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February 15, 2009

What Would Andrew Jackson Do?

Friedrich von Blowhard writes:

Dear Blowhards,

Simon Johnson was formerly the chief economist at the IMF. As a consequence, he’s had experience with governments all over the world, including many that are basically run by small groups of wealthy oligarchs. Having turned blogger, Mr. Johnson recently wrote a posting, High Noon: Geithner v. The American Oligarchs, in which he points out that the way the U.S. government is responding to the banking crisis is looking awfully Third-World-ish.

Mr. Johnson was interviewed by Bill Moyers on PBS. You can read the transcript or listen to the interview here.

Below are some portions of the interview that highlight for me exactly how critical the current situation will be in determining what kind of country we want to have going forward:

BILL MOYERS: Oligarchy is an un-American term, as you know. It means a government by a small number of people. We don't like to think of ourselves that way. …Are you saying that the banking industry trumps the president, the Congress and the American government when it comes to this issue so crucial to the survival of American democracy?

SIMON JOHNSON: I don't know. I hope they don't trump it. But the signs that I see this week, the body language, the words, the op-eds, the testimony, the way they're treated by certain Congressional committees, it makes me feel very worried.


BILL MOYERS: Geithner has hired as his chief-of-staff, the lobbyist from Goldman Sachs. The new deputy secretary of state was, until last year, a CEO of Citigroup. Another CFO from Citigroup is now assistant to the president, and deputy national security advisor for International Economic Affairs. And one of his deputies also came from Citigroup. One new member of the president's Economic Recovery Advisory Board comes from UBS, which is being investigated for helping rich clients evade taxes.

SIMON JOHNSON: …I don't think you have enough time on your show to go through the full list of people and all the positions they've taken.… I think these [Wall Street] people think that they've won. They think it's over…They think that we're going to pay out ten or 20 percent of GDP to basically make them whole. It's astonishing.

BILL MOYERS: Why wouldn't they believe that? I mean, when I watched the eight CEOs testify before Congress at the House Financial Services Committee earlier this week, I had just finished reading a report that almost every member of that Committee had received contributions from those banks last year. I mean in a way that's like paying the cop on the beat not to arrest you, right?

SIMON JOHNSON: I called up one of my friends on Capitol Hill after that testimony, and that session. I said, "What happened? This was your moment. Why did they pull their punches like that?" And my friend said, "They, the Committee members, know the bankers too well."

BILL MOYERS: Last year, the securities and investment industry made $146 million in campaign contributions. Commercial banks, another $34 million. I mean, American taxpayers don't have a flea's chance on a dog like that, do they?

SIMON JOHNSON: It a massive problem, obviously…these people are throughout the system of government. They are very much at the forefront of the Treasury. The Treasury is apparently calling the shots on [the Obama administration’s] economic policies. This is a decisive moment. Either you break the power or we're stuck for a long time with this arrangement.

I think it is time for us to recall a bit of our own history. This is hardly the first time the U.S. government has had to deal with economic oligarchs. The White House web site (of all places) succinctly reminds us of one of those conflicts in its biography of Andrew Jackson:

The greatest party battle centered around the Second Bank of the United States, a private corporation but virtually a Government-sponsored monopoly. When Jackson appeared hostile toward it, the Bank threw its power against him.

Clay and Webster, who had acted as attorneys for the Bank, led the fight for its recharter in Congress. "The bank," Jackson told Martin Van Buren, "is trying to kill me, but I will kill it!" Jackson, in vetoing the recharter bill, charged the Bank with undue economic privilege.

I think it is high time we started to demand a little of Old Hickory’s toughness out of our extremely flabby political leadership. If we don’t demand it now, we had better get used to doffing our caps in the presence of our Wall Street betters.

In the spirit of Smokey the Bear, “Only you can prevent your own servitude.”



posted by Friedrich at February 15, 2009


It may not be the Chicago school of economics but its the Chicago way,
what are you prepared to do?

