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VIDEOFive Things You Need to Know: Conspiracy of Fools
No wonder so many people believe in conspiracy theories.
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Kevin Depew's Five Things You Need to Know to stay ahead of the pack on Wall Street:
1. Conspiracy of Fools
From a New York Times analysis of the components of the proposed economic stimulus package:
"Saving, or paying off debt, might make sense for individual households, but what the economy needs most is for people to spend money, helping stores to sell more, factories to produce more and employers to avoid cutting additional jobs."
Sorry, but this is completely incorrect. By this logic, all we would really need to do to "fix the economy" is burn down a million houses a month, destroy our cars and throw away our clothes after wearing them (sorry dry cleaning industry!).
No wonder so many people believe in conspiracy theories. When these types of demonstrably false assertions are repeated over and over again it could lead one to believe there really is a coordinated effort between Washington politicians, the Federal Reserve and mainstream news organizations to make people dumber, presumably so they can take their money.
The reality is that printing money, which is precisely what is going to take place under this $888 billion "economic stimulus" package, cannot create real savings or wealth, it can only redistribute it.
2. Oops!
According to Time Magazine (via Barry Ritholtz), since October, the government has deposited $165 billion into the accounts of the nation's eight largest banks, which are now worth $418 billion less than they were four months ago. Also, the Congressional Budget Office estimates that the government's preferred shares are showing a $20 billion loss, the magazine reports.
"All told, the government's annualized rate of return on its investment in the nation's largest banks is -1,096%."
I was immediately reminded of this: The Paulson Plan Will Make Money For Taxpayers.
"My analysis suggests that Treasury Secretary Henry Paulson (a former investment banker, no less, not a trader) may pull off the mother of all trades, which could net a trillion dollars and maybe as much as $2.2 trillion -- yes, with a "t" -- for the United States Treasury," former hedge fund manager Andy Kessler wrote in the Wall Street Journal in September.
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