How Statistics Lie

In late 2006 shares of Citigroup (arguably once the largest bank in the U.S.) achieved a price high of $57.00. After bankers went public with their Subprime crime, the shares tumbled to $0.99 and then recovered to four dollars or so.

A recent headline? “CITIGROUP SHARE PRICE DOUBLES”.

If you bought stock at $50 and watched it fall to a dollar, you might have lost your house, your car and your wife. In fact the stock may have since quadrupled in price from its low, but that reality is valueless and grossly misleading in the real world.

The headline is a perfect example of what I call a “true lie”. It would be a sad story in isolation...but this is not an isolated true lie. You hear true lies every day.

You are routinely told that while you were shaking in your boots you missed the market low. It’s your fault, because markets have now recovered by fifty percent or one hundred percent or some such percentage.

Hello? I was in the “investment” business. There was nothing of substance to invest in at the low. Show me an investment, not another horse race speculation. Sorry folks....no investments. Only lies to make you feel foolish now that you have been robbed.

I’m keeping my powder dry, and I don’t buy into the story that I am to blame for criminal activity on Wall Street. We were legally robbed outright by the subprime travesty, and the robbers are still at large and in charge. Nothing has changed, and you should indeed be insulted by the barrage of true lies that point fingers at millions of victims.

The Double Dip

Foreign speculators (we formerly called them investors) in U.S. securities have recently found that dollar fluctuations provide an arbing cushion to mitigate their losses. This arb helps to keep players in the game.

If the U.S. dollar fails to recover to counter the next market setback, the double downside decline experienced by foreigners could cause all hell to break loose.

In my opinion, the U.S. dollar is living on borrowed time. Government bailouts are the easy way out, but they are also a one way street. Bailouts simply lead to bigger bailouts.
Eventually the dollar pays the price.

Reading The Riot Act

President Obama spoke on Wall Street one day before the first anniversary of the momentous Lehman Brother Brokerage collapse. He pointed out that a year ago, $5 trillion of U.S. savings evaporated over a three month period. He insists that the ongoing rape of investors since then will not be tolerated, and he served notice to the thieves that they will have to make new rules for themselves.

In November 2009, I published this poem in my most recent book entitled November Years, Reflections on Aging.

Integrity

Can oversight be overseen
By those who took it down?
They are in charge.
They will not leave.
For decades still around.

Without integrity
Wall Street cannot recover.
Without integrity
Wall Street cannot exist.

D. Grant Sirola

November Years - the book can be purchased from McNally Robinson Booksellers at http://www.mcnallyrobinson.com/ or phone: 1-800-561-1833