Too Big To Fail…Twice?

Nothing demonstrates where the world stood in 2008 as well as this image of Hank Paulson – then Treasury Secretary and former Goldman Sachs boss – kneeling before House Speaker Nancy Pelosi, literally begging her not to break up the proposed deal that would bailout the nation’s financial system.

Too big to fail Hank Paulson

This image isn’t exactly real. It’s from HBO’s adaptation of the excellent Too Big to Fail by Andrew Ross Sorkin.

But did it really? The thought of the ultimate Master of the Universe bowing to the Prada-wearing arch-enemy of Dubya, Paulson’s boss, is the most telling example of the insanity that was the few weeks in September 2008 when the world changed.

And change it did

America’s unemployment rate has shrunk from its peak of 19% in 2009 (thanks, Bureau of Labor Statistics), but millions still remain out of work. An untold amount of people are underemployed, working part-time at jobs beneath their skill level. Home foreclosures have slowed, but many communities remain ravaged by the vacant properties now owned by banks that just sit, empty, waiting for squatters and vandals to trash. No city better symbolizes all that was changed, for the worst, than Detroit – the home of the American auto industry and Motown that recently declared bankruptcy and appears like it will never come close to its former glory.

But for some, not much has changed. The CEOs and others that placed their huge bets on complex derivatives? They may have left their posts (although not all did), but they still managed to exercise golden parachutes raking in millions upon millions of dollars. They still get to enjoy the Hamptons estates and the Vail winter paradises. The 1% remains just that, and they’re even more ahead of the curve than they were before.

And the proposed legislative changes to prevent a meltdown like this from ever happening again? Well, good luck with that. The pride and joy of the Dodd-Frank reforms was the Volcker Rule. Named after former Fed Chairman Paul Volcker, this policy would prevent banks from making investment bets from their own money – the same type of bets that caused them to lose trillions of dollars and need bailouts in the first place.

Too big to fail Volcker Rule

But the Volcker Rule is far, far, far, far, far, far, far, far away from being finalized, five years after The Great Recession came into our lives. Five separate government agencies are charged with the task of creating the final language of the Volcker Rule. These agencies (the Securities and Exchange Commission, the Commodities Futures Trading Commission, the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency) all have their own agendas.

On top of that, they’re also mandated to incorporate public comment into their discussions. That public includes the investment banks they’re charged with regulating. Those banks and their associations and lawyers have flooded the agencies with their (many times legitimate) concerns.

It’s taken forever and we’re nowhere near done.

But on the bright side, the stock market has returned to glorious heights, with the Dow recently eclipsing 15,600 and other indexes also surging. But at the same time, Main Street – the street you and I most likely walk on – still struggles.

So, what can we learn from this?

Well, it’s up to us to get and stay educated on investing our money. Investing is and will forever be a great, great thing. But it’s hard and scary and intimidating. Too many people jump into the fray, randomly picking a few stocks without knowing a thing about fundamental analysis or technical trading factors. Too many people don’t know the difference between actively managed mutual funds and index funds and how that affects the bottom line. Too many people trust the hot stock picks of whatever analyst wormed his or her way into getting face time on CNBC as opposed to really sitting down to do the research or finding trustworthy, smart people who have already done the work.

Just today, a reputable economist who had predicted the financial crisis, Manuel Hinds, took measures that signified his concerns for the short-term economic future. If we are to face another “2008”, we better get ourselves protected. And the best form of protection is knowledge.

January 2, 2021 Update: We have just announced our BEST STOCK NEWSLETTER of 2020 AWARD!

CLICK HERE to find out which stock newsletter was up 78% in 2020 (and whose 2019 picks are now up 113%).

*** Our Award for BEST STOCK NEWSLETTER of 2020 ALERT ***

Updated January 2, 2021

At WallStreetSurvivor, we subscribe to dozens stock recommendation and advisory newsletters. There is ONE newsletter that is constantly outperforming all of the others--The Motley Fool Stock Advisor.

Five of their 2020 stock picks have doubled and the average return of all 24 of their stock picks for 2020 is up 78%!

We have been tracking ALL of the Motley Fool stock picks since January 2016. That's 5 years and 120 stock picks. As of Friday, January 1, 2021 the Motley Fool's January stock pick (TSLA) is up 720%, their March pick (ZM) is up 172%, their April pick of SHOP is up 226% and their June pick CRWD is up 120%; and another two have more than doubled. In addition, 10 of their 2019, 12 of their 2018, 11 of their 2017, 15 of their 2016. Most impressively, over the last 5 years that we have been tracking every recommendation, their average stock pick is up 209%--tht means over the last 5 years their stock picks, on average, have TRIPLED!

Now no one can guarantee that their next picks will be as strong, but our 5 years of experience has been super-profitable. The important thing about the Fool stock picks is you have to buy them the day they are recommended because they usually pop 5-10% in the first 72 hours after the release their recommendation. You sure don’t want to risk missing out on their next pick.

Normally the Fool service is priced at $199 per year but they are currently offering a NEW SUBSCRIBER DISCOUNT that allows you to get theiir next 24 stock picks for just $99/year. HERE is the LINK to visit their New Subscriber Discount page.

CLICK HERE to get access to all The Motley Fool’s Stock Picks and their next 12 months of picks for just $99 per Year! 



GET UP TO $1,000 IN FREE STOCK

WHEN YOU OPEN A ROBINHOOD BROKERAGE ACCOUNT

Robinhood was the first brokerage site to NOT charge commissions when they opened in 2013. They just past 10,000,000 accounts and to celebrate they are offering up to $1,000 in free stock when you open a new account.

Here’s the details: You must click on a special promo link to open your new Robinhood account. Then when you fund your account with at least $10, you will receive one stock valued between $5 and $500. Then, you will get a link to share with your friends. Every time one of your friends opens an account, you will receive another free stock valued between $5 and $500. Click here to learn more about this Special Robinhood offer.

Claim your free stock NOW (before it’s too late)



Comments are closed.