The Battle Hymn Of The Stock Trader

Defying common sense, logic, real world economics, and increasing its own traditional reasons for rising and falling, the stock market of late has been irrationally exuberant to an unusually irrational extent. One can thus easily imagine that traders in this fun house now begin each day with their own fight song — one that goes like this:

The Battle Hymn Of The Stock Trader

Mine eyes once saw a NASDAQ to 5,000 did soar,
And it stayed there for an instant before plunging to the floor
If I live but long enough, it will rise to that once more,
The stock market marches on.

I have read of callow know-it-alls stampeding frothing buyers,
And listened as the talking heads joined in their upbeat choirs,
Then watched with growing horror as good analysts turned liars,
The stock market marches on.

Let the pessimists go soggy my resolve will never fail,
O’er the long term I know losers are the ones who just turn tail.
I will brush my teeth with champagne and eat lobster by the pail
The stock market marches on.

Glory, glory trading profits,
Glory, glory unearned profits,
Glory, glory cap gain profits.
And the market marches on.

Michael Silverstein’s latest book is The Devil’s Dictionary Of Wall Street.

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The Best Idea To Reanimate The Economy You Won’t Hear About Elsewhere

We increase the top income tax rate from the present 39.6 to 45 percent and use ALL the new revenue generated, ALL OF IT, to reduce lower income tax rates.

This is NOT a tax increase. No new money flows to the government. It’s merely a tax shifting from the presently under-taxed top to the over-taxed working lower and middle.

This immediately reduces income inequality. It immediately improves the earnings and economic lives of the working middle class and lower paid workers.

It animates the economy immediately by spawning more spending by most Americans who have more net income to spend.

It reduces the growth of poverty, whose biggest cause today is the working lower and middle sliding down.

And this is critical. It does NOT reduce needed investment that grows an economy. Rather, it generates new investment to tap into greater consumer spending — it loosens the strings on the vast billions not being invested by bloated corporations today because there is no consumer spending to justify such investment with all the new jobs this investment would also generate.

Republicans won’t back this approach because they will call it a tax increase (it isn’t, just a tax shifting), and label it class warfare, which is silly since many if not most tax changes benefit some group at the expense of another.

The Democrats won’t back this proposal because they want to tax the rich to fund government programs — not a bad idea in many cases, but a totally separate issue that should be dealt with separately.

This is a proposal that many on the small-government right can support along with people on the generally big-government left.

Why haven’t you heard about this simple and obvious way to immediately reduce income inequality, aid the middle class, and do the other worthwhile things noted above? Because no one is being paid to peddle the idea.

Michael Silverstein’s newest book, The Devil’s Dictionary Of Wall Street, is available from Amazon.

The Importance Of Believable Economic Reportage

If your local weatherman keeps telling you that the sun is shining and temperatures are in the sixties, and you look out your own window and see it’s snowing and the thermometer there is reading in the thirties, pretty soon you stop paying attention to that weatherman and his predictions.

These days, our economic weathermen, economists and government officials, keep assuring us the recession ended years ago and recovery has been going on since then. We know this is baloney. The recession didn’t end. And what’s happening now is not recovery but sinking slowly deeper into the economic muck.

Almost no one believes their Big Economic Lie anymore. It simply does not comport with the everyday truth we see all around us.

Why is this so scary? Lots of reasons. Maybe the most important is the affect of all this lying on our policy makers. They seem to be the only ones who still believe the lie .

Most policy makers really want to do the right thing by their constituents. But how can they do so when when the economic weathermen they listen to keep saying things are  OK so why bother doing anything serious?

For that reason alone we need believable economic reportage. What do we get instead? Here’s an example.

This January, with most of the country frozen and the West Coast in deep drought, with all the rotten economic activity (and non-activity) this weather generated, the Conference Board’s tabulation of leading economic indicators still showed a healthy increase, and the stock market jumped big on the news.

As the Big Economic Lie gets less and less believable, and policy makers still buy into this lie, more and more Americans lose faith that the people who govern them really understand their needs. And that is very, very scary..

Michael Silverstein’s newest book, available from Amazon, is The Devil’s Dictionary Of Wall Street.