Posted by: slumlord on February 15, 2009 6:47 AM

I responded with a story about another oligarchy of considerable importance to Americans: the Mexican drug insurgency that we have created with the War on Drugs.

Posted by: Daniel Newby on February 15, 2009 9:35 AM

Okay, I'm completely confused now. Didn't Wall Street signal distress at the vagueness of Geithner's comments? And aren't Democrat congresscritters scapegoating bankers? So how is the gummint the tool of fat cats? Don't get me wrong, I think we'd be better off if gummint was the tool of the moneyed interests. But all I see coming out of Obama & Co. is the standard socialist assault on malefactors of great wealth.

Posted by: ricpic on February 15, 2009 9:59 AM

To date the partisan wrangling has remained the same old same old … does the federal government use deficit spending to pump cash into the system through funding various projects and programs (Dems say yea, Pubs say nay) or through tax cuts, which most benefit higher end wage earners (Pubs say yea, Dems say nay). So, they split the difference and once again the oligarchs win.

The conundrum we face is how can the new administration, led by a President predisposed toward pragmatic consensus building and proving that he is NOT a dangerous radical, tackle the banking oligarchs without triggering a backlash among the citizens who voted for his opponents … who kept warning that a vote for Obama was a vote for socialism? Talk about a rock and a hard place!

As an aside to indicate how rocky the rock is, after the election and before the inauguration we had a local news item about a small town convenience store where some of those “real Americans” VP candidate Palin kept referencing modified their buck-a-date pool to predict OBL’s capture or assasination and added Obama’s assasination to the mix. How does a leader facing vehement oppostion to his supposed "hidden radical socialist agenda" by a significant minority of the citizenry go up against the entrenched oligarchy without risking an ugly backlash?

Johnson’s blog posting linked to above includes this suscinct passage that further explains what we’re up against.

“The elites who run the US banking industry have had a great run of economic good fortune. They used this wealth to further strengthen their political power, both through donations to politicians of almost all stripes and more broadly through taking positions of formal and informal influence throughout the executive and legislative branches.”

Absent a massive change of public opinion about how we react to terms like “free market”, “regulation”, “nationalizaton”, and so forth we’re in for a very bumpy ride, so buckle up.

Posted by: Chris White on February 15, 2009 10:44 AM

I'm actually willing to give Geithner the benefit of the doubt for hiring financial industry insiders. While there is the question of divided loyalties, they also are the people with the best inside knowledge, who know what the industry most needs.

Posted by: Peter on February 15, 2009 12:32 PM


Answers to your questions:

#1) If by "Wall Street" in this context you mean the stock market, it was distressed by Geithner's "plan to come up with a plan." This is because the current situation, in which the shadow banking system (securitization) has stopped working and the largest financial institutions representing a majority of the remaining lending power of the economy are paralyzed by the masses of bad assets on their balance sheets, is not good for the American economy or the prospects of the companies that do business here. If by "Wall Street" you mean the management of the largest financial institutions, I think they are probably quite happy with Mr. Geithner's proposal.

#2) Congressional Democrats have said a few mild critical remarks about the banking sector and its leaders, but have done almost nothing in any substantial way to harm their interests. While approving of the transfer large sums of taxpayer money to these institutions, there has been no serious attempt to insist on even symbolic change at the top of such organizations. Certainly there has been no serious curtailment of the vast sums these oligarchs extract from their organizations; all such restrictions heretofore announced have merely shifted such massive payouts slightly into the future. If this is your idea of hostility, I can only say that I would personally welcome a summons before Congress on the management of my own business.

#3) The government is the tool of the fat cats because it has been and remains so nice to them. It has allowed them to make large, if illusory profits for many years by labelling their institutions 'too large to fail', a handy dandy little insurance policy provided by you and I that has cost the financial institutions in question precisely nothing except some campaign contributions and lobbying costs (a relatively minor cost of doing business). The government, drawing on its ability to tax future generations, is making good on that insurance policy at a likely cost of trillions of dollars.

