Re: Li's formula and how it helped break Wall Street

It is interesting that we're blaming what the current president might
do in the future for our problems last year - haha - while we ignore
what went on 8 years prior? lol. Or 60 years before that?
Here's my contribution to the subject of 110 years of overspending on
warfare;
http://www.youtube.com/watch?v=me1cFWuZwU4
But let's do a little recollecting about the past 8 years shall we?
In 2000 after 55 years of the Cold War seventy percent of all
millionaires in the world were foreigners and owned 70% of all the
wealth. They still do. No matter, because most of them invested
heavily in America where their money was secure from the trevails and
misfortunes of being invested in markets at risk to terror and
fraud.
In 2000 George Bush was swept into office by a miscount of votes in
the State his brother was Governor, Florida and his dad, former DCI
approved as Congress put their stamp of approval on the deed, and Fox
News made it all sit well with the American public - and the 43rd
President was in office.
Nevertheless, this caused some foreigners to question the wisdom of
being fully invested in the USA, which suddenly began looking like a
bannana republic to them and they began withdrawing their money
investing in other markets that had higher returns for the risk.
Which started in the fall of 2000 after the election of Bush.
In 2001 two things happened in America that caused foreigners
invested
here to begin pulling their money out in larger numbers. The poster
child for American business innovation, on the cover of every major
American financial magazine for seven years running, and at one time
fortune 500 listed this company as the #7 company in America - Enron
was found out to be a sham! As early ad February 2001 rumors of
difficulties were floating around the foreign press. On August 17,
2001 Skilling abruptly quit. The attacks of 9/11 obscured the
details
but by December 2, 2001 Enron files for bankruptcy protection. It
wasn't until after the invasion of Iraq and WMDs were the talk of the
day that any charges were actually filed. By then it was old news.
Not to non-US millionaires, to them it was another nail in the coffin
of the confidence they once had in US fairness and justice and they
responded by moving their money to markets that may not be any safer,
but certainly offered higher returns.
Now, obviously none of this sat well with foreign investors who owned
70% of America at that time. Other markets that have these problems
try quickly to assure investors and put the troubles behind them.
The
US takes foreign participation for granted. Others do not. That's
why when the Mumbai attacks caused a 3% drop in the Indian stock
market recently the Indian government acted to put things behind
them. When Chinese bankers were accused of wrong doing, they were
executed within a week and investors were assured it wouldn't happen
again.
Did we ever learn what the drop was for the US markets due to 9/11?
Well its gotta be worse, since the attacks were so much larger.
What did the Indian government do in response to their attacks?
Negotiated with the Pakistani government and made damn sure that the
perpetrators were caught within days, and brought to justice publicly
- and put the events behind them, and assured foreign investors this
wouldn't happen again and wouldn't impact Indian affairs in any case.
For good measure the Indian government pulled out all stops to
rebuild
all damage and put the whole mess out of the public's mind.
Sort of how President Clinton treated the first five terror attacks
against the USA made on US soil. People don't even remember them,
and
pay them no mind. Ditto with Reagan's handling of the destruction of
US Embassies.
That's not how Bush rolled. The attack was put front and center in
the American public's mind and milked for every ounce it was worth
for
personal political gain. Even after leaving office after eight
years,
*** Cheney still can't help but make comments about the terror
attack
that's coming! No matter how much it hurts the US economy to do it
or
emboldens others to try to attack America to BE that attack so often
spoken of in high office. As long as its good for Cheney and the
Republicans who cares about the country?
Well, the point is Bush DID NOT put the attacks behind him, but made
them the centerpiece of his presidency. The World Trade Center site
is still not completed after 7 years. Did you know that it took only
3 years to build the ORIGINAL World Trade Center? And they had
strikes, gas explosions, and every delay possible in New York
Construction.
I cannot imagine an event more positive to any President than to
preside over the re-dedication of the World Trade Center - AS IT WAS
-
or anything more positive to the American economy. But that's fallen
into a memory hole for Americans and whatever is built, whenever it
gets done - it will likely make matters worse, or perhaps won't
matter
at all since the financial strength that abided in America in 1999 is
no more.
The American public may put up with all this rot, but not so for
foreign investors.
The trickle of cash flowing out of the USA that started in 2001 - had
grown to a steady flow by 2002, and after the invasion of Afghanistan
AND Iraq AND no WMDs? no charges against Enron filed as of 2003?
That
flow turned into a torrent.
This had a very predictable effect on the five secondary markets that
benefitted from the flow of TRILLIONS of dollars in cash, the grew
like topsy! China, India, Russia, Brazil, and Germany all grew at
