the game. Enough said, you all are quite an unfriendly bunch when challenged with facts.

LOL...I was the one that said that actually.

And while making money is the goal of EVERYONE, not just Wall Street, it is not the one, only and end all for you- or anyone else.

I also have to laugh at your ridiculous comment of having "skin in the game", no major investment bank today have their own "skin in the game", they have investor/taxpayer/OPM "skin in the game", where they make wild, morally hazardous bets and take all the profits if the wild bets pay off and then stick taxpayers with the losses when they fail. That is not what most honest peope would call a very good business plan, not moral or ethical. That comment was the whopper of the century.

nokomisjeff, if it were not for US taxpayers there would be no Wall STreet today, it would have imploded spectacularly if the Feds didn't pump a trillion into it in 2008. Wall Street would have failed, went BK, from the very mindset you exhibit in your comments. If it were not for taxpayers Goldman Sach would have went BK in 2008.

Not trying to put your view down, just giving you a dose of the truth that might be hard to see through your rose colored glasses.

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Don Bauder Jan. 18, 2011 @ 12:40 p.m.

If making money were the be-all and end-all of everyone, I would never have wound up in financial journalism. The pay has never been good, but the satisfactions are great. And, if making money were my only aim, do you think, while at the UT, I would have fought for tell-it-like-it-is financial journalism -- not just for me, but for the whole business staff? If money had been my only aim, would I have taken on the establishment in the football stadium and Petco Park scams? Do you think my salary and status at the UT zoomed? Hardly. I was fighting to keep from being fired the whole time. Frankly, I find those whose only motivation is making money to be quite boring. Best, Don Bauder

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nokomisjeff Jan. 19, 2011 @ 5:30 a.m.

"Frankly, I find those whose only motivation is making money to be quite boring" Then I'm the most boring guy you ever came across. I bet Soros is boring also.

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nokomisjeff Jan. 19, 2011 @ 7:23 a.m.

@Surfdawg, No major investment bank has skin in the game? Are you sure you want to stand by that outrageous statement? I suspect that you are thinking of Morgan Stanley and GS, and ignoring the rest of the street (like Brown Brothers Harriman) that are primarly composed of partnerships risking their own capital.

Also, Don said that most brokerages are banks. That is a most inaccurate statement and should be revised. While many brokerages own banks, they are not banks. Plus, you should revisit the new FINREG and see what they say....if you can decipher the tangled laws and regulations.

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SurfPuppy619 Jan. 19, 2011 @ 8:14 a.m.

? I suspect that you are thinking of Morgan Stanley and GS, and ignoring the rest of the street (like Brown Brothers Harriman) that are primarly composed of partnerships risking their own capital.

Yes I was.

GS was the last major Investment Bank to STOP using their own money and go public. When that happens they no longer have their own skin in the game. Even with their proprietary trading they still unload losses on their own customers. That is why we had such a major meltdown with the markets on 9-2008.

These clowns took wild risks with OPM and then took the profits while socializing the losses.

As I said, there would be no market today, with NO ONE making $$, if it were not for the taxpayer TARP bailout/s. Goldman would have certainly gone BK, and probably every other major investment bank.

In the old days all the big firms were private partnerships that risked their own money on the bets they made. Those days are over, long gone. Goldman was the LAST of those private partnerships.

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nokomisjeff Jan. 19, 2011 @ 10:49 a.m.

So, Surfdawg, After GS went public there were no partnerships left on the street? See, you are a good example of one who gets their facts from the financial press etc as this is blatantly incorrect. In your words, then Brown Brothers Harriman is not a partnership, a major player, and their 1.5-3.5 trillion dollars under management doesn't count? http://en.wikipedia.org/wiki/Brown_Brothers_Harriman_%26_Co. Also, one cannot discount the influence on the street of Cargill, a private company that trades 30% of the world's food supply and has a huge presence in the currency and capital markets and they are not trading OPM. I can name 15 partnerships off the top of my head, but if you look at any tombstone ad, you will see for yourself. Please make fact based statements and don't make editorial statements disguised as facts when all you have is an opinion.

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SurfPuppy619 Jan. 19, 2011 @ 3:08 p.m.

So, Surfdawg, After GS went public there were no partnerships left on the street? See, you are a good example of one who gets their facts from the financial press etc as this is blatantly incorrect

That's right, and I am 100% correct-Goldman was the last of the 6-now 4- major investment banks to go public. It was what set them apart from the rest, in recent times. In the old days ALL of them were private partnerships.

Now, if you're going to start claiming some little mom and pop firm is still private let me qualify my comment for you- Goldman was the last MAJOR investment bank to go from a private partnership to a public company.

How's that? make more sense?

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SurfPuppy619 Jan. 18, 2011 @ 11:28 a.m.

I will not be back,and that's a shame as I always thought even though the boards were pretty left leaning, that opposing opinions would get a fair shake, especially from those not in the know. Frankly your telling me about markets is the same if you had the hubris to tell a neurosurgeon how to remove a deep seated brain tumor. You really don't know.