#4) I would think a substantive policy attacking these 'malfactors of great wealth' would involve, at a minimum, taking their bankrupt businesses into FDIC receivership, firing all the senior staff, wiping out their stockholders and creditors (that is what happens in bankruptcy, remember) and then selling them off in chunks that ARE NOT 'TOO BIG TO FAIL.' If the Obama Administration does not take these obvious and practical steps, but instead continues to provide guarantees and cash without demanding any sacrifices from the senior management, shareholders and bondholders of these institutions, it is actually serving as their enabler.

You seem to be confusing talk (directed at the suckers who will be paying for all this, i.e., the taxpayer-voters) with action. I see no action. Do you?

Posted by: Friedrich von Blowhard on February 15, 2009 12:32 PM


Hysterical. Hurry up and wait! If Obama takes any more time in signing this bill, the chance of a backlash only grows, right Chris?

Posted by: Day Off on February 15, 2009 12:52 PM

Chris -- The idea that bliss would be ours if only the Republicans would shut up and get behind Obama is pretty funny. Which isn't to say that the Republicans don't richly deserve to be pelted by spitballs. But 1) You really think Obama's program is guaranteed perfection itself? Care to explain why? 2) You'd really expect politicians to NOT behave like politicians? Or only Republicans, when a Dem is president?

The idea that Obama (prep school, Harvard Law, surrounding himself with Clintonites from similar backgrounds) is a righteous badass eager to wrestle down the oligarchs is even funnier.

But I could be wrong. Maybe Obama made it thru prep school, Harvard Law, and the school of Chicago politics without becoming part of the establishment. And maybe he has surrounded himself by ex-Clintonites precisely because he's such a renegade.

We shall see.

Posted by: Michael Blowhard on February 15, 2009 1:34 PM

Maybe you could lead the charge yourself, Fred, if you weren't too occupied with the hobbies of being voyeur, blogger and occasional political pundit. I've also noticed a tendency among some of your peers to unearth only as much information necessary to make someone you don't like look bad, conveniently ignoring information that might be favorable. What's most frightening to me is that this pursuit among erstwhile vital and successful men demonstrates just how fast the lack of real responsibilities or the need to sing for your supper can degenerate intellect as well as character. (Also, makes one wonder if some of you guys aren't projecting your own flaws onto others.)

Scoff all you want, I guess. Why should you care when you won't be around for the impending disaster? Better yet mock people you believe or at least want to believe are facing destruction. Sour grapes of wrath from someone who won't share that future, good or bad, eh?

I won't allow bitter predictions that are more curses than insightful admonitions to affect me. The beast that is the US government, corrupt and inefficient as it is, is resistant to influence good or bad. Besides, Obama's administration is showing some surprisingly good judgment wrt to the auto industry bailout. This gives me hope that not every decision he makes will be bad. And, alas, despite your advanced age and supposed erudition, your wisdom in this matter is unlikely to be any greater than mine in this matter. Only time will tell but probably only one of us will still be around when the answers are revealed...

Posted by: shiva on February 15, 2009 1:36 PM

"I'm actually willing to give Geithner the benefit of the doubt for hiring financial industry insiders. While there is the question of divided loyalties, they also are the people with the best inside knowledge, who know what the industry most needs."

Is this a serious comment? Because if it is, please kill yourself now and stop wasting air that others can breathe. You're willing to give a tax cheat and industry insider the benefit of the doubt? WTF? And you're also concerned about divided loyalties? Let me guess, like whether Geithner is loyal to his Wall St. pals, his own personal financial aggrandizement or the current administration that supports more taxpayer money for the previously mentioned Wall St thieves? And what does Geithner thinks the industry needs? Why more taxpayer money! Of course! What could be the problem with any of this?

Posted by: Anonymous on February 15, 2009 1:40 PM

Shiva -- Congratulations on being younger than we are. That's a big accomplishment that you deserve loads of credit for. Now, what were you saying?