20%
or better. And did so year after year after year.
Meanwhile, growth in US markets, and those markets closely tied with
the US, Britain and Japan, faltered. By 2006 these markets reported
five years of steady fantastically strong growth! Their underlying
economies were also strong. Their investment banks were also quite
capable. The various accounting firms around the world reported this
to their clients, and now EVERYONE Americans included, began
diversifying into foreign markets - which accelerated the growth.
The Bush Administration attacked foreigners. Everyone from the
French
on down. This didn't stop folks with money from investing overseas
and pulling their money out of America. In fact, rising war
expenses,
and increasing difficulties in Iraq and Afghanistan, with potential
for the war to spread to Syria or Iran, and the detonation of a nuke
in North Korea - all heightened concern about money invested in New
York City - the obvious target of terrorists against whom even
American military might appeared to be helpless.
This was all delivered by the Bush Administration.
The major US pension funds were in Shanghai in 2006.
By August 2007 the Shanghai exchange exceeded NASDAQ for the first
time in history.
The torrent had turned into a flood!
In September 2007 the subprime housing market collapsed taking out
nearly $100 billion from the banking community. This on top of the
$7.2 TRILLION removed from the US financial community since 2000
election.
Due to changes in accounting rules in 2002 - in the wake of the Enron
fiasco - this subprime collapse became far worse - especially in
light
of the steady drawdowns in cash suffered by US banks over the
previous
7 years. These rules were not properly analyzed or vetted by the
Bush
Treasury officials, in part due to the reluctance of the Bush
administration to associate itself with Enron. So Sarbanes Oxley
warts and all was adpoted as the law of the land - a silent time bomb
waiting for a fiscal crisis to go off. It went off in September 2007
- by vaporizing assets of banks needlessly, which caused the problem
to spread vaporizing hundreds of billions of dollars needlessly - at
a
time when banks needed liquidity.
Bush in characteristic fashion, ignored the crisis as it spread and
took no action whatever as the last dregs of ready cash flowed into
the Chinese, Indian, Russian, Brazilian and German markets.
We learned a lot on Fox News about Tom Daschle's tax treatment of his
drivers over a five year period. Does anyone know where Cheney and
Bush have THEIR money invested at this critical time? Did THEY get
hurt in the recent meltdown? That is a story I'd like to see - but
fear I won't - not at least in the USA.
I suspect Bush and Cheny had their money in Swiss Francs or
something,
and now has it safely invested in Singapore, Shanghai, Mumbai and
Sydney - given the fact that his dad used to be Ambassador to China
and all. Or maybe given Cheny's ties to Haliburton, he had it
invested in the Middle East oil kingdoms, or Brazil's burgeoning
alternative energy markets? No matter what the outcome for the rest
of us, I bet the former President and VP are doing quite well.
Better
than most. Good for them eh?
At least they can take care of their personal economic affairs in a
positive way.
Today, there are ten million millionaires in the world holding $40
trillion of the worlds $56 trillion in cash. Only three million of
them are Americans, and nearly all have significant portfolios
overseas at this point. Not so at the start of 2000.
The lack of ready cash wreaks havoc on bank operations.
I read a portfolio of a Chinese bank recently. Their credit rating
just got raised (again) and they proudly reported their nonperforming
loans were only 3.5% of their deposits.
Do you know what the rate of nonperforming loans was when WaMu was
downgraded?
1.7% - less than half!
Why was that?
Because $16.7 bilion was withdrawn over a 10 day period prior to the
downgrade for WaMu.
and
this Chinese bank registered over $20 billion in new deposits over
the
previous 30 days before the upgrade.
If deposits and withdrawals are so important to the health of a bank,
and nonperforming loans are not that important - WHY DO WE NOT HEAR
MORE ABOUT THE FLOW OF CASH OUT OF THE COUNTRY? Why are we fed a
steady diet of stories about dishonest bankers and incompetent
financial planners and greedy deal makers?
Well part of it has to do with drama - drama sells. That's why
newsteams chase fires all over hell and back - and don't look at the
statistics of hospitals unless there's a horrific corpse and its
halloween.
The other part of it is most people don't know how to read a balance
*** or how banks work or how or what the financial community does.
So, its devilishly easy to mislead even a good reporter especially if
there is good drama in the spin.
The problem is, just like Cheney warning from beyond the Vice
Presidency of a horrific attack, politicians and news folk who give
headlines to Bernie Madoff and today's latest crook, are driving yet
another nail in the coffin of an American recovery even as they
wonder
how a crook could do so much damage! haha..
Fact is they cannot.
During the Bush Presidency over $15 trillion left the USA financial
community, and we have yet to do ANYTHING to bring it back. Fact is,
we may NEVER do those things - but one thing is for certain.
IT ISN'T OBAMA's FAULT! haha - its as much BUSH as anyone.

http://www.youtube.com/watch?v=7PinyS5iOEk&feature=channel

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