Jeff, relax, this is the internet-it was made for spouting off.

I don't claim I know more than you or anyone else, and certainly not about micro level NYSE trading.

But I do think I have a macro point of view that is legit. And I like to shout it from the roof tops so to speak, because face it-this country sure needs some fixing.

Don't run off mad. Stick around, we all grow on you over time-even me!

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Don Bauder Jan. 18, 2011 @ 12:46 p.m.

I agree. We want to hear Jeff's point of view. I'm not sure you can call us a left-leaning blog. Consider: on this blog, to whom do we aim the most invective? Answer: public employee labor unions. That doesn't please the political left. What's our second biggest target? Corporate welfare. I don't think that makes us leftist. Some of the most prominent conservative think tanks such as Heritage Foundation and Cato Institute (Libertarian) oppose corporate welfare. Best, Don Bauder

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nokomisjeff Jan. 18, 2011 @ 11:44 a.m.

Surf, there will always be trading whether it be now or whenever. The market has had many panics without government intervention and it still rebounded. The panic of 1812 was bad, but the panic of 1873 made most banks and businesses in the USA fail, check it out. All panics, bear markets, etc are caused by the same things, irrational exuberance,too much credit, and too much speculation. Nothing is new either as they had derivatives, banking, interest rates, speculation in ancient China. Hell, the first economic stimulus was in 1st century Rome when the treasury put 6 million pieces of silver on the street because the balance of payments with the mideast bankrupted the Roman business class. The markets, bull markets and bubbles are just a game of musical chairs, always has always will, part of the human condition.It's not fair for me to bust on you though, because if you get your business news from the networks, CNBC, or the WSJ, you are just part of the flock of sheep on the conveyor belt getting ready to be fleeced. The mainstream business news is not truth, only the price action on the screens is truth. If you listen to brokers, business reporters,people "in the know," take stock tips etc, you are going to get fleeced. I have no rose colored glasses, just the view of a pragmatist that has had a seat and traded in the pits at the CBOT now CME since 1978. Do you have a track record in the markets and have you made a decent living for 32 years living by your own wits....If so then throw all the stones that you want, if not, then you know what not to do.

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Don Bauder Jan. 18, 2011 @ 12:53 p.m.

I agree with you that the people who get their business news from CNBC and the WSJ are being set up to be fleeced. That's been one of our themes here on this blog. I am wondering if your admission of that makes YOU left-leaning. In any case, we welcome your contributions and hope you will stick around. I think you will find more to agree with than to argue with. Best, Don Bauder

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David Dodd Jan. 18, 2011 @ 1:20 p.m.

Classical liberalism shouldn't be confused with the modern label of "left-leaning". Everything Jeff has written here so far seems to be from the point of view of a classical liberal. Those that can, do, and if they understand what they're doing then they are successful. Those that don't get it lose their shirts and cry to the government for protection. I've never invested in a stock or a bond or given a penny of my money to some fund where someone else makes decisions in a world I don't understand. I have no pity for those who play trader and lose and blame the system and demand that the government wipes their bloody nose. I have nothing but respect for those who trade and win, because they don't get every position right and they don't cry about it when it happens, they learn from it.

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Don Bauder Jan. 18, 2011 @ 9:36 p.m.

The race is neither to the swift nor the victory to the strong. That's supposed to be from the bible. Best, Don Buader

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David Dodd Jan. 18, 2011 @ 10:01 p.m.

Ecclesiastes 9:11 to be precise. Interestingly enough, Aesop wrote about the Hare and the Tortoise before Ecclesiastes was believed to have been penned. A fable, in any case.

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nokomisjeff Jan. 18, 2011 @ 5:49 p.m.

Don, I am a liberal in the mold of Locke, Adam Smith is my role model, and the Enlightenment is my guide. I look towards F.A.Hayek for intellectual stimulation and admire people like Ayn Rand, Kant, Newton, Marmontel Henry Hazlitt, Ludwig Von mises, and a host of others. If that makes me a leftie, so be it:) As a younger man, I had a correspondence with Hayek starting when I attended a lecture as an undergrad in '75, which lasted until two years before his death. But my brush with great people taught me to believe in the deflation of ballyhoo and hyperbole, and my mantra became that if something can be observed or hypothesised, it should be scientifically tested. That's the difference between me and the general public.

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Don Bauder Jan. 18, 2011 @ 9:44 p.m.

Smith, Rand, Hazlitt, von Mises, Hayek are all free-market advocates. I used to consider myself Austrian/University of Chicago school. But no longer. It is unrealistic. Just look what happened 2007-2009; what free market are you talking about? The government and Fed have created around $2 trillion in bailing out your industry. I dislike regulation and once preached for deregulation. No more. There have to be controls when a monster (greed) gets out of control, even though regulation is quite flawed. Best, Don Bauder

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nokomisjeff Jan. 19, 2011 @ 5:42 a.m.