Posted by: Michael Blowhard on February 15, 2009 1:41 PM

Dear Shiva:

I'm a little puzzled at the nature of your criticism. Is it because I'm older than you (probably true, I'm 54) and you think this means I don't care about the future? I have three children and give far more thought to the future (granted, their future) today than I did to my own future when I was your age. I also, quite sadly, do have to sing for my supper, in the form of running a business with some 30 employees, an activity that keeps me from being more than an occasional contributor here. This form of singing will have to provide my supper for at least the next decade, so I would say that the idea of watching our leaders and kleptocratic elites maneuver our economy into a Japan-like Lost Decade for their own fun and profit doesn't exactly cheer me up.

By the way, if you have any actually substantive comments to make, pro or con, feel free to jump right in.

Posted by: Friedrich von Blowhard on February 15, 2009 1:57 PM

Michael – you really need to re-read my comment. I see no new ideas from the Republicans, merely political posturing and policies serving certain interests of the oligarchs. I see no new ideas from the Dems, merely political posturing and policies serving other interests of the same oligarchs. I see no perfection in Obama's plan, merely status quo pragmatism. I just meant to pose the question; what did we really expect?

Look back through pre-election, pre-inauguration, comment threads here on 2Blowhards; it is easy to find plenty of spewing about Obama being a radical socialist. Now some of the same posters dun him as an elitist tool of the oligarchs. Where's the consistency? What would happen if he were to offer a plan that nationalized certain TBTF banks? Would he be hailed as a tough leader serving the taxpayers or lynched ... figuratively if not literally ... as a Chavez wannabe?

To repeat, Obama is between a rock and hard place ... as are we all.

Posted by: Chris White on February 15, 2009 2:53 PM

Chris: Absent a massive change of public opinion about how we react to terms like “free market”, “regulation”, “nationalizaton”, and so forth we’re in for a very bumpy ride, so buckle up.

Chris, for all your being Mr. Progressive around here, you seem to be the commenter most susceptible to lobbyist and media propaganda. "The American people will never tolerate nationalization, regulating banks, or 'buy American'!" Whatever, Chris. (P.S. Presidential assassination fantasies among dumbasses are not a new fashion, Chris; they came into their current vogue among that select, bipartisan segment of the body politic c. 2000.)

Dude, you are in one greenly progressive utopian state of denial.

Shiva: You're giving Chris a real run for his money in the "saying a whole buncha nothin' in a weighty tone" competition.

Also, like Anonymous @1:40 PM said.

Posted by: Moira Breen on February 15, 2009 3:19 PM

I said: Also, like Anonymous @1:40 PM said.

Like Anonymous said, that is, except for the part about "[Peter] please kill yourself now and stop wasting air that others can breathe." My desire to see Peter beaten about the head and neck for his opinions is metaphorical merely.

Posted by: Moira Breen on February 15, 2009 3:24 PM

"I see no perfection in Obama's plan, merely status quo pragmatism."

More bailout money for the same assholes and keeping the real estate bubble inflated?! Shit, you're making Peter look intelligent!

Posted by: Compton on February 15, 2009 6:40 PM

More shocking news:

A hard place indeed, Chris.

Posted by: Anonymous on February 15, 2009 6:52 PM

Point #4 of Friedrich's response (to ricpic's pro-business comment) lays out a definite, pro-business course of action. At age 59, I'm still young enough to see the sense of it, and not to fear the associated risks. It's change I can believe in.

Posted by: Robert Townshend on February 15, 2009 8:03 PM

The congressional grilling of the CEOs was a particularly hilarious bit of theater.

Obama is one of the principal villains of the mortgage fiasco, through his alliance with ACORN. The very CEOs Obama and Congress were lecturing filled the coffers of Obama's presidential campaign.

And, finally, Obama's "bailout" is payback to those same CEOs for filling his campaign coffers.

A fine bit of theater, a diversionary tactic. And, it worked. Chris Whiter-than-thou swallowed it hook, line and sinker. Obama is a genius at swindling the SWPL crowd. Of course, the SWPL crowd wants to be swindled. Like our Whiter-than-thou comrade, all that matters to them is that they feel holy and pure.