Selig Cartwright, Goldman Sachs Washroom Attendant, Solves The Income Inequality Puzzle

(Mr. B. enters the washroom, obviously seeking relief.)

Is my personal Stall #8 ready, Selig? Ready for immediate use?

It’s ready, sir. Though still locked. I thought first I’d discuss an idea with you. About income inequality.

Love to chat with you about that, Selig. First the stall.

But sir, you’re always saying that hearing from little people like me is the most important part of any great leader’s job.

Yes, usually it is. Just now, however…

It’s a very simple idea, Mr. B.

Dear God! Tell me your idea for heavens sake, Selig, then unlock the door to my personal stall.

I knew you’d be interested, sir. Here it is: Income inequality in and of itself is not a bad thing. Hard work, talent, and initiative should be compensated generously. Big earners also have enough money above their own needs to invest, which builds the economy.

Obviously, Selig. Can I get into my personal Stall #8 now?

Not yet, sir. Too much income inequality, however, that doesn’t trickle down enough to the middle class, the group that buys the most goods and services This not only makes them poorer, but doesn’t provide the wherewithal to animate an economy based largely in consumption. It also keeps potential investors from investing in job-producing new economic activities.

Wonderful, Selig. You’ve been reading Paul Krugman in the New York Times. I’ll pay to renew your subscription if you unlock Stall #8 very, very quickly.

I will, sir. But I’ve only described the problem. Do you want to hear my solution?

I’m dying to hear it, Selig. Really, really dying. Get on with it man.

Here’s the solution. Raise the top tax rate from 39.6 percent, paid only by top earners, to 44 or 45 percent. Then use all the new revenue generated, ALL of it, sir, to lower tax rates paid by middle class workers. This will allow them to spend a lot more, animating the economy in the process, reduce poverty because the biggest cause of new poverty today is people falling into it from the middle class. It would also spur investment because investment flows into areas that promise the most profits, and the most profits would now be where an enriched middle class does its increased spending.

Good, but no cigar, Selig. First, because it’s a tax increase and that’s a no-no.

It’s not a tax increase, Mr. B. The total tax bite remains the same, it’s just reallocated from the under-taxed top to the over-taxed middle.

It’s class warfare, Selig.

No, sir. Every class of earners benefits. Top earners pay more in taxes, but those top earners who supply goods and services to the middle class more than make that up in extra profit.

Then who loses, Selig?

Economists who work for conservative think tanks, CEOs who pad their own bank accounts by pushing up their company share prices with Fed-funded stock buy backs, and Wall Street derivative peddlers.

Let’s not forget one other category of losers, Selig.

Sir?

Washroom attendants who would rather philosophize than provide keys to bathroom stalls.

I’ll open yours immediately, sir.

Very wise, Selig. And one other thing.

Sir?

Leave the economic policy-making to people who have paid their representatives in Washington to make it in an appropriately top-favored manner. Because, my friend, no matter how you vote and how sensible your ideas, this is the way it’s going to be.

(Michael Silverstein’s new Book, The Devil’s Dictionary Of Wall Street, is now available from Amazon as both an ebook and in print form)

Selig Cartwright’s No Inflation Vision — A Goldman Sachs Washroom Attendant’s Adventure

(Entering the Goldman Sachs washroom, Mr. B. finds washroom attendant Selig Cartwright looking different than usual.)

Selig, your eyes are a’glow. There’s a corona around you head. What’s happened to you, man?

I’ve had a vision, sir.

A vision? Oh, damn. One of our traders slipped you a bit of his get-up-to-speed stimulants again.

No, sir. This wasn’t a chemically-induced vision. It was something that came to me in one of the stalls.

Oh, one of those. But the glow in your eyes. The angelic look on your face. The rainbow colors around your head. My own stall-based visions don’t produce that sort of…

No, sir, this wasn’t one of those visions. It came about watching a broken toilet.

A broken toilet, Selig? Explain.

The toilet, sir. It kept flushing and flushing and flushing, but it never overflowed. I watched and suddenly I understood.

What’s to understand? It didn’t overflow, Selig, because the new water was simply drained off before it could overflow. So what produced a vision?

I finally understood, Mr. B., why there isn’t a huge burst of widespread inflation these days, even though the Fed for months has been pumping billions and billions of new money into the economy.