Of course there is no free market and 2007 was not about the free market despite what the pundits preached. How can there be a free market when the markets are regulated by a dozen federal agencies. Even the commodity exchanges are regulated by the CFTC, SEC, Commerce, IRS, Fed, NASDAQ, NFA, and a hos tof others. Many regulations are contradictory FWIW, such as allowable position sizes and margin regulations. Sadly, the general public doesn't have a clue what happened in 2007-2010 because they get their information and perceptions through the lens of business reporters, most who don't have a clue about anything. When you base your own ideas on editorial and not fact, you're in trouble, and 75% of business reporting is editorial, probably 15% is made up crap, and only the price reporting are the really true things. And I agree with you 100% about the Fed bailouts, but I have major problems with the Fed, which has allowed the dollar to lose 92% of its value since it was created. That is not by accident which is known by those who really study economics and not the Keynesian crap that's in vogue right now. Statists who want more government regulation of markets have very flawed thinking.....I could go on for about 3 days with the fallacy of more regulations etc.

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nokomisjeff Jan. 19, 2011 @ 6:26 a.m.

Oh yeah, supporting regulation when it is flawed? That makes as much sense as a person who would have an artificial heart implanted that doesn't work. The doctor implants it because he "Feels Good" the patient accepts it as "Hope." Most people deal with feelings and base their thought patterns on feelings, I base mine on fact based information and science.

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SurfPuppy619 Jan. 19, 2011 @ 8:27 a.m.

And I agree with you 100% about the Fed bailouts, but I have major problems with the Fed, which has allowed the dollar to lose 92% of its value since it was created.

The dollar is collapsing right now-and it is going to TOTALLY collapse.

That day is coming, and when it does you better have your seatbelt on because you're not going to be in Kansas anymore.

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nokomisjeff Jan. 19, 2011 @ 5:50 p.m.

The dollar is collapsing right now??? I'm watching and trading the USD/EUR right now and it's trading at 1.34270 and the puts aren't trading at a premium. Dollar is a little weak against the yen, but manageable, and the pound is at 159.170 and the dollar is up a little against the pound. The Swissie is 1.04 and the Canadian Loonie is at .99370 down against the dollar. The put options are not trading with a high risk premium (no more than the calls), so I don't see your point. Generally, I think it's safer to not try to predict the future, and certainly not try to predict the future as none of us are clairvoyant. The market is telling you what's going on, and the dollar is fine for now. If you're so convinced the dollar is going down the tubes, are you loading up on puts so you can make money? Are you shorting the dollar?

Are you guessing or do you have inside info? Are you a clairvoyant, a soothsayer?

Just a thought but perhaps it would be better if you stick to your legal stuff, and not get your panties in a bunch about market related stuff which you are painfully ignorant. Not trying to bust your chops but I wouldn't pretend to know case law, or any law for that matter like you do.....Why does everyone pretend that they know about markets?

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SurfPuppy619 Jan. 20, 2011 @ 9:37 a.m.

The dollar is collapsing right now???

Errr.r...yes, it is, big time. I guess you think the old greenback still has the purchasing power it did 5 years ago too!

. Are you guessing or do you have inside info? Are you a clairvoyant, a soothsayer? =================== LOL....this coming from who-YOU? Who claims that the major Investment Banks have their "own skin in the game"? Please!

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nan shartel Jan. 18, 2011 @ 3:42 p.m.

but the market has been a minefield for some and a goldmine for others...and those traders r paid to do what many of us r 2 busy in our own lives ...otherwise we could spend the time learning to do it...we can only become familiar with it...it's gambling at it's worse...hedging ur bets at it's best to think others can foresee and manage everything that may come up in the stockmarket and the world of finance

Lorie opened my eyes some here because the other side of an issue was raised...how the traders felt about the economic downturn and i had never really given that any significant thought or credence before

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Don Bauder Jan. 18, 2011 @ 9:47 p.m.

Don't expect knowledge to be that helpful in the investment/speculation game. What one needs most of all is luck. Best, Don Bauder

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nokomisjeff Jan. 19, 2011 @ 5:59 a.m.

Don, sadly the public believes in luck which is the way it should be. "Luck" has no place in markets, just like mysterious talismans and suprernatural lucky charms have no place in someone's pocket to ward off evil. Incidentally, in grad school, I took a logic course for the heck of it and proved that "Luck" if it exists, is a zero sum game. If you think that I have been lucky for the last 33 years I have some oceanfront land in Denver that I'd like you to check out. Successful speculation involves testing, statistics, counting, science, conquering fear, creatying trading systems, studying neural networks, and using game theory espiecially the works of Selten, Harsanyi, Nash, and a good does of Bayesian models, and . If I had to depend on luck, I would have been bankrupt 30 years ago. Luck serves a speculator like luck serves a professional poker player.....hardly.....the best poker players will have an edge over the public and the better speculators will ultimately take money from the lesser speculators.

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Don Bauder Jan. 18, 2011 @ 9:52 p.m.

Haven't had a chance to look at it, but will. Best, Don Bauder

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nokomisjeff Jan. 18, 2011 @ 6:40 p.m.

