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12 July 2011

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flite

My own review of Cantor's investments indicate that he is a very unsophisticated investor, or more likely, has less than optimum investment advisors. While he has a substantial portfolio, it is a mish mash of 'diworsification' rather than logical investment diversification.

It follows then that his view of the budget and deficit are equally, unsophisticated.

highlander

It is a perfectly legitimate investment, properly disclosed, and well within the bounds of house rules.

What it shows is that Cantor, unlike about 90% his fellow politicans, might actually have a grasp of the cause and effects of government fiscal and monetary policy.

While fighting our way out of a deep recession, a weak dollar is not necessarily a bad thing. It promotes increased exports, I would imagine you know that quite well, Mr Silverman PHD! And recession proof GOVERNMENT EMPLOYEE!

Adam L Silverman

Highlander: Nice strawman you've got there! Did I anywhere in the post indicate that it wasn't a good investment, that there was anything wrong with it? No, I did not. Have you ever see me post anything on here arguing against a weak dollar? No you have not. This fund, however, is a short on US Treasury Bonds, not US dollars. Apparently the concern is that Congressman Cantor has a (potential) conflict of interest: if he faithfully executes the laws, including the constitutional requirements in the 14th Amendment pertaining to keeping the credit of the US good, then his investment will do poorly. But I did not write about that either, just posted the links to the reporting on his investments without comment or commentary. Your over active imagination seems to have filled in what I did not write. I have a report to finish by Friday, perhaps you would be so kind as to let me know what I'm writing in it?

As for being recession proof because I'm a government employee: good to see that you recognize that government can create jobs.

William R. Cumming

Growing consensus that today's US dollar worth less than $.07 of 1970 pre-Nixon going off into his various devaluations of dollar. And in fact may be less than $.04!

An unwritten MSM story with most of the value being lost since 2001!

Fred

highlander:

"It is a perfectly legitimate investment, properly disclosed, and well within the bounds of house rules."

The problem is that the members of congress enact legislation that will have a direct impact on some companies valuation (regulatory impacts) and they certainly have inside knowledge of what contracts are likely to be made by the government. The incentives put allot of pressure on the 'ethics' of the investment, regardless of it being disclosed.

VietnamVet

Dr. Silverman,

I have a dog in this fight since my pension is 100% paid by the federal government. In 1974 I was hired by the federal government when there was a push to employee Vietnam Veterans.

I find it astonishing that the Congressman invested on a short position against US Treasuries and against the full faith and credit of the federal government. If this is not treason, I do not know what it is. Congressmen Cantor and West and their supporters are hot-headed radicals that intend to flush government down the drain. Just as frightening is the lack of corporate reporting of these facts.

With only 4% of Americans believing the federal government benefits the Middle Class, these radicals have a fertile ground to obtain votes against the status quo. The problem is without federal financial regulation and monetary support, a Neo-Gilded Age Depression is guaranteed. The Sunday Washington Post had a good article on this "Want to avoid another Depression? Try understanding the first one"

BillWade

My own position is that shorting stocks is anti-American unless you feel the corporation you are shorting is up to no good.

Cal

Conflict of interest.

PS

A little googling would locate a research paper about the extraordinarily large returns that members of Congress were making in stock-market investments -- not mutual funds but individual stocks. The researchers didn't accuse the members of using inside knowledge to time purchases and sales of stock, but the reader was bound to think that something was fishy.

Jose

Interesting post Dr. Silverman, but does anybody know who is managing his assets or are they in trust?

I seriously, doubt a Congressman could have the time to manage such a broad range of investments.

Remember, the Devil in always in the details...