Actually, Selig, the Fed has been doing this for years, not months, and has pumped trillions in new money into the economy, not billions or even hundreds of billions. What’s this have to do with your vision?

I saw, sir, in a burst of clarity, why all this new money hasn’t overflowed into inflation, the way the toilet didn’t overflow even though it kept flushing.

And why is that, Selig?

Because, sir, all this new money has been scooped up by the top one percent. So the only inflation is limited to soaring incomes for Wall Street heavies and big company CEOs, and the things that only they can afford to buy like certain kinds of art, certain kinds of travel, and homes in Manhattan and the Hamptons.

True, Selig. But please don’t think you have to thank us for this. Thank us just because we have to suffer the pangs of inflation while everyone else is spared the pain by getting nothing that would cause them to have more money to spend, which would lead to the kind of inflation the government measures.

So it doesn’t bother you, Mr. B. that all the new economic growth since the 2008 market crash and subsequent recession has only gone to the top one percent of income earners?

Actually, Selig, according to official numbers, only 95 percent of this economic growth has gone to the top one percent. That bothers me. There’s a five percent leakage somewhere that has to be plugged.

I’m confused here, Mr. B. You really think just the very top income earners should get 95 percent of all economic growth?

Of course, Selig. What is there to be confused about? The fact that we get all — or virtually all — means we deserve to get it all. The fact that the Fed and others in Washington continue to pursue policies that make this happen, that just shows they understand this. We’re the best and brightest. We’re entitled.

But Mr. B., you’re always telling me entitlements are bad.

They are bad, Selig. But some entitlements are worse than others. And ours, unlike those others, aren’t bad at all. They’re deserved. And will never again be challenged.

But aren’t you worried, sir, that in coming elections some party will move to change things?

Grow up, Selig. The big election issues for years to come will be Obamacare, or immigration, or some war we get into for some reason or another, or maybe an environmental crisis we can no longer ignore, try as we might. No major candidate, neither major party, will make a big thing about correcting income inequality. Sure, they’ll whine about a suffering middle class, but their solution to middle class pain will be growing the economy, and as your vision illustrated, we’ve ordered things so the only beneficiaries of that growth will be the very top tier. However…

However, sir?

However there will always be jobs for little people who provide personal services for the best and brightest. Care to keep one of those little people jobs for yourself, Selig? Or would you prefer to have another vision instead?

I’ll get down to giving another polish to your personal Stall #8 immediately, sir.

Very prudent. And always remember, Selig, a man never stands so tall as when he bends to serve his financial betters. That’s what the new American opportunity society is all about.

(Lots more Selig Cartwright commentary can be found in Michael Silverstein’s latest book, The Devil’s Dictionary Of Wall Street.)

Wall Street Redefined

Having trouble following the strange doings in markets these days? Perhaps these few definitions. among the hundreds found in my Devil’s Dictionary Of Wall Street book, will help in your understanding:

Bank Regulators:
Keystone financial cops who avoid getting into political traffic accidents by never actually chasing the robbers.

Capital Gains:
In the ongoing competition with labor, this is a status report

Christmas:
Formerly a religious holiday that has morphed into a seasonal obligation to overspend.

Credit Scores:
What Americans receive these days in return for giving up their right to privacy.

Debt Ceiling:
The always porous roof atop a national house of cards.

Detroit’s Big Three:
Poverty, property abandonment, insolvency.

Downsizing:
A process that attempts to shoehorn a size 12 company work load into a size 10 workforce.

Economic Forecasting:
Hindsight projected into the future.

Economic Recovery:
A period when things get worse more slowly between two periods when they get worse very quickly.

Financial News:
News that’s often not fit to print but gets printed anyway.

Fracking:
A chemical enema inserted into the earth in hopes of releasing large quantities of combustible flatulence.

Globalization:
A process that brings all peoples everywhere together in a common tragedy of epic proportions.

Inflation:
An excess of money in circulation so extreme that even poor people have more of it than usual.

Initial Public Offerings (a.k.a. IPOs):
Privately owned companies heavily rouged and tarted up by skilled investment banker makeup artists for a one-time appearance at a Wall Street coming out party.

Interday Highs:
Stimulant-generated euphoria experienced by Wall Street traders after brief washroom visits.