Of interest to all should be this deeply flawed talk from Robert Shiller of Yale, a leading economics expert who, like Paul Krugman doesn't have a clue about economics. http://tinyurl.com/4k3utjn Incidentally, Krugman's paper on international trade that won him the Nobel Prize was sophomoric at best and showed that the average 20 year old runner at the Merc has a better grasp on trade than Krugman

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David Dodd Jan. 18, 2011 @ 7:05 p.m.

Pulls up a chair, cooks some popcorn

This is going to become VERY entertaining.

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MsGrant Jan. 18, 2011 @ 8:41 p.m.

I've opted out. My nephew reads Ayn Rand for fun. I, on the other hand, am dumber than dirt.

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Don Bauder Jan. 18, 2011 @ 9:59 p.m.

The world that Ayn Rand wrote about -- and Hayek, Hazlitt et al wrote about -- no longer exists, if it ever did. How can one say that such a world exists when Wall Street gets trillion dollar bailouts? Best, Don Bauder

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David Dodd Jan. 19, 2011 @ 1:30 a.m.

No Hayekian, much less Rand, would've supported the bailout, Don. Government did that, a very Keynesian government did that. Too big to fail. Right?

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Don Bauder Jan. 18, 2011 @ 9:55 p.m.

I think you dislike Shiller and Krugman -- and no doubt Stiglitz -- because they care about a recovery of the TOTAL economy, not just the upper 10%. They are worried about unemployment and miseries at the bottom of society. This makes them quite unpopular on Wall St. I like all three. Best, Don Bauder

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nokomisjeff Jan. 19, 2011 @ 6:21 a.m.

Incidentally,one of my best friends and sometimes associates had Stiglitz as his thesis advisor back in the early 80's. I've found Joe to be a rather engaging person the three times our paths have crossed, and he's a real nice guy, just like Shiller is. Krugman isn't a nice guy and I can tell you that from personal experience as he takes himself way too seriously. Don, I can tell that you would be a horrible speculator as you decided that I dislike Shiller, Krugman, and now Stiglitz with no information leading in that direction, in fact, you pulled that out of thin air. I only mentioned that I thought Krugman's paper that won him the Nobel Prize was sophomioric, I never said I disliked Shiller(said his talk was flawed...that's all) or Stiglitz. That's the trouble with the business reporter class, in that deadlines cause them to create something from nothing whether it is "Stocks rose because of rumors," or I dislike Shiller, Krugman and Stiglitz when I never said that. Oh well, I've been misquoted before. I expect that the economy will muddle along and recover someday, but not through the will of the government. Government regulation doesn't create jobs and prosperity, the private sector does. When was the last time a government "Jobs Bill" actually created jobs? You really think Krugman cares about the lower 90%? Would you share what you have been smoking?

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Don Bauder Jan. 19, 2011 @ 8:07 a.m.

Go back and read what you wrote: you said that Shiller, like Krugman, "doesn't have a clue about economics." Now you say that I pulled your negative opinion of those economists out of thin air! C'mon, read your own statements. Best, Don Bauder

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nokomisjeff Jan. 19, 2011 @ 10:53 a.m.

Did I say I didn't like them? No, you did! I just said that they didn't have a clue about economics. You made that other stuff up like I already said. I have a very good memory of my statements and don't need to be told to read what I wrote:)

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Don Bauder Jan. 19, 2011 @ 11:17 a.m.

You seem to be saying that we have a definitional problem. You clearly said that you didn't like Shiller and Krugman as economists. Now you seem to be saying that you never said you didn't like them as people. Best, Don Bauder

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nokomisjeff Jan. 19, 2011 @ 3:32 p.m.

I never mentioned the word "Like," you completely made that up and put words in my mouth. That's OK with me, as I'm pretty used to that. An old, now dead WSJ reporter in the 80's used to deliberately misquote me quite frequently when discussing my specific market, and I think it was a game with him.

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SurfPuppy619 Jan. 19, 2011 @ 8:30 a.m.

Of interest to all should be this deeply flawed talk from Robert Shiller of Yale, a leading economics expert who, like Paul Krugman doesn't have a clue about economics

Since when did any of us say Paul Krugman had a clue????????

No one I know agrees with anything he says.

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nokomisjeff Jan. 19, 2011 @ 9:23 a.m.

Well, Mr. Bauder thinks Krugman is a caring individual, I but don't know if Mr. Bauder thinks Krugman Knows what he's talking about. At one time, in his 20's and 30's, Krugman produced good work. His work significantly deteriorated at the same time he decided to be the Rush Limbaugh/Ann Coulter of the left. Lots of people think Krugman walks on water, especially the sycophants who agree with most of the editorial pages of the NYT because it plays to their touchy feely emotions. I can personally like people, be friends with them, although I might think that their work and ideas are insufficient or 100% wrong. My late wife was a communist for years, a real communist who studied in the USSR in the 70's when people weren't allowed in, so if I could marry someone who was totally wrong about things.......There's so much more to life than politics, and a hearty debate in the spirit of Franklin is always a good thing.