Augustin L

These idiots in the congress have no concept of the american system opposed to the british system based on the work of Simon Patten, List and many others to save the republic we must go back to a credit system, not a debt based system. In the current situation the cutting of the money supply,''drastic auterity measures'' to pay the debts would eventually collapse the system for all money in circulation, I repeat all money in circulation is created with debt, Therefore more money needs to be created out of debt to pay the existing ''claims'' debts. It is certainly a welcomed development to hear the informed citizenry talking about reducing the size of the national security state behemoth. But the main aim of any well informed citizen should be to work to restore a credit system not based on debt with a public national central bank out of the hand of the private financial oligarchical interests.Only then could we see a significant revival and increase in the physical ''real'' economy as opposed to the current scourge of monetarism which is destroying our republic the same way it did the roman and the british after the repeal of the corn laws of 1846. The Constitution of the United States is clear with regard to the full faith and credit of the republic and the nefarious deeds of suit monkeys in Washington are clearly treasonous.To quickly get out of this crisis we need first to cancel the ''trash'' illigitemate gambling debts CDS,CDO and eliminate most other forms of derivatives and honor the legitimate ''productive'' debts, that are in a legitimate form, and we utter a credit system in which we move the debt of the states, the legitimate debt of the states, the legitimate debts of the nation, which are now located in the states, the same way we move it into a credit system, the same way as was done in the formation of the U.S. Constitution. That's what works; it's the American System, the real American System.
Now, with these actions taken the transatlantic world can survive. Otherwise...
Right now, the amount of actual fungible credit represented by the existing debt of the United States, can not be paid, can not be sustained unless as under a Glass-Steagall provision.At that point, we now have an entity which is not money. It's a denoted debt of a credit system, not a monetarist system. The
debt of the United States no longer depends upon money. This is what the United States was constituted to be.

Adam L Silverman

VietnanVet: everyone in the US, as you are aware, has a dog in this fight. While yours, COL Lang's, and the other veterans, as well as Federal, state, and local retirees and eve tone retired whose paid into social security or Medicare or anyone on Medicaid, have immediate concerns, as do all currently serving personnel, military and civilian, in order to pay their bills, crumbling infrastructure, shuttering of schools, all of it will grind to a halt. Tomorrow I'll put up a post on what is happening in MN due to the shutdown there with links. This isn't going to be an inconvenience, it's not going to be an unpaid holiday for folks like me, rather its going to be what we understand of society coming to a grinding halt. It won't be a libertarian or objectivists fantasy come true, rather it'll be akin to what anarchists hope for.

Adam L Silverman

Mr. Wade: my understanding is that when done properly shorting helps the market maintain equilibrium. Unfortunately our financial sector has turned it into a way to play the market like a rigged casino game. Under regulation is as damaging as over regulation and we keep seeing it every day in how we deal with our financial industry.

highlander

Adam Silverman Phd,

A good reply. But there is in fact quite a bit of scholarly debate, about whether the government can in fact create lasting jobs.

As for the utility of governments in general, once you get past defence and law enforcement. Governments are a lot like anal openings. Stinky, high maintenance, and generally unpleasant, but unfortunately entirely necessary.

Augustin L

To Adam Silverman: It's been quite a while since most of the short selling being done on the market had nothing to do with price discovery. In fact the overwhelming majority of the short sales being done on the market today is called ''naked short selling'' the translation of this financial jargon means counterfeiting of shares. This practice has repeatedly been used to enrich hedge fund managers, it was also used as a financial weapon to target and destroy innovative companies who for a variety of reasons ran contrary to the interests of the all powerful financial oligarchy. This last financial crisis in particular was precipitated on two occasions by naked short selling first in the case of bear sterns and secondly in the case of lehman brothers, the SEC knows full well who were the culprits but turned a blind eye, it is clear that we now have complete regulatory capture. We do not have any financial press or any press for that matter. The fourth estate is dead, we only need to look at the shenanigans going on in London with regards to the News of the world to understand that these practices of the Murdoch empire were probably duplicated here by Fox news and newscorp (who currently owns the wall street journal) Adam here's the first link which explains how the hedge funds naked short sales accelerated the crisis: http://www.youtube.com/watch?v=xUKSU1qahgE&feature=related

http://www.youtube.com/watch?v=NcjssQSthNU&feature=related

And here's another link which gives an overview as to how short selling was used to destroy honest companies, real capitalism and capital formation in the United States:
http://www.youtube.com/watch?v=hH5cMQLJRUo

http://www.youtube.com/watch?v=4DFtikYeLkw&feature=related

So sad is this situation that the culprits are revered,honored and celebrated as cultured pillars of society. It certainly help when you've stolen a couple of billions here and there!!!