Market Research:
“Manny. This is Hank over at Goldman. How’s it going? What do hear about H.P.?”

Moochers:
Anyone at the federal trough who isn’t you.

Quantitative Easing:
The last refuge of a central bank that has tried everything else and failed.

The New Normal:
The old poor.

The Treasury:
A government agency staffed by Goldman Sachs employees on sabbatical leave.

Too Big To Fail:
Financial obesity that unlike physical obesity does not shorten life but guarantees its perpetual continuation.

Toxic Assets:
Assets that no sane individual wants but which government has a strange and endless desire to possess.

Wall Street’s Best And Brightest:
Dumb and dumber in thousand dollar suits.

Available At Last! The Devil’s Dictionary Of Wall Street

Ambrose Bierce’s Devil’s Dictionary was a delightful collection of quirky definitions, naughty verse and satirical pieces skewering an overblown and profoundly corrupt Gilded Age.

Michael Silverstein’s new Devil’s Dictionary Of Wall Street applies the same approach to today’s overblown markets and their puffed up denizens. Its hundreds of painfully funny definitions, poems, and encounters featuring Selig Cartwright, Goldman Sachs washroom attendant, will make you laugh—and think.

Silverstein is a former senior editor with Bloomberg Financial News, and a long time regular on NPR’s Marketplace Morning Report. The Devil’s Dictionary Of Wall Street is now available from Amazon in both print and ebook formats.

Check it out. You’ll like it.

Selig Cartwright, Goldman Sachs Washroom Attendant, Learns The Truth: Big Banks Now A Branch Of Government:

(When Mr. B. enters the Goldman Sachs washroom for his regular morning visit, he finds washroom attendant Selig Cartwright waiting expectantly…)

What is it, Selig? You look pensive. Is there something you want to tell me?

No, sir. Something I want to ask you. Do you vote, Mr. B?

Of course, I vote, Selig. It’s every American’s duty. We need to elect the best possible representatives who will make the best possible laws.

That’s what I’ve always thought too, sir. Except now…now…

Now what, Selig? Speak up man.

It’s some stories I’ve been reading in the New York Times, sir. Hearing elsewhere, too.

That rag. No wonder you’re upset, Selig. What have they been writing now? I’ll wager it’s something nasty about big banks.

Yes, sir. They and other media are saying, well, hinting strongly anyway, that the people we think we’re electing to make the best possible laws don’t really make the laws that affect big banks. That the banks themselves, their lobbyists, their lawyers…

Stop right there, Selig. I know where this is going. They’re saying that after the people in Washington we elect to make laws that are supposed to regulate Wall Street, they pass these laws along to other government officials to make the regulations that actually allow the laws to work, but these other government officials end up negotiating with us, and we make sure these new laws don’t work against our interests. Is that what your reading and hearing, Selig?

That’s exactly what I’m reading and hearing, sir. Is it all lies?

Lies, Selig? Of course it’s not lies. That’s exactly the way things are done these days. What’s the problem?

I guess the problem, Mr. B, at least for some people, is that companies and industries the government think have done things, or might do things, that require regulation to protect the public, shouldn’t write these regulations themselves.

I could tell you a lot of reasons that argument is silly, Selig. Instead, I’ll just say what Dick Cheney said when it was pointed out that the overwhelming majority of Americans didn’t think we should get into a war in Iraq.

What did he say, sir?

Cheney said just one word, Selig. He just said: “So.”

I don’t understand, sir.

What he was saying, Selig, was that no matter what most Americans thought or wanted, he and others in the Bush Administration had the power to start a war if they wanted to start a war. No one could stop them. They had the power and they could use it as they saw fit. And if most Americans disagreed, thought it was stupid, thought it would lead to disastrous consequences, “So.”

You mean, Mr. B., that Washington passed Dodd-Frank to keep Wall Street from operating the way it wants to operate, and people are disappointed because you’re putting the kibosh on its effective enforcement.

“So.”

And Americans are furious because the big banks made a record $40 billion-plus in the first quarter of this year while average wages and benefits for other Americans, even the ones who still have a job, are stagnant or falling.

“So.”

And if Democrats instead of Republicans are in power, when it comes to really keeping Wall Street in check, both end up going along with what Wall Street wants.

