And the Paul bashing begins...
And the Paul bashing begins... The origins of the 'Corruption'... The biggest scumbag on Wall Street?... 'I forgot how painful your recommendations are...' A stuffed buffalo butt...
"How outrageous, what a fraud... he is really a mean and nasty guy..."
No, it wasn't another anonymous message board critic writing about yours truly. Those were the words Arthur Levitt – the former chairman of the Securities and Exchange Commission (SEC) – used to describe Ron Paul yesterday on Bloomberg's radio show.
According to Levitt, Americans should not take Paul seriously, because, among other things, he walked out of an interview on CNN this week. That "indicates a level of instability... a kind of semi-madness." Levitt is also warning that if he's elected, even worse things will happen: "buying into an odd-ball like this, you're getting hateful, dangerous stuff." Given a chance to temper his words, Levitt tells the hosts: "I use those words specifically."
Strangely, on the same day Levitt was attacking Paul on the radio, the Wall Street Journal was attacking him in print. Dorothy Rabinowitz wrote a wonderfully slanted and scathing attack against Paul: "He is the best-known of our homegrown propagandists for our chief enemies in the world. One who has made himself a leading spokesman for, and recycler of, the long and familiar litany of charges that point to the United States as a leading agent of evil and injustice, the militarist victimizer of millions who want only to live in peace."
What, you might wonder, has these critics so exercised? Ron Paul says that the Bush administration used 9/11 as an "excuse" to invade Iraq, a war he opposed and voted against. Paul has explained, repeatedly, that he doesn't think the U.S. should be the world's police department. He believes putting our troops in harm's way all around the world causes us a lot more trouble than it is worth.
These ideas have a long and noble history in America, dating back to George Washington, who warned his successors not to become entangled in foreign alliances. Most Americans share Paul's view on this issue, according to opinion polls. But to the two Jewish commentators (Levitt and Rabinowitz), Paul's view – that we shouldn't guarantee Israel's defense (or any other country's) – is "madness." Do these detractors have the integrity to explain why their view is so slanted? Of course not. In fact, having any principles at all seems offensive to Arthur Levitt, who says of the Tea Party: "It's a piece of insanity for them to hold to their so-called principles."
I find Levitt's opposition to both Paul's and the Tea Party's dedication to principle fascinating, because Levitt built his career by being determinately unprincipled. To the public, of course, he is something of a folk hero. He pushed a new rule through the SEC in the late 1990s – Regulation FD, the so-called "Fair Disclosure Rule." The rule made it against SEC regulations for companies to selectively release information. That is, if you called up a public company and asked a question, they wouldn't be allowed to answer it, unless they were speaking to "all" investors at the same time. The SEC claimed this would "level the playing field" between big investors and small investors. (If you believe that, then there's a nice bridge in Brooklyn I'd like to sell you...)
It's a funny thing about propaganda... the bigger the lie or the more absurd the claim... the more willing people are to believe it. What Regulation FD really accomplished was a total lockdown on the amount of information public companies would give investors. The rule allows public companies to disclose next to nothing, which gives large investors (who, by the way, still have access to plenty of inside information via social networks and business arrangements) an even bigger and more complete advantage over the public.
Meanwhile, the public continues to buy public companies with the false belief that the markets are fair and honest and that the SEC protects them. Ha, ha, ha... on Wall Street, the SEC is known as the Scoundrels Encouragement Committee.
If you don't think Arthur Levitt is one of the biggest scumbags in Wall Street history, simply ask yourself why, during his tenure at the SEC, did he personally urge the FASB (the financial accounting standards board) not to implement rules that would have required public companies to expense stock options? This was the single most important issue before the SEC during Levitt's tenure. Not only did he not move the SEC to act on the issue, he applied a tremendous amount of political pressure on the FASB so that it couldn't act to protect investors. This set the stage for the horrendous stock options abuses we saw in the late 1990s and 2000s.
