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Best of the Exchange: Entitlements, Greenspan's Legacy and Betting Like Buffett


Minyans tackle social trends as the market shudders.

With the launch of The Exchange, Minyans now have a forum in which to express their viewpoints, comment on articles and meet other like-minded financial souls. Minyanville publishes "A Best of the Exchange" each Friday to highlight the many insightful posts and discussions going on behind the scenes.

Become part of The Exchange and let your voice be heard!

(Editor's Note: Some of the following posts have been modified slightly from their original form.)

Minyan Rolfe Winkler's Op-ed on Social Security entitlements generated a Buzz and some Banter this week. Generations debate the future of financing retirement.

Minyan Dr. Coles:

Congressional incompetence is taking us to a fiscal grave.

The full retirement age is based on maintaining a 50% death rate, so the government does not have to pay any paid for benefits but to half of the investors. The government gets 15% of all wages (up to $102,000) in America and is so incompetent as an investment manager they don't invest our money and grow the funds.

The problem with Social Security is totally caused by government. No matter your political party affiliation, and setting aside your thoughts on issues, we all need to remember what it is to be an American citizen. We need to make sure our elected representatives obey their Oath of Office and keep their Oath of Allegiance. Know who you're voting for.

Minyan Euro:

As a European investor, I find your market commentary to be interesting reading, but your propaganda to be appallingly trivial.

I am quite a fan of the general European social model -- it's far superior to the American one despite right-wing orthodoxy fantasizing about its necessary collapse. It's been going strong for 60 years, and frankly, we're in better shape than the U,.S. is, general people's well-being considered.

Of course if you ideologically choose to, you can go down the road of always blaming "entitlements" for all economic ills. There is no end to such thinking. However, if America's "economic supremacy" is predicated on the idea of some sort of sheer utilitarianism and it still produces results such as we're seeing, maybe it's time for the U.S. to lose this so-called economic supremacy which obviously doesn't deliver and forces people to economically co-operate in ways which many find ethically questionable.

Professor Cooper had harsh words for former Chairman Greenspan, and although many Minyans agreed, some were not as quick to blame the housing bubble squarely on the Fed.

Minyan Robert:

Greenspan plainly changed his risk analysis and behavior between Clinton and Bush II. When Clinton asked for lower rates, Greenspan said show me the path to a balanced budget. Between Clinton and Gingrich, they did.

For some reason, which we may never know, under Bush II he printed without any precondition. Now he says it was all Bush II's fault for not cutting spending. Did he even ask for discipline?

I thought the ability to discipline the politicians is why the Fed was made independent of the political process.

Minyan Michael:

As long as anyone (you, me, us) labors under the delusion the Fed chairman, or the Treasury or The President or Congress for that matter, creates and implements public policy for the greater good rather than for the vested (business and political) interests, we will remain confused by their actions, either while they are employed by the public or when they "return" to private practice.

In our polite society, we seem to be willing to give everyone and anyone the benefit of the doubt. We should not. What ever happened to doubting Thomas?

Once I gave up the attempt to understand public policy from the "greater good" delusion and began to look at our policy leaders from the "rainmaker for my business buddies/interests" view, their actions began to make a lot more sense.

I instantly became a better investor and trader. I was no longer handicapped with attempting to make sense of the insanity and simply saw it for what it is, a rigged game. Why are obvious conflicts of interest and clearly "informed" options and futures positions not being investigated by the SEC?

Why is it now routine to find a stock jumping a day or so ahead of "news" and no one is even surprised by the jump? It's becoming so transparent as to be laughable. Insider trading, while always in the background, is now front and center.

Remember when Toddo talked about the unseen hand a few months back? Even he was surprised by the degree of industry agreement with his proposal that the markets were being manipulated by the chosen few.

Why is it that we can look at just about any other culture or country and clearly see all the self dealing and corruption but are blind to our own?

And how, exactly, do you expect this to play out? Rather than shaking your head and saying "no, I don't want to think about that" maybe we need to give it serious thought. Because once the unseen hand starts down the rabbit hole, do we really expect it to stop?

That's like giving a 5 year old a free pass to the candy section of the local 7-11 and then expecting that same 5 year old to practice restraint. Yeah right!

Professor Depew took a peek into the secrets of Warren Buffett's success and you may be surprised at what he found. The Oracle from Omaha is no joke!

Minyan Jim:

A long time ago I bought Fruit of the Loom stock. It had every major underwear brand out there and sold to Wal-Mart (WMT), J.C. Penney (JCP), Sears (SHLD) and everyone else. How could they lose? Raise the price ten cents a pair and a few million in debt disappears in a flash. It was a worldwide market for the Fruits. You couldn't lose or so I thought.

Buffet's business model as described in aforementioned article is exactly what happened. But for it to really work he had insiders he paid well to sell the company down the tube. Fruit of the Loom is now one of Buffett's flag ships which makes him hundreds of millions a year. A lot of honest stock holders took it in the looms in this process.

GE Finance
(GE) and Jack the Welch had the same business model. These predatory lending practices have now been passed down to the banks. And again Johnny Lunch Box will take it in the shorts. Imagine another billion dirty shorts too soiled to laundry and Buffet gets even richer replacing them.

Speaking of money isn't it ironic that the media speaks of all those billionaires as if we admire them. Most of them made their billions putting the squeeze on Johnny the consumer or sticking it to each other. If corporate America were left to stand on honest economic business practices, most of firms would have been down the tube decades ago.

Johnny pumps billions into markets trying to save for retirement and the Wall Street gang packs it out the back door, enriching themselves while telling investors their Harvard degrees have earned them the right. Look at what being college educated has done for us now!

Wall Street, banks, corporate America is a cesspool afloat with thieves & liars. Johnny should know that by now.

The sorry part of our economy today is that the fastest growing segments consist of mostly gambling, building new prisons and housing criminals, national defense, tourism and eating. Hows that for a backbone for our economy! Were in trouble folks!

Minyan Pietro:

I can't help not to report the ongoing motto coined by the blogger who opened my eyes first. The motto goes: "Privatize profits, socialize losses"

Sad, but utterly real.
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