“So.”

Which makes present-day politics, at least when it comes to Wall Street, irrelevant. No matter who seems to be in power, you’re in power when it comes to things that involve your own interests.

“So.”

And that in essence, sir, Wall Street has become a fourth branch of government with powers equal to the other three branches on critical economic matters.

An equal branch of government, Selig? Are you trying to be offensive?

No, sir. I just meant…

Selig, Selig, Selig. They’re on the phone every day begging us for money they think they need to get reelected. They’re sucking up to us daily so they can get fat pay goodies after leaving office. We’re funneling money to their family members directly or indirectly if they play along with what we want. All the people who argue our case on legislation, and negotiate regulations, are their ex-employees — or former colleagues. Yes, Selig, we’re a fourth branch of government. But equal? Let’s just say some branches are more equal than others.

Now I understand present-day American politics, Mr. B. I’m still a little confused about something, though. You told me just a few minutes ago how important it is to vote? But if you control so much and you’re not voted into an office, why is voting still so important?

Because, Selig, when the next big crash comes, the blame is going to fall on people who were supposed to make laws to prevent it. It’s elected people who are going to take that hit. And when the next crop of pols replaces them, because we don’t have to be elected, we’ll be free to buy them, too.

An inspiring explanation, Mr. B.

Yes, Selig. And one that should make you very proud. You’re part of the big bank team, after all.

My cup runneth over, Mr. B.

See that it’s the only thing in this washroom that so runneth. You’d be amazed how many job applications we get these days for jobs like yours, jobs cleaning Wall Street bathrooms.

I appreciate the opportunity to serve, sir.

Continue to do so, Selig. Now get my Stall #8 ready for use. Pronto.

(Michael Silverstein’s new comic novel, MURDER AT BERNSTEIN’S, is available from Amazon.)

The Endlessly Rising Stock Market Explained

Many people are confused about why the stock market keeps rising. The economy, after all, is in lousy shape. So why does the stock market keep going up and up?

A single headline that appeared the other day on the Yahoo Finance website helps explain the reason. Building on what that headline reveals allows a fuller explanation of this strange market phenomenon.

Here’s the headline: “Weak U.S. data run give stocks a lift.”

What does this headline tell us? And how do comparable headlines and news stories support the thinking that keeps the endless stock price run up going?

When the economic data reported are good, stock prices rise.

When the economic data reported are bad or weak, however (as noted in this headline), then The Fed is expected to maintain or increase its quantitative easing (money printing) which boosts stock prices, so bad or weak data also makes stock prices rise.

Moving on…

When consumer spending increases, stock prices go up.

When consumer spending decreases, however, it’s because gas prices have gone down and consumers can spend their money elsewhere (the market’s thinking), so stock prices go up.

When companies report good earnings, stock prices go up.

When companies report bad earnings, but these earnings beat analyst expectations, stock prices go up.

When consumer confidence remains below benchmarks distinguishing between good from bad overall confidence, stock prices go up if confidence increases a bit, even though the overall sentiment remains very negative.

When job numbers are good, stock prices go up.

When job numbers are bad, but nonetheless in line with a slowly improving economy (as defined by the market), stock prices go up.

When foreign markets go up, our domestic stock market follows along.

When foreign markets go down, analysts here “look beyond” these downturns and our stock prices rise.

When not a single piece of news looks good, or can even be spun into something that looks good, stock prices briefly decline but then surge upwards as investors pour in to take advantage of the “stock buying opportunity.”

This kind of thing explains the stock market’s endless rise. And you don’t have to worry that this is some kind of bubble. Because this time, honestly, no kidding, all the best and brightest minds agree — this time it’s really, Really, REALLY, different.

(Murder At Bernstein’s, a novel by the author of this piece, is now available from Amazon.)

Selig Cartwright, Goldman Sachs Washroom Attendant, Explains How To Do Away With Taxes

(The scene is a washroom in the headquarters of Goldman Sachs. Mr. B., a company executive, comes out of his private Stall #8 after an extended visit, carrying a bunch of papers. He encounters Selig, the washroom attendant, who asks…)

Writing a novel, Mr. B.?

If only, Selig. Doing my taxes. Or starting them anyway. They are so, so, so…

Crazy? Irritating? Unfair?

