That's not over. That's why the FBI is currently investigating the Wall Street banks and the hedge funds for illegal insider trading.
The man behind the investigation, U.S. Attorney Preet Bharara in Manhattan, has said the insider trading he's after appears to be "rampant" and has compared the practice to performance-enhancing drugs. Subpoenas from his office have gone out to giant firms, including mutual fund managers Janus Capital Group and Wellington Management. Fox Business News said Chicago hedge fund operator Citadel also drew a subpoena. None of these firms has been charged.But it's still a good idea to buy stocks in the long run. They have on average gone up faster than bonds, right? According to Wall Street Jurnal's Paul B. Farrell that has not happened in the last two business cycles. That's because the hedge funds, Wall Street banks and wealthy investors have sucked all the profit out of stocks before the average investor can possibly buy them.
The breadth of the subpoenas suggests the probe could involve many mutual funds, hitting a sector that's always had a reputation of conservatism. It may change the minds of investors who still think the market operates equitably for all.
Paul Farrell offers this advice to investors. Stocks are a sucker's bet being offered by Wall Street.
- American stocks are a high-risj sucker bet.(America’s divided into two stock markets: one for Wall Street’s rich insiders, another for Main Street’s suckers: “Investors, as opposed to traders, buy stocks in companies whose profits they expect to rise. The conventional wisdom says stock prices will follow profits up, but over the last two business cycles, that simply has not happened.” ) Main street has figured out they are the suckers that the Wall Street bankers are fleecing. They aren't going back into the markets any time soon.
- New ‘big short’ dead ahead: Derivatives con game will crash again (Wall Street’s sneaky and will do anything to keep the derivatives casino running hot. Insiders “have no intention of ceasing their prop trading,” according to Lewis. “They are merely disguising the activity, by giving it some other name.) The derivitive game is goning to crash again.
- Hedge funds shorting China: Warning — U.S. faces collateral damage (China may well crash first. Fortune’s Bill Powell interviewed hedge-fund kingpin Jim Chanos of Kynikos Associates, who’s “betting that China’s economy is about to implode in a spectacular real estate bust.” China is “an economy on steroids.” In a Charlie Rose interview, Chanos said “China’s on an economic treadmill to hell.” If so, then all of Wall Street’s highly promoted emerging markets are also sucker bets. )
- New insider-trading indictments killing Main Street confidence (Investor distrust of Wall Street’s casino will skyrocket in 2011. Before the elections in November, an AP-CNBC poll found 61% of investors had already lost confidence in the market, thanks to extreme volatility; 55% believe the market’s rigged to favor insiders. )
- Banksters’ perfect gambling record proves stocks a rigged game (Morici says “J.P. Morgan and Bank of America went through the entire third quarter without a negative trading day, no losing days on proprietary trades. Unless you believe in perfection, something stinks about the information they are using. If someone is winning all the time, then someone else is losing. That’s the ordinary investor. Stocks have become a rigged game.)
- Wall Street is socially worthless, existing only to make insiders rich (John Cassidy writes: “Much of what investment bankers do is socially worthless.” Wall Street exists solely “to make itself very, very rich.” )
- The Fed is America’s worst nightmare, a $3.3 trillion moral hazard (Moral hazard simply means no consequences for Wall Street’s complicity in triggering the 2008 catastrophe. As a result, Wall Street insiders came away believing they can take bigger and riskier bets in the future because they will get away with it next time, too. )
- Wake up to a new normal: no growth, deflation (economist Gary Shilling, a longtime Forbes columnist, warns: “Real economic growth rates of 2% or less are likely through 2011.” But we need 3.3% just to keep up with population growth.
So “high unemployment remains a political problem … with weak economic growth, looming deflation, and the dollar and Treasurys remaining the safe havens in a sea of global trouble.”
Warning: America’s new era, featuring no growth, deflation and a jobless recovery, will continue for years, resembling Japan over the past two decades. Worse, brutal deficit cuts will trigger riots, as in England, France. )
- Privatize Social Security: New GOP Congress loves dumb ideas. (Wall Street wants to get its hands on $20 trillion of your retirement money to lose in the next crash they create.)
- Warning: Wall Street will lose another 20% of your money by 2020.
Why is Wall street permitted to run such crooked markets? Because Wall Street belongs to the ultra-wealthy, and so does the Republican Party. The wealthy do nothing for the American economy except work to suck it dry so that they can invest the funds they steal in foreign countries where the return on investment is much higher. They are happily foreclosing on homes they don't even own. Would you buy financial products from someone this crooked or careless? You shouldn't.
Just for fun, read this article on American Wealth, Income and Power.
This brings me back to the question I asked in the previous post. Does America really need an extremely wealthy class for anything at all? They are parasites who add no value to America. America's wealth and power is and always has been built on the work of the workers and the middle class.