morphing capital: December 2011

Saturday, December 10, 2011

The Street

I wrote this poem/song lyrics in September 2009, eight years after the attacks of 9-11. The Crisis of Finance Capital was still in the headlines. Stock Markets had started to crash in October 2008, with no bottom in sight. Credit and commerce froze, although war funding continued, unaffected. The government & the Federal Reserve responded with TARP, interest rates near zero, and various guarantee programs available only to the big financial institutions. The S&P 500 index hit bottom in March 2009. Money continues to flood Wall Street while no effective programs reach the devastation in the rest of the country.

On nine-eleven Wall Street fell

People burned, people jumped

Bodies rained -- on the Street

Men and women went to War

Support our Troops

Free Markets cannot die they said

Traders traded, brokers brokered

Finance Capital revived, Shadow Bankers thrived

CDOs SIVs ABSs flowed throughout the globe

Bonuses rained -- on the Street

Men and women fight in War

Support our Troops

Overleveraged credit froze

Global gears seized up

The lubricant of money flowed no more

Brother -- lend me a dime

Uncle Sam -- lend me a billion

Men and women fight in War

Support our Troops

The death of Finance we must forestall

Not the time for strings or regulations

Taxpayer funds flood the Street

The gears unlock, credit flows, and yes, of course

Bonuses rain again -- on the Street

Brother lend me a dime

I paid my taxes, my mortgage I cannot pay

Men and women die in War

Support our Troops

Support the Street

Why Morphing Capital

"The times they are a changing"
Bob Dylan

As an individual equities trader since 1985 (mostly part-time), I've been through several business cycles, through market tops and bottoms. I believe this time is different. (And yes, I'm aware of the overuse of this phrase) My belief evolved from my participation in the markets and my observation of the world around me.

Capitalism I believe, has entered a different phase and cannot be modeled on systems of the past decades. First, we had Industrial Capital, which gave us the industrialization of England, Europe, the US and the rest of the industrial world. It gave us the Equities Bull Markets from the mid 30's to the late 60's. A change came in the 70's. Making things, became less profitable, i.e. Industrial Capital's rate of profit began to decline, despite the squeeze it put on labor in the industrialized world. Globalization (use of cheap labor & resources, new markets) prolonged this phase but the rate of profit continued its decline. Then, with deregulation in the 1980's, came Finance Capital. It gave us a booming stock market from mid 80's to 2000 via buyouts, increased leverage and a private equity boom. Capital's squeeze of Labor intensified. It's last hurrah came with the mortgage securitization boondoggle, which pulled in the people who had avoided the dotcom bubble but could not resist nodoc loans. In the crash of 2008, government bailouts transferred the private losses of Finance Capital to government balance sheets in an attempt to stabilize it. Now, Finance Capital (money making money) is imploding and taking down the sovereigns with it. Who or What is left to be exploited?

The purpose of this blog is two fold:

First -- my selfish need to understand. My trading, my research (see book list) and readings of other blogs (see blog list) are swimming around in my brain and I need a place to organize my thoughts and synthesize my ideas.
Second -- I need feedback. My hope is that the questions raised here will stimulate others and start a conversation.

Disclaimer: I am not a trained economist nor a professional trader.