RLKirtley

Congressmen and Their STAFF can use indider information when trading!Just one of the ways they become rich!

confusedponderer

Mr. Silverman,
the shutdown is for one thing turning Minnestota into a dry state.

http://www.rawstory.com/rawreplay/2011/07/minnesota-running-out-of-booze-cigarettes-due-to-government-shutdown/

These people are perfectly willing to burn down the structure of government because they fervently believe something awesome will rise from the ashes. So they sing odes while the fire rages. It may just be something awesome that rises from the ashes, of the terrifying kind.

http://www.politico.com/news/stories/0711/58192.html

A shutdown includes putting an end to the generation of revenue, gives an interesting twist to "going to live with the money that is coming in the door."

http://www.politico.com/news/stories/0711/58192.html

That's just the thing those harebrained Arizona lawmakers did when they slashed the budget for tax collectors, saving $25 million - forfeiting $174 million in revenue raised. Strokes of genius like that and tax cuts then 'compelled' AZ into sell-offs and all sorts of cuts into social, medical, education and other government programs, incidentally, things that Republican ideologues wanted to see privatised a long time ago anyway.

http://harpers.org/archive/2010/07/0083023

Tax laws that are not enforced, for practical purposes cease to exist. Tea party breed Republicans are for law enforcement only to the extent that someone is about to go to jail in the end. Enforcement of other laws - like environmental regulation (only a tree hugging lefty can insist to be able to eat the fish that he catches), taxation etc. pp. - not so much. Nuts.

Good luck, America, you'll need it with such lunatics around in positions of power. May reason prevail.

confusedponderer

PS: What I am trying to get at is this: When Pawlenty says that government has to make do with what money comes the door he is clearly bullshitting his audience. He makes it sound as if revenue is something like manna in the morning.

That Republicans are deliberately destroying revenue sources for the government shows that they are acutely aware that government does not exist in a vacuum and that there is a clear link with revenue and the things and functions the government can and has to fulfil.

The point is that they are not about enforcing existing laws. They don't like a good deal of those and want to see them gone. So they are rendering the government deliberately incapable of enforcing all those laws that they don't like, and calling for a concentration on the basics because there isn't money for anything else (their policies and tax cuts make sure of that). Their idea of government is what was called "Nachtwächterstaat" in the 19th century Germany i.e. the 'night watchman state'.

http://en.wikipedia.org/wiki/Night_watchman_state

"A night watchman state, or a minimal state, is a form of government in political philosophy where the state's responsibilities are limited to protecting individuals from aggression, theft, breach of contract, and fraud. Therefore the only governmental institutions in a hypothetical night watchman state would be police, judicial systems, and the military, with some theories also including prisons."

If they were to discuss that openly with their electorate they would likely not find majorities. Thus the obfuscation and the bullshitting and the generation of budget crises, in order to get there anyway, in the emergency there is no other choice!

They are top down revolutionaries, who try to impose their ideas by deceit on the rest of society.

BillWade

"It’s no secret that members of Congress qualify as political insiders, but a new report strongly suggests that they also may be insiders when it comes to trading stocks.

An extensive study released Wednesday in the journal Business and Politics found that the investments of members of the House of Representatives outperformed those of the average investor by 55 basis points per month, or 6 [sic] percent annually, suggesting that lawmakers are taking advantage of inside information to fatten their stock portfolios."

http://www.economicpolicyjournal.com/2011/05/members-of-congress-are-exempt-from.html

laughing here, Martha Stewart just chose the wrong line of work.

Dr Silverman, I'm ok with short selling to "balance" things out but I feel it's often used to artificially keep a stock's price down. If we had a bit more transparency in the markets that would help enormously.

The Congress recently put 220,000 hard working Americans out of work when they outlawed online poker.
These folks were bringing in a lot of oversea money, how screwed up is that?


BillWade

Jose, I'd bet doughnuts to dollars (no, that's not mistake on my part), that Rep Cantor keeps a real close eye on his investments, it behooves hime to.

scott s.

OK, so he is hedging a rate increase in the long bond. Ho hum. Looking at the provided link, this investment represents a pretty small proportion of his portfolio. Compare for example an equal investment he has in Vanguard Ginnie-Maes. So I guess he also has a conflict in looking for continued low interest in mortgages?

Adam L Silverman

VietnanVet: Confused Ponderer beat me to it...and as I have a due out tomorrow, I'll put off a more extensive bit about the Minnesota madness until tomorrow night.

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