Sanctimonious ideals are everything. Nothing that happens in reality is of any importance.

The cult of extended adolescence has devolved into suicide. Our lifelong adolescents never grow out of teenage narcissism. Proving to the adults that they are not motivated by such grown up necessities as self-preservation, profit and group security becomes the obsession of the life-long adolescent. He'd rather commit suicide than admit that the compromises of the adult world are inevitable.

Posted by: Shouting Thomas on February 15, 2009 9:51 PM

Shiva: You're giving Chris a real run for his money in the "saying a whole buncha nothin' in a weighty tone" competition.

Since Chris is both intelligent and artistic, I'm sure he's hot, so I'll take that as a compliment.

As for you blowhard chicken littles, whateva. And remember to get the number candles on your next b-day cake so you won't cause a house fire.

Posted by: shiva on February 15, 2009 10:01 PM

"Since Chris is both intelligent and artistic, I'm sure he's hot, so I'll take that as a compliment."

All that from an internet post!

Posted by: Crystal Ball on February 15, 2009 11:43 PM

A few months back the criticism of Obama was that he's not merely a liberal Democrat but is really a closet radical with ties to domestic terrorist William Ayers et al and his election meant he would attempt to move us toward socialism. Now the criticism is that he's a creature of the banking oligarchs, refusing to make the tough decisions like nationalizing or breaking up the TBTF banks. So, where is the consistency?

When the Shouting One gets his knickers in a knot trying to have it both ways, with the problem being ACORN and government interference in the markets ... AND the problem being the alliance between the financial sector CEOs, Obama and Congress ... I scratch my head and chuckle. Where is the consistency?

Is it only my imagination, or hasn't ST lectured me in the past about how CEOs are the noble creators of jobs and wealth when I've criticized our current distortion of capitalism? You know, when I've said things like global corporatism doesn't care about America or American citizens, just their own power and profits.

I continually refer to the major parties as the Good Cop/Bad Cop parties, does this sound like I've "swallowed hook, line and sinker" the completely predictable efforts of the elites to retain the status quo? I just didn't expect anything else under Obama and still suspect we're better off than we would have been had McCain won the coin toss.

And, while I appreciate shiva's compliment, I hope she knows that the candles on my next birthday cake will require an on site fire marshal.

Posted by: Chris White on February 16, 2009 8:34 AM

shiva, you make the stupidest, most useless comments I've ever seen on 2Blowhards. Nothing of value at all. I started reading your comment, not knowing it was from you, and thought, "This string of insults, devoid of sense, insight, wit or style, looks like the kind of shite spewed by that waste of protoplasm that calls itself shiva." I get to the end of the comment, and whose moniker do I see?


An immodest name for a nullity like you. So let me paraphrase the self-description of the Destroyer, tamping it down to suit your mediocre level:

You are created shiva, despoiler of words.

What an accomplishment.

Posted by: PatrickH on February 16, 2009 10:02 AM

"I continually refer to the major parties as the Good Cop/Bad Cop parties, does this sound like I've "swallowed hook, line and sinker" the completely predictable efforts of the elites to retain the status quo?"

Yes it does. You need to make up your mind. Read your comment from Feb. 15th again. Maybe that was another Chris White?

Posted by: Anonymous on February 16, 2009 10:59 AM

Chris White-than-thou, I have no ideology, and thus no need for "consistency," since I am not peddling a world view. I'm looking at the world, amazingly, as it exists on an individual level. On an individual level, I see human corruption as the overwhelming issue. We're all the same in that regard. No matter who holds the reigns of office, he or she will steal as much as possible and hand out as many favors to friends and allies as possible.

Human corruption cannot be fixed. So, the problem is how to minimize the stealing and influence peddling. The most corrupt method is Utopian ideology, of which you are admitted adherent. This method is ultimately corrupt because it depends on re-making humans in the ideal. You are a prime example of this delusion. You have deluded yourself into thinking that you would not steal and hand out goodies to your allies if you held the reins of power. You would. In fact, you would be even worse than Obama or Bush.