Stock options accounting was a black and white, non-partisan issue. As Warren Buffett said, "If options aren't compensation, what are they? And if compensation isn't on the books, where should we put it?" And yet... Levitt did everything he could to protect his wealthy backers on Wall Street, which is why, after his public career, you found him sitting in Wall Street's highest paid positions: "advisor" to Goldman Sachs... "advisor" to AIG (before it collapsed)... and board member at Bloomberg. He's nothing more than a highly paid errand boy. His attack on Ron Paul was just another errand.
There's one other big Levitt issue no one has ever looked into... As chairman of the AMEX during the 1970s, and as a major Jewish New York financier, Levitt certainly was very familiar with Bernie Madoff, who was chairman of the Nasdaq. They were in all of the same social and business circles. Madoff is alleged to have begun his Ponzi scheme during Levitt's tenure as Chairman of the SEC. I'd bet a lot of money that if you looked hard enough, you'd find that Levitt acted to protect Bernie during the SEC's investigation of his firm in the late 1990s. But nobody ever has. And nobody ever will – unless Ron Paul gets elected, of course.
None of this might matter to you. You might not like Paul, either. Or you might not care, either way, who wins the Republican nomination for president. The truth is, I don't much care, either... So why bother writing a Friday Digest about someone attacking Ron Paul?
I'm pointing this out to you because it's so easy to see that politics in our country is a charade. There's no freedom of the press. There's no real election. The whole thing is staged to appear like democracy and freedom. The reality is, our elections are about as free as Putin's. The big money-backers of the Republican Party and the Democratic Party control everything. They own the media. They own the bureaucrats. And they own all the candidates – except for Paul. These people don't care whether it's a Republican or a Democrat who wins... because they own both political parties.
I could tell six months ago that the next presidential election would feature Mitt Romney against Barack Obama. Or, as I like to say, it'll be the white Obama versus the black Obama – the only difference is the color of their skin. In terms of their policies, who you vote for won't make any difference. And that's the only "choice" you'll get.
Ron Paul? Don't make me laugh. He will never be elected. If he wins in Iowa, you will see a level of vitriol unseen in the last 50 years in American politics. He will be called a racist. Someone will allege he sold drugs and killed people. All kinds of madness will erupt. After all, we're talking about a man who refused to accept Social Security and his Congressional Pension because he knows they're both unfunded Ponzi schemes. You can't have a man like that in the White House. It's all part of the Corruption of America.
Have a very Merry Christmas. We're taking the next week off, but you'll still get a Digest each day. We're running "Best of" essays – the issues our editors believe contain the best ideas we published in 2011. Print 'em out. They'll make you a better investor.
In the mailbag... was it a compliment or an insult? I'm really not sure. But I thought it was a pretty funny letter, in any case. Send your notes to us here: feedback@stansberryresearch.com
"You Sir, are the 'Grand Poobah' of the investment publishing industry. If I had a stuffed buffalo butt, I would come to your house to crown you. Thank you sir, may I have another?" – Paid-up subscriber Charlie Leckinger
Porter comment: Like I said... I'm not sure what to make of this one. Any suggestions from the audience?
"Your 'corruption' essay is the most unbalanced analysis of the economic events of our nation. I now understand why your recommendations are missing the reason for signing up for services- successful results. I will cancel my subscription. This is the second time I subscribed, and I forgot how painful your recommendations were. Plus, the barrage of offerings attempting to sell your many other products is disgusting." – Paid-up subscriber Jim O
"You have chosen the more difficult road to travel. I admire the character that shines from within you. Your patriotism is sorely needed by this country. As for former Treasury Secretary Henry Hank Paulson, the following expression suits him along with the vast majority of Congress. 'What good will it be for a man if he gains the whole world, yet forfeits his soul?' History will not be kind to these self-serving individuals that have abandoned their oaths. You have assembled a great team of financial advisors and educators. Thank you for all your efforts. Keep up the good work." – Paid-up subscriber Mark Rand
Porter comment: And there you have it, folks. Two people, reading the same essay, receiving the same services, from the same advisor – me. Look at the different reactions. When I tell you writing the things I write ends up costing me millions of dollars in revenue, I'm not kidding.
Have a good New Year. I think I'll shut up for a while. It's getting too expensive to grumble.
Regards,
Porter Stansberry
Baltimore, Maryland
December 23, 2011