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Don Bauder Jan. 19, 2011 @ 11:50 a.m.

You seem to be saying that Krugman, when he started writing a column for the NY Times, became a pop economist when before he was a scholar. I disagree. I think he makes economics and politics understandable for the masses. Best, Don Bauder

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Don Bauder Jan. 19, 2011 @ 11:47 a.m.

I agree with much of what Krugman says -- in fact, most of it. Let me just name a few: 1. Krugman understands that one of our most cancerous problems is the deep divide between the richest 1 or 2% and the rest of the country. 2. He realizes progressive taxation could help solve that problem; 3. He wants to see the unemployment problem be at the top of the administration's agenda. 4. He realizes that right-wing calls for a "free economy" -- that is, business operating without government intervention -- is a colossal fiction that is based on lies: how can the free marketers claim that they want no government intervention when they run to the government for bailouts and protection every time they get into trouble, and corporate welfare is larger monetarily than social welfare? Those are just some of the points that Krugman makes well. Best, Don Bauder

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nokomisjeff Jan. 19, 2011 @ 12:14 p.m.

Have you actually read any of his scholarly papers or do you just read his blog and NYT columns? Wait a minute, that was a stupid question as nobody would ever admit to not looking at the source and doing due diligence, what am I thinking. A close study of his papers shows many inconsistencies with his pseudo-populist views of today that the masses gobble up.

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Don Bauder Jan. 19, 2011 @ 1:13 p.m.

Yes, I have read some of his papers, but spend more time with his columns which I find informative. Best, Don Bauder

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nokomisjeff Jan. 19, 2011 @ 3:21 p.m.

Which ones specifically? and don't google one for giggles:)

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nokomisjeff Jan. 19, 2011 @ 12:23 p.m.

This is my favorite Krugman paper from the 1970's. I get a laugh out of it as it discusses Interstellar Trade. http://www.princeton.edu/~pkrugman/interstellar.pdf

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Don Bauder Jan. 19, 2011 @ 1:20 p.m.

Let's get off Krugman for a minute and let me ask you again. How can you believe in the economic theories of Hayek, et al -- which basically state that business should have maximum freedom from government -- when the Treasury and the Fed have dumped more than $1 trillion and closer to $2 trillion into rescuing the financial system? And corporate welfare is much larger than social welfare. This is one reason I quit believing in the Austrian/University of Chicago schools of economics. They are simply inconsistent with today's reality. You cannot believe in the teachings of Hayek and justify the massive bailouts of the financial system or the corporate welfare projects that are multiplying. Please: tell me how you can believe in both. Best, Don Bauder

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nokomisjeff Jan. 19, 2011 @ 2:07 p.m.

Don, the treasury is controlled by politicians and the Fed is a private corporation basically answerable to nobody, even Congress for that matter despite what the talking class assures the population. Hayek, Nock, Smith, et al would be turning over in their graves if they knew the thievery going on today, the likes of which hasn't been seen since the Grant administration when Fiske and Gould tried to basically kidnap Grant and corner the gold market in 1869. The level of incompetence and crookedness that these incestuous "Flexions" in the Fed, Treasury, Goldman Sachs, and Commerce dept are capable of is unparalleled. These "Flexions," this high level cabal of government and business people are are looting everything for their own gain, but there's absolutely nothing we can do about it. So instead of bursting a hemorrhoid about all the thievery going on, a sagacious person will figure out that the government actions will move the markets and one might as well make a few bucks out of it, acting in their own self interest. The rational producers, the profit makers, the businessmen of this country are all under siege from the government class and the muckraking reporters who think they are independent but are just tools of the aforementioned people. Even the so called conservative media like Fox et al are firmly part of the plan of the "Flexion" class which is doing its best to keep the population angry in order to divert attention from this wholesale fraud.

You keep mentioning "Today's Reality," which doesn't compute because nothing is different today than it was before somewhere in the world. Governments have always stolen from the citizens, well connected businesses have always flourished, the masses have always been grumbling, and the business class has always been besieged by the State. As you are a business reporter, I will not embarrass you with trying to repeat to you the various panics and busts of the country since the Panic of 1797, as all basically have very common elements, and the causes are eerily similar. Nothing has changed since the the days of the Rothschilds.

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Don Bauder Jan. 19, 2011 @ 4:12 p.m.

I agree with you about the corruption and the looting. (One slight argument: the Fed is controlled by the big banks, which also have great influence over the Treasury. One larger argument: business is not under siege from government. Business controls government today.) I agree that Adam Smith would be spinning in his crypt if he knew what is going on today -- all over the world, not just in the U.S. But I have a problem with your solution: figure out the diddling and make money off it. Maybe you can do that. But very, very few can, and even the geniuses can lose their shirts. You said in an earlier post that the pros on the floor make their money by fleecing the amateurs. So where does that leave 99% of the population? We have to bring back some equity; if we don't, the instability will destroy us all, including that top 1%. Best, Don Bauder

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David Dodd Jan. 19, 2011 @ 5:08 p.m.