Since you believe so fervently in your own holiness, you believe that we just need to bring holiness into the public sphere. This was the great political sin of the 20th century.

I wasn't peddling a grand conspiracy theory. I keep trying to phrase this in a way that you can understand, but your halo keeps blinding you. The "good intentions" mania of the diversity campaign created the ideal conditions for the grand theft that Obama and his cronies are pulling off.

You are the problem, Chris Whiter-than-thou. Multiple your childish halo preening by millions of like minded narcissists and you create the conditions for the public delusion we are now experiencing. Along with the hordes of SWLP halo wearers, you were ripe for a rip-off.

Whatever faults he may have, Obama is a genius at playing your kind. I dread to see where this is leading us. I expect the worst.

Posted by: Shouting Thomas on February 16, 2009 11:26 AM

Couldn't agree more with Friedrich's response to ricpic, particularly the solution to this mess he proposes in #4 of his response.

I also agree with Chris in that pre-election, the criticism against Obama was that is a radical socialist, while post-election, the criticism against him is that he's more of the same. Which is basically true, but were he to attempt to enact the policies put forth in Frederich's response to ricpic, oh the cries of "Socialist!" we would be hearing. Of course, that shouldn't stop him from enacting them, but unfortunately, I'm fairly certain he won't do anything even close.

Posted by: JV on February 16, 2009 12:33 PM

I also agree with Chris in that pre-election, the criticism against Obama was that is a radical socialist, while post-election, the criticism against him is that he's more of the same.

Is there a point in here somewhere, guys? Are you suggesting that it is not possible for someone to both a) espouse extreme socialist views, and b) be in the pockets of the usual special interest suspects? Because as far as I can see, that's a simple, non-contradictory description of things as they are. (What, you think socialist countries don't develop entrenched interest groups that seek to manipulate politics for their own benefit?)

Are you interested in what's actually going on, in a way that matters, or would you rather just sit around enjoying utterly irrelevant quibbles about un-named persons who have allegedly restricted all their pre-election criticism to "socialist!" and their post-election to "tool!"? And I dunno about you, fellas, but I sure recall running across boatloads of commentary, pre-election, keeping tabs on which interests were dumping money into Obama's campaign. How'd you manage to miss all that?

Which is basically true, but were he to attempt to enact the policies put forth in Frederich's response to ricpic, oh the cries of "Socialist!" we would be hearing.

And who are these people who would be crying "Socialist!" at any attempt to put these decidedly non-socialist remedies into motion, rather than the decidedly socialist (for the malefactors) "remedies" that Obama is still promoting? Why, the media shills, and the Congressional shills, who shill for those same interests who bankrolled Obama into power. Some hysterical WSJ editorials and John McCain reading his prepared K Street press releases on the Senate floor are sure signs that the public just wouldn't tolerate these pirates getting what was coming to them! In the face of that poor honest Barry couldn't possibly lead in another direction! Uh huh.

Of course, that shouldn't stop him from enacting them, but unfortunately, I'm fairly certain he won't do anything even close.

'Cause God knows his hands are tied by the public's deep conviction that letting failures fail and take their licks is "socialism".

Posted by: Moira Breen on February 16, 2009 5:51 PM

so·cial·ism [ sṓshə lìzəm ] or So·cial·ism [ sṓshə lìzəm ]


1. political system of communal ownership: a political theory or system in which the means of production and distribution are controlled by the people and operated according to equity and fairness rather than market principles

2. movement based on socialism: a political movement based on principles of socialism, typically advocating an end to private property and to the exploitation of workers

Let's see now. Hundreds of billions to banks and speculators. Tens of billions to Detroit. No regulatory strictures, no ownership stakes for the taxpayers.

Socialism? Nope.

