"It is said that in a purely competitive capitalist system, all businesses are vectored to zero profit in a process of creative destruction. As a certain class of participants clearly recognizes this they take every opportunity to corrupt the system through fraud. This is why markets must have regulators. At times the fraud overcomes the regulation to such a degree that the normal market balances are rendered ineffective and the system passes into a crony capitalist system, if not an outright oligarchy.
It is hard to imagine a more inherently ineffective system of capital and resource allocation than crony capitalism. It is a game in which is rigged to deliver most of the money in the system to a minority of insiders, thereby bankrupting all their customers.
Greed compels the materially obsessed to obtain the greatest piles of chips, but in the long term renders their chips to be almost worthless because they are unable to stop their fraud and plundering, even when it is in their best interests. They are not governed by rationality or conscience or even common sense.
For periods of time oligarchies are able to survive in an uneasy equilibrium enforced by power, but ultimately these wickedly wealthy wither and die on their great piles of gains."
Jesse, Crony Capitalism: The Fed's Frankenstein, 17 December 2010
“There is nothing so disastrous as a rational investment policy in an irrational world."
John Maynard Keynes, 1931
"Essentially, the Great Financial Crisis was result of widespread fraud on the part of sellers of ‘securitized assets’. Books of banks masked huge SPE exposure. ‘Opaque securities’ were sold as investible quality but nothing more than mathematical approximations at time of issue. Yes, it became far more profitable to sell complex MBS risk baskets than identifiable, securitized assets
Were there villains? Of course, there were. Place to look was Wall Street. It compensated much more for selling opaque securities. Well, there’s that reality, too. I’ve been told by more than one current and former banker that the banks tell the regulators what the rules should be.
And let’s keep in mind regulators let each bank devise its own, unique value at risk model, rendering stress tests highly unreliable. The Way governments ended doubts about solvency of opaque banks was with stress tests and pledge of taxpayer funds to maintain solvency.”
Harald Malmgren, April 19,2017
“Markets can remain irrational a lot longer than you and I can remain solvent.”
A. Gary Shilling, investment meeting,The Advertiser, Montgomery Alabama, 3 December 1986
"While some of the crowd were speaking about how the temple was adorned with costly stones and offerings, he said, 'All that you see here, the days will come when there will not be left a stone upon another stone that will not be thrown down.'"
Luke 21:5
“The glory of the Lord entered the temple through the gate facing east.”
Ezekiel 43:4
"Lift up, you gates, and be lifted up, you ancient doors, that the King of glory may enter."
Psalm 24:7
All I want to add is: you'll see.
Have a pleasant weekend.