99% of the population has no business "investing" as people like to call it. I prefer the term "gambling", because that's exactly what it is. Jeff's right Don, and so are you. I used to make a boatload of money at the track. Saturdays and holidays and big advertised races were the best. People that had absolutely no idea what they were doing decided to go bet millions of dollars on equines they knew nothing about. I depended on it. It was great.

I never encouraged a single one of them to do this.

Go work for Acme Incorporated, stick around for a few years, and they'll offer you a awesome retirement plan. Give a percentage of your paycheck to people you'll never meet, and they'll go play the ponies, except they'll call it investing, and the track is called "Wall Street". You want to know why the government bailed out Wall Street? Because they encouraged people to hand over their money that way. Meanwhile, people that actually study the horses and understand the game, are going to rake away a big profit. You want to blame those people? Blame the government. They set up a bunch of suckers. We never really had a "free market", because the banks that are a part of the Fed are puppet strings. The economy is a flowing river and the market is a boat. You float that boat on the river and it goes where it goes. You tie a string to the boat, like the Fed did and does, and it isn't free. It's connected. We've never seen a true "free market" in the U.S.

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Don Bauder Jan. 19, 2011 @ 9:23 p.m.

Beginning in 1987, right after the crash, the Fed (along with the federal government) began manipulating the stock market. The Fed found it could do so by manipulating futures. The government set up all kinds of incentives like IRAs to invest in the market. For 25 years now the Fed and the government have put a gun to our heads and told us to buy stocks. But there have been two ignominious crashes in that period -- the popping of the tech/dot-com bubble of 2000 and the late 2007/2008 crash tied to the derivatives/housing scams. I am buying stocks cautiously now (only 27% of my portfolio), but only blue chips with good yields. This could backfire. Central banks are flooding the world with liquidity. This has always been dangerous in the past. Best, Don Bauder

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nokomisjeff Jan. 20, 2011 @ 6:11 a.m.

Don, only 27% invested in stocks, I feelo bad for you for missing the move freom the S&P low of 666 in 2009. You ought to read Henry Clews book that I linked as he mentions the best way for making money in stocks that I've ever seen. When, in the face of a collapsing market everything is going down in a bout of revilsion selling, fade the sellers and you will make money, or at least in every panic since 1799. Why aren't the central banks being beaten up for this liquidity. Why isn't anyone noticing the extra money out there in all currencies? Right now, my clearing firm will allow me to borrow as much money as I want, but at 1.3%. Borrowed money is not the same as OPM as it has to be paid back.

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David Dodd Jan. 20, 2011 @ 7:07 a.m.

Yeah, well, the next bitchen thing we all get to hedge on is inflation, because hell yes, everyone is printing money like it's the greatest thing since soybeans. Funny thing about flooding the market with all of that cash, it's like a flail, it comes back to bite you in the ass. Know what's different this time? Gold is over-bought, so I have to wonder where the next shelter is going to come from. Even here, where the dollar was once a haven, it's lost a lot of ground. Corn futures? It'll be some commodity, for sure.

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nokomisjeff Jan. 20, 2011 @ 12:42 p.m.

I own lots of corn and i'll probably muddle along until I make a profit. I don't know if gold is overbought, but my models remain murky. Either way, you would not have a calculable edge either buying it or selling it at the current price, As I earlier said, gold had a much greater value in 1980 when it hit $850, but the greatest value was in 1869 when Fiske and Gould tried to corner the gold market and ran it up to $300. back then, $300 could buy a halfway decent house.

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nokomisjeff Jan. 19, 2011 @ 5:36 p.m.

Don, the Fed being controlled by the big banks? I bet that a plurality of Fed Governors would disagree with you. Do you have any numbers or official sources within the Fed to prove your contention that the Fed=>Big Banks=>Treasury or is this just opinion and editorial again?

OK, You have a problem with my solution, but I didn't know I had a solution, I consider my plan of action a way of dealing with all of this. There really isn't anything anyone can do unless one would do what they did in 1789 France or 1918 Russia. Short of that, the government class has too much control. You think big business controls government, I contend that at the very top there's a symbiotic relationship as evidenced by the migration of top government apparatchiks into business and vice versa. You and the rest of the talking class makes a big deal about the bottom 90%, and I feel that the best way they can be helped is by giving them jobs, not handouts. The average poor person today has a much better life than Louix XIV had in many ways. He has access to medical care that Louis could only dream about. He has year round refrigeration, better schooling, better travel methods available, access to better roads, better food, sanitation, electricity, cars, flight, and on and on. You might think that the 90% is going to revolt, that instability will take hold, but I contend that our instability would be much like the instability and hyperinflation of the Post WWI Weimar as our populations have much in common socioeconomically with the Germans of that era. Of course it could cause a tyrant to take power, much like Hayek described, but one can make a good case that our last two presidents are tyrants. I suspect that most people will muddle along like they have for the past 2 thousand years, but whatever happens, the human condition won't change and we will always have greed, war, sloth, avarice, et al.