Posted by: Peter L. Winkler on February 16, 2009 7:56 PM

Hundreds of billions to banks and speculators. Tens of billions to Detroit. No regulatory strictures, no ownership stakes for the taxpayers.

Socialism? Nope.

Damn straight, Winkler! That's not socialism at all. In fact, it sounds more like...fascism! Liberal fascism!

That's it: Obama's stimulus package is liberal fascism!

Of course, it's not any -ism at all. We're way beyond ideology with this. Let's just can the talk of -isms, shall we, and instead reach back through time into our classical political philosophy vocabulary, and dust off that old warhorse -archies (and I don't mean the "Sugar Sugar" band). -archy comes from the Greek word for (among other things) "power" and (I believe) "beginning" or "source". So let's get classical, shall we? Let's look at the power behind all this, behind the left, behind the right, behind it all, the source or beginning of the nastiness of today.

So which -archy is it? There's one -archy in particular that's been mentioned here many a time, and which fits the bill as the best single word to capture what's happening in this big old ugly world of ours. Which -archy is that I (don't) hear you ask?

Hint: It begins with "oli-" and has a "g" in it somewhere.

Posted by: PatrickH on February 17, 2009 9:22 AM

Just want to run by y'all an idea I heard about this mess... to follow the money. But not the money trail from bankers to DC-- instead the trail that leads to the bankers. The money comes from... us.

A) you have all your money in one major bank;
B) you have money in a retirement or pension account and you don't know exactly how much is paid in management fees;
C) you ever pay for financial advice other than a few hundred bucks on books (if you have a high-end 1% advisor, or pay more than $10 per trade, you're a superdupe);
D) you don't know about random walk theory and related key statistical observations about the stock market and traders;
E) you've never read anything about the science of advertising, especially as relates to the financial industry...

Then you are part of the problem. In the same way that a gullible mark is, in some real way, partly responsible for being conned.

Some prescriptions:
A) move some small fraction of your money to a smaller bank;
B) ask the manager of your retirement plan for a complete accounting of fees (then ask every month, as they will never fully answer);
C) buy a few $20 books on the stock market and then never pay for stock market advice again;
D) educate yourself: use books, classes, or ask your local expert;
E) same as (D).

Posted by: I_have_seen_the_enemy on February 18, 2009 3:09 PM

Sound advice, I_have_seen... Question: which books on the market would you recommend? There are some pretty bad twenty dollar books out there in all probability. Any really good ones?

Posted by: PatrickH on February 18, 2009 6:05 PM

To: I_have_seen

The trouble with financial advisors isn't so much that you can do it just as well yourself but that you can't tell whether or not the advisor is more competent than you. At the very least, if you have a lot of money, you're going to need an accountant.

The $20 books aren't a bad idea though. Best to make the financial pros think you know something about what they're supposed to be doing with your money.

BTW, are you a proponent of the random walk theory?

Posted by: misty on February 18, 2009 7:49 PM

"are you a proponent of the random walk theory?"

Mostly. When it comes to stock brokers, talking heads or newspapers, hedge fund managers, amateur traders, or anybody else with conflicting incentives (i.e., pretty much everyone), then - totally, yes.

Not only can you not tell whether *anyone* is more competent than you, but most pro's have a powerful incentive to say (and often believe) they are.

I understand that from time to time, academics find and document market inefficiencies, but I don't think those exceptions help the credibility of the groups I listed.

Books... no specific rec's (I get advice from a local math PhD), but avoid anything about technical analysis or cherry-picking stocks. Instead spend that money on books about cognitive biases ;-) Decide whether you believe the market will beat inflation in the long run- if you don't, read up on alternatives like Treasury Inflation Protected Securities (TIPS). If you do, learn more about topics involving long-term trading (a better word than "investing" IMO), like diversification, risk-profiles, and so on.

I daresay the whole biz is a like a much larger, much tonier casino, with the middle-class willingly in the role of slot-machine addicts.

Always pay the minimum management fees and commissions- stop buying yachts for bozos.

Posted by: I_have_seen on February 18, 2009 8:41 PM

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