The tricky road ahead

The brightest minds on Wall Street are being assembled by our new administration to examine ways to fix the stock market and halt the descent into financial ruin.  In order to find that formula we must first erase the mindset that caused the crisis, and start with a fresh look at the problem. The trick on Wall Street has been to create confidence to the investor to such extent that he or she will give up money for others to invest for profit. An old New York broker with whom I was associated once told me that "it is all done with mirrors". He made a lot of money and retired to Florida where he continue to make money with that formula.

The problem we have today is that the investor has lost confidence in Wall Street. We are an affluent society with lots of spare money to invest. People in the entertainment industry are paid millions of dollars for their talent and have little interest in learning about stocks, so they pay others to invest for them. Glib salemen on Wall St. promise handsome returns for the right to use OPM (other peoples' money) and it all based on confidence in the broker. So what do we do when that trust is broken?  The answer lies in a tricky road ahead. The same people who caused the breakdown are the same ones who aare now being asked to fix it.

I do not think they will have the intestional fortitude to subscribe to federal regulation that restrain or inhibit their activities on Wall Street. To do so would in effect put them out of work, or at least, reduce the financial windfalls they have been accustomed to managing. A clear and unvarnished look at the problem indicates that greed is the culprit.....and it is hard to change a leopard's spots without getting scratched.

Common sense tells us that the Dow is sustained by the daily flurry of trading and it is an artificial indicator of our real wealth on the market. Wall Street is like a casino where you throw the dice or play Texas Hold'em and it all depends on the integrity of the dealer (broker) if you get a fair shake. So how do you fix the tricky road ahead? Well, a restoration of confidence is the first step, and that can only be assured by federal regulations that place safeguards on investments, including the elimination of day trading and a return to long term investements that promise a steady flow of money to business and industry. We need to rid ourselves of the quick "get rich" attitudes and place our money in steady well established  companies where it will work well with the capitalistic system we pretend to have.

Many people are intimidated by the financial gurus who flex their muscle on Wall Street. Just remember that they are the ones who created this mess and I don't think they will come up with the real solution to the problem. Remember that old Wall Street broker when he said "it is all done with mirrors". What he really meant was that we must rely on the reflection of trust embodied in brokers. It is hard to fix a broken mirror.