As far as fleecing the public by the floor traders, if one is going to place their money "at risk," they ought to understand that the money is "at risk" And the fleecing of the public from the floor traders is not wholesale. The difference is that the floor trader gets to buy at the bid and sell at the offer whereas the public gets to buy at the offer and sell at the bid. Just that little tick on each side of the trade makes the price of a seat well worth it. That being said, the electronic trading is changing the floor atmosphere as the pits are disappearing at a fast rate with computer servers taking up the bulk of volume. Still, even with the servers, the members get better liquidity, reduced commissions and fees, better margin rates, and the big deal, no margin, marked to market on all spread trades.

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Don Bauder Jan. 19, 2011 @ 9:27 p.m.

The average life span of a person at the time of Louis XIV was about 35. Now it's more than double that. Of course we live better (but our housing is not as good as his was.) Best, Don Bauder

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SurfPuppy619 Jan. 20, 2011 @ 9:50 a.m.

You think big business controls government, I contend that at the very top there's a symbiotic relationship as evidenced by the migration of top government apparatchiks into business and vice versa. You and the rest of the talking class makes a big deal about the bottom 90%, and I feel that the best way they can be helped is by giving them jobs, not handouts. The average poor person today has a much better life than Louix XIV had in many ways.

Jeff, you're comments are so full of baloney it makes me laugh! Big Business does not control gov?? Are you for real?????

40% of ALL legislation today is WRITTEN by Big Business, 60% of ALL PASSED legislation is written by Big Business.

The gap between the top 1/10th of the top 1% is at it's widest spread EVER. And you claim Big Business is not running the show-OMG I cannot believe you made such a ridiculously stooopid comment. Do you even keep up on current events? Or does your trading background make you some sort of expert on gov and muni affairs by osmosis that the rest of us common folks don't understand, or b/c we do not do it "60 hours per week"????

We live in a banana republic today where the rule of law is sold to the highest bidder. That is Big Business and special interest. The courts are nothing more than an extension of that failure. We live in a neo-feudalist society.

BTW-the "average" person today-whoever that is- faces a life that is far harder than your Louix XIV comment, last time I checked they didn't have AIDS back then, they didn't have a murder rate of literally tens of thousands per year due to drug wars as TJ does, they didn't face the threat of nukes raining down on them or wild wingnuts flying 747's into sky scrappers.

Your comments to Louix XIV are just flat out dumb. Sorry to be so blunt, but you had to hear that.

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nokomisjeff Jan. 20, 2011 @ 1:02 p.m.

Surf, to not embarrass you as you try to whip out your penis and it fails considerably in the measuring department, I will state that your comparison of the top tenth of the top 1% is with great fault as the top 1% pays 40% of the income taxes in this country. And, yes, my trading acumen makes me an expert on a whole wide range of subjects, including government financing, laws, FINREG, etc. in addition to many other things. However, you are a lawyer, a class of person that I hire when needed, much like I hire a plumber, or the guy who mows my yard. You haven't mentioned your expertise in the markets, your annual rate of return, or any of the other things I queried you on except to tell me how full of baloney and BS I am. Neither did you mention or respond in a civil manner to any logical deconstructions I made of your arguments. You really give off the vibe of being a sort of bully, piling on your mostly incorrect psychobabble that you don't even realize how foolish it makes you look, plus you're wrong. You're a lawyer, trained in twisting words and ideas to fit your needs. You ought to stick with the lawyering and don't give up your day job. I'll give you the last word as I will not respond anymore to your taunts and invective, and I will give this one to you as I suspect that you really need a victory at this time in your life, no matter how small. I'll be munificent, and give you this one. However, I am done with this discussion and won't waste any more of my precious time on you or this discussion.

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SurfPuppy619 Jan. 20, 2011 @ 10:02 p.m.

I'll give you the last word as I will not respond anymore to your taunts and invective, and I will give this one to you as I suspect that you really need a victory at this time in your life, no matter how small.

LOL, OK Jeff, whatever you say! I have to laugh at your "taunts and invective" comment because you have a major meltdown everytime I call you on some of your more...errr....specious claims.

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bluehorseshoe Jan. 19, 2011 @ 6:17 p.m.

All fiat currencies are doomed. Once the Chinese start backing their yuan either partly or fully with gold, sit back and watch the fireworks. Pretty ironic that the dollar and euro go back and forth between being considered the "safe currency" to be in. Both Moody's and S & P have made it clear that the dollar is hanging by a loose thread over thin ice.

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Don Bauder Jan. 19, 2011 @ 9:30 p.m.

Generally speaking these days, the stock market moves up as the dollar goes down. Wall Streeters can't think beyond the end of their nose. Until inflation erupts, the nation's investors (and gamblers) want a weak buck. Then it will be too late. Best, Don Bauder

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David Dodd Jan. 19, 2011 @ 6:39 p.m.

Nobody is going to back their currency. The buggy whip is obsolete. Currency is a commodity now, backed by nothing more than the reputation of the printer. Don't play the currency game, you'll get killed.