All that, Selig. No time now to complain about them, though. Gotta run. Places to go. People to see. Derivatives to churn out.

You know, Mr. B., maybe we don’t really need taxes. I have an idea that might let us abolish them altogether.

Abolish taxes? Really?

Yes, sir. The other day I was speaking with one of the company’s bond traders…

Always an educational experience, Selig. Continue, please.

Well, sir, he mentioned how the Fed is buying $45 billion a month in long-term Treasury bonds.

That’s right, Selig.

And that comes out to $540 billion a year.

I don’t have my calculator with me, but that sounds right. Carry on.

Then on the radio, Mr. B., I heard that the CBO, the Congressional Budget Office, this fiscal year was projecting the national government’s deficit would be $845 billion. Which means that this year one part of the government, The Fed, would be buying 64 percent of the debt issued by another part of the government, the Treasury, with both using the same collateral — the full faith and credit of the United States.

You see a problem here, Selig?

Of course not, sir. Who could possibly think such a thing? It got me thinking, though. If The Fed is already borrowing 64 percent of new debt issued by The Treasury to fund the deficit, why not borrow it all? Then there wouldn’t be all those arguments in Washington about how deficits are endangering the economy because there would always be a willing buyer for this debt.

Not a bad idea, Selig. But what has this got to do with taxes?

Well, Mr. B., if one part of government spending — the part funded by deficits — was all funded by The Fed’s buying bonds from the Treasury, why not have The Treasury issue bonds to cover the part of government spending now paid for with taxes? Then we could do away with income taxes altogether.

Great Reagan’s ghost! You’re right, Selig! Then all the extra spending possible because Americans would no longer be paying taxes would generate the biggest boom since sub-prime mortgage lending. I’m seeing Dow 50,000 here. But wait. Wouldn’t this notion play havoc with the country’s credit rating?

It probably would, Mr. B. In fact it might give the United States a credit rating a notch or two lower than the Bank of Cyprus. But so what? Low credit ratings may scare off private lenders, or make them demand higher interest on their loans. But when S&P lowered the credit rating of the U.S. from triple-A to AA+, borrowing of this country’s debt actually increased and at lower rates, too, because the main buyer is The Fed, and it doesn’t care about the country’s credit rating, doesn’t demand higher interest rates either, because in essence it is lending to itself.

I’m feeling a little dizzy here, Selig. No more deficit worries. No more income taxes. Surely this would have to catch up with the government somewhere down the road.

Not necessarily, sir. You know my wife reads her Bible regularly.

I do know that, Selig. I hope your good woman is well and she still prays for me.

She is well, sir, and she prays for you nightly. Fervently. As if our economic survival depended on your good will.

A prudent woman as well religious one. Good combination. But why do you mention her now, Selig?

Because when I told her my idea, she referred me to Leviticus in the Bible where it speaks about debt forgiveness every few years, and declaring a Jubilee celebration when one occurs.

So, Selig? So?

So, sir, every few years government leaders and Fed policy makers could go on a retreat together, and come back declaring a Jubilee on all outstanding government debt held by the Federal Reserve. Then the worrisome debt built up by deficits would disappear, income taxes would never have to come around again, and we could start the whole borrow-from-ourselves-to-pay-for-everything cycle all over again. And because this would be sanctioned by God, and no one in Washington would dare admit being a non-believer, there would be no objections.

Selig, I’ll admit I am impressed. Very impressed. I thought all the cleaning chemicals you’ve been inhaling in order to keep this washroom sparkling had probably damaged your brain. Now I see they have actually enhanced its operation. I’m even thinking we hold meetings of the company’s Ethic Committee down here in the future, have them do some washroom inhales, better to ensure we’re compliant with all government regulations.

I’ll work on the seating arrangements, sir.

Do that. Ha ha ha ha. Forgive me for tittering, Selig. But won’t people be surprised when they hear that this country’s new economic policies were devised by a man whose main job is unplugging toilets at Goldman Sachs?

Actually, Mr. B., I don’t think many people would find that surprising in the least.

(Michael Silverstein’s new comic novel, Murder At Bernstein’s, about a financial news billionaire who wants to get elected Mayor of Philadelphia, is now available on Amazon.)