Ajay Jani forwarded me a nice clip from Milton Friedman circa 1976. For the “greed is bad” folks:

Give Phil Donahue credit. At least he always admitted to being a socialist! I respect that.

Do I think most people who voted for Obama expected what is unfolding? No. Do I think the people who voted for Bush expected his 8-year effort? No. Therein lies the problem. All of this partisan BS, and it is BS, is going in a circle. Until the American public decides they don’t need a daddy, that they don’t want a nanny state, until they understand their politician (whether on the left or right) doesn’t care about anything except the excitement and power generated from sitting in that chair, we will flounder. Do I expect this trend to change? No. Too many people, either through no common sense, desperation or sheer stupidity, want to be “believe” in someone other than the person they see in the mirror. At the rate we are going forget nanny state, we will be a state of losers with no spine, conviction or passion for anything other than shopping at Walmart. I remain firmly entrenched at the Gulch.

From the New York Times (and courtesy of Jason Gerlach of Sunrise Capital Partners LLC who pointed it out to me) comes more on mutual fund “fees”.

John Mauldin offers:

Alex Spiroglou writes me:

A trader working for Citi, is a private sector employee or a civil servant?

Some people smelled a con (video).

It used to be big real estate gains. Big stock gains. Oh how we have fallen. Now we ponder how $8 a week is economic development.

From the Boston Herald comes this piece

Fidelity’s Edward Ned Johnson jumped into the controversial debate over President Obamas New Deal II and what Johnson called government make-work projects.

Without naming names, Johnson praised the administrations effort to make economic recovery its top priority, saying it was admirable.

But Johnson, sounding like hes never been a big fan of the original New Dealers from the 1930s, warned of too much government involvement in the economy and indicated Fidelity is beefing up its government-affairs unit to fend off possibly burdensome new regulations.

We can only hope that the governments cure doesn’t further sicken the patient, Johnson wrote in his annual update on Fidelity’s performance over the past year.

During the 30s, Congress – with guidance from the president and the same kind of good intentions – shifted the country’s cash flow away from productive businesses to government make-work projects, which most likely prolonged the Great Depression, wrote Johnson, arguably Boston’s most powerful business executive.

As for the financial-system crisis, Johnson also took a somewhat anti-government conservative view toward its causes, saying this climate was caused by many well-intentioned policies – stimulated by individuals at high levels in government and sanctioned by regulatory structures.

Those policies helped make money ridiculously easy to obtain and business people eager to comply with the policies, Johnson wrote.

Not surprisingly, others views on Johnson’s views depended on their interpretation of economic history.

Daniel Mitchell, a senior fellow at the libertarian Cato Institute, said Johnson’s remarks were on the right path, though he said they might be kind of risky if they anger government policymakers.

Mitchell compared former President George Bush to Herbert Hoover and Obama to Franklin D. Roosevelt, the two presidents in office at the beginning and end of the Great Depression. Both failed to get the nation’s economy working, he said.

But William Cheney, chief economist at Bostons John Hancock Financial, said he very much disagreed with Johnson’s version of FDRs New Deal policies.

Roosevelt’s initial policies did boost the economy, which faltered after FDR tried to rein in government spending, Cheney said.

I tend to agree with Johnson on too much government, but his firm Fidelity is a huge problem. They have made billions in fees delivering no performance for a very long time. They are the core buy and holders. And buy and hold is not the path for the average investor – unless the average investor wants to possibly make no money for decades. Now Johnson is openly saying he will lobby hard to keep the gig of stuffing people in a bad investment rolling along.

From the wires a dose of reality:

There are signs Congress, at least, is running out of patience with the current approach and is looking for more drastic measures.

Members of the Senate Banking Committee Tuesday peppered Bernanke with questions about the government support, suggesting the government was delaying the inevitable.

“Wouldn’t it be better to close some of those banks rather than continue propping them up?” asked Alabama Sen. Richard Shelby, the ranking Republican on the panel. “Aren’t you sending a message that we’re going keep propping the up?”

Bernanke responded by implicitly referring to the stress tests, saying the “first step is to get clarity, the transparency, ” what he called “the assessment”. The next [step] is the capital.”

The biggest banks “are never going to get to the point where that [insolvency] occurs because you keep injecting capital, ” said Sen. Robert Corker (R-Tenn.).

“There is no commitment by any means to never shut down a big bank, absolutely not, but I do believe that the major banks we have now can be stabilized,” Bernanke added.

Similar thinking got the government into trouble with the S&L debacle, say analysts, when capital injections and regulatory forbearance deepened the crisis.

“We believe the quickest and lowest cost solution to the government is to close down troubled financial institutions, regardless of size, extract the toxic assets and sell the good parts of these financial institutions to private investors as quickly as possible,” the bank analysts team at Friedman Billings & Ramsey’s wrote in a Feb. 23 research note.

Will banks ever be massive profit centers again? Or will they end up as severely regulated (and perhaps rightfully so) operations that only make the government approved/regulated profit?

An interesting read. Perhaps one of the reasons I have not been able to adopt Twitter. I have created a Twitter account, but I can’t say that I have yet to use it in a meaningful way.

Feedback in regarding a recent post of mine:

Why can’t people give Clinton credit for anything? You can certainly say Clinton did have a bubble that helped balance the budget. You can question the accounting. However, he still “balanced” the budget. Bush had probably one of the largest housing bubbles of all time to help him and he still couldn’t balance the budget. He also had a stock market that certainly was somewhat bubbly. Still, he doubled the national debt. Interestingly, since Carter the Democrats had always lowered the deficit while the Republicans have always greatly expanded it. We will see what Obama does to the deficit.

My statement was 100% accurate regarding the 1990s and deficits. Giving credit or not giving credit for “anything” had nothing to do with my post. I am not some rabid partisan here. Anyone that comes on this blog and sings the praises of DC politicians (as the email above does) can expect to have their you know whats handed to them by me. The current mess we are seeing extends way back. The lowering of rates to 1% after 9/11 was all part of the effort to re-inflate the dot-com stock bubble. Clinton and Bush should be memorialized together for overseeing the bulk of the bubbles since 1994.

A very well done chart comparing bear markets over time.

Source: Barry Ritholtz and JP Koning.