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bluehorseshoe Jan. 19, 2011 @ 6:47 p.m.

The Chinese just might, possibly a new reserve currency for the world. This is not lost on gold which is in a 10 year bull market, quite a run for anything. This is a race to the bottom of the currency barrel. The pound sterling may be the world's oldest currency, but it's days are numbered. It will be very interesting to see how this all plays out.

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nokomisjeff Jan. 19, 2011 @ 8:09 p.m.

And how do you know this? By the way, the British Pound failed in 1992 when Soros broke the Bank of England.. The pound is still around. It would take a lot for the yuan to be the reserve currency. The Chinese would have to remove the strict currency controls, they would need to let it float,and their central bank would have to end the taxation that remittances and transfers of the yuan face. It would have to be a free currency, transfreeable and convertable anywhere in the world. Gold might be in a bull market, but this isn't the greatest value gold has ever reached. It had higher value in 1980 when it reached $850, and it's greatest value was in 1869 when Gould and Fiske tried to corner the gold market and and it hit $300. Gold is just a commodity and as Refriedgringo said, so are most currencies. You can buy currencies, rent currencies, sell currencies, loan currencies, subordinate currencies, mortgage currencies, swap currencies, trade currencies, tranche currencies, and everything else you can do with commodities. The USD has been a commodity since 1971 because of the Nixon Gold Shock when the dollar ceased to be backed by anything. Also, you said that Moody's and S&P have made it clear that the dollar is hanging by a thread. Perhaps you were referring to the media overhype of a warning to the bond market by an unnamed official of Moody's who also warned France Germany and the UK, and they also said that S&P was issuing a warning. Incidentally when that story crossed my Bloomberg machine, the dollar went up against the Euro, yen, and Swiss, and bonds from both ends of the yield curve went up. If the US had our debt downgraded to from a AAA to an Aa, have you calculated just how many basis points less that we would get for our bonds? I never saw mention of the "Dollar hanging by a thread." in that story.

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Don Bauder Jan. 19, 2011 @ 9:33 p.m.

It will be a long, long time, in my judgment, before the dollar is replaced as the world's top currency. One reason is that the other currencies are so weak. Best, Don Bauder

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nokomisjeff Jan. 20, 2011 @ 6:20 a.m.

Don, your comment about other currencies being so weal is 100% correct. One merely has to look at the price of commodities in those currencies, at their markets, to prove your point. You ought to do a story on private central banks rigging their currencies for their own gain, like the Fed has done. Or, you ought to do a story on the average rate of pay of employees who work for the Fed, janitors and secretarys included.

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Don Bauder Jan. 20, 2011 @ 10:32 a.m.

I have made mention several times that the U.S. wails about China keeping its currency weak, but what are we doing? Shoveling out all that liquidity, we're trying to keep the buck down. It's going on all over the world. In the 1930s, this was called competitive devaluation. Best, Don Bauder

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nokomisjeff Jan. 20, 2011 @ 12:32 p.m.

But we are not really keeping the buck down as all the other currencies are losing value. They complain about our GDP/Debt ratio at 100% and overlook Japan's ratio at 245% and eurozone's ratio at 78% average. Incidentally the doomsayers fail to realize that both the 30 year bond and ten year are trading at 119, nearly 120. That's par plus 20 full basis points. Also, whenever the market has any hiccup, the money goes into the dollar and bonds and they rally quite sharply. Anyways, I won't worry about a demise until bonds are trading at 40, and at that point I will turn my sights to going long the bond market, but for now I'm short. Munis might be looking good for a buy if we have a crisis and the good munis go down in price with the bad ones. Defaulted munis pay off 66% vs the 42% for corporate, and the insured or otherwise guaranteed munis are nice, as many are paying 7-8% yield.

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Don Bauder Jan. 21, 2011 @ 1:42 p.m.

There's that old Wall Street saying, "When they raid the whore house, they take the piano player, too." You want to put your money on the piano player. I suggest Johannes Brahms. Did you know he once played piano in a brothel? Best, Don Bauder

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bluehorseshoe Jan. 20, 2011 @ 5:37 p.m.

Wait until the closed end bond funds are yielding between 9-10% as they did at the height of the crisis in 2008-2009. Locking in that kind of a tax free yield only happens once or twice a decade, maybe more often in this uncertain world. Plus, for many state governments, municipal interest payments are second only to education in the pecking order, so the safety is greater than some kooks in the media are suggesting.

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Don Bauder Jan. 21, 2011 @ 1:43 p.m.

The greatest portion of my portfolio is in munis. I think -- and hope -- you are right. Best, Don Bauder

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bluehorseshoe Jan. 21, 2011 @ 5:10 p.m.

If you are in Muni's, go without your own state tax exemption, and go with the solvent states. Yes, there are a few of them. Nebraska, North and South Dakota and Wyoming.

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Don Bauder Jan. 21, 2011 @ 8:03 p.m.

You're close. Ours are Colorado, but one of our sons still has some Cal munis. Best, Don Bauder

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