Joe -
I read an arcane detail the other day. It seems that now the SEC (the Securities and Exchange Commission) is proposing a change in margin requirements for the purchase of stocks. At present, you can borrow up to half the cost of a stock. Now they propose to lower the margin requirement to 15% -- so now large stock-buying institutions will be able to borrow 85% of the value of stocks that they purchase.
It may seem like a meaningless detail, but the 50% margin rule in effect up to now was originally put into place after the crash of 1929. At the time of the crash, you only had to put up 10% of the value of the stock, and could borrow the other 90%. They raised the margin requirement because it seemed to lead to crashes, since if stocks only declined 10% you were wiped out. I don't fiddle around with stocks much, but I like to pay attention to what's happening.
It just seems to confirm that we're in late-stage capitalism, where speculation dominates, and not that much real productive investment is going on. To keep the party going just a little bit longer, our so-called "regulators", paid off by those who they regulate, are betting everybody's pensions, savings, and future livelihoods, just so the speculators can pile up a few more hundred billion before they pull out for some island they've already bought in a warm climate.
It's hard to say which will happen first -- destruction of the banking system by the real estate bubble bursting, or by the stock and bond bubble bursting.
Take care,
Brent
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Dear Brent,
Incredible!
But ya know what? As long as the rip-off is conducted in slow motion, it will go completely unnoticed by the American public. The sad thing is that all those "marketplace" and "business" shows will never mention it at all. By the time the public understands what ahs happened to them, the scammers will have been sucking down mai-tais on those private islands for a year or more.
Joe
