Financial Deformation
I'm in the final quarter of The Great Deformation - The Corruption of Capitalism in America by David Stockman. If the book was not so long I would want to do it twice because I feel like half of it or more has not sunk in. This is an intense tome that dispels financial legend after financial legend, from the narrative of the Great Depression (it was caused by the gold standard -- not, it was leveraged over-speculation in the 1920's) to the Reagan Revolution (it was a triumph of supply side tax cutting -- not, it was excesses of debt and deficit spending in a free floating currency), TARP and the Obama stimulus (it saved Main Street -- not, it hurt Main Street and savers while rewarding reckless Wall Street speculation) and BAIN Capital (it is in the business of saving and strengthening struggling companies -- not, it is a predator that lives off of artificial liquidity generated by the Fed and has sucked dry a string of now zombie companies).
No political party is spared in this book that has been called an "intense rant by an angry man." Well, Stockman has plenty of reason to be angry. And so do you. If you'd like a short, short version, here's an opinion piece Stockman wrote recently for the NY Times.
I started reading this book because the early reviews and reactions coming from the quarters I inherently distrust were so shrill and dismissive. You can take this interview with CNBC's Larry Kudlow as Exhibit A. A recurring critique skips over the spot-on analysis of the eight decades of financial deformation and focuses on his strategies for making changes today. This is a critique I am sympathetic too -- as with the Suburban Ponzi Scheme, with such large financial deformations there are no real "solutions" and few strategies that could be effective that will appear anything but ultra-radical to insiders and other deeply vested interests.
As I sat at my desk yesterday, a CNBC anchor reported that the stock price of something like a hundred companies had reached all time highs that day. It reminded me of a conversation I had with a close relative a couple months ago. Said relative remarked on the robust nature of the stock market as of late, the pitiful (actually negative) returns they were getting with their retirement savings in more prudent investments and their gut insight that it was a good time to get in.
Personally, I think that's just the class of sucker this rigged market is waiting for.
A couple years ago I did a podcast on Peter's Schiff's 2006 speech to the Mortgage Bankers. It was a powerful talk where, in very much this style of David Stockman's book, he provided a complete and thorough explanation of the housing bubble and ensuing financial crisis a full two years before it unfolded.
Last week a new speech by Schiff was uploaded to YouTube. Before you move your money into the stock market to take part in this bull run at the exchange, you should really take a half hour and watch this.
If you want to discuss this particular article, I enourage you to enjoy some bonus thoughts I've written at the Strong Towns Network and then hang out with us there to go deeper in this topic.