JC- Los Angeles January 22nd, 2009 4:00 pm ET

When the new President requires a do-over on the oath of office, it is anything but a smooth, smart and successful start.

Our nation has been run into the ground by the connected few who spent that last eight years looting the country without any fear of oversight.

When the nation needs a $700 billion do-over, how can Paul Volcker be considered “one of the most respected economic figures in the country?” where was he before?

When the new Treasury Secretary nominee fails to pay taxes, how is this a break from the morally bankrupt leadership of the past eight years?

When an octogenarian like Greenspan dispenses cheap money time and time again to an instant gratification, glutonous consumption society, how could none of our leaders see that this was a bad idea?

Rather than closing Guantanamo Bay, how about freeing many of the questionably detained and replacing them with our failed leadership?

I don’t know why, but the image of an “overhanging” reminds me of a Road Runner cartoon with Wiley Coyote holding a box from ACME standing at the edge of the ‘overhang’…and it is starting to crack…

Road Runner is in true form.

It would be cheaper & more efficient if the military did it ll & civilians were paid to watch!

How about if we ask him to merely increase taxes on the members of the “lucky sperm society” who were born into wealth?

My question would be, “what about the people who worked to generate wealth?” Where do they fit into the equation?

In any event, I personally do not see how Obama can raise any taxes on anybody this year in light of the economy.

However, in light of the deficit I do believe that taxes will be going up in the future. He should start by taxing those who work in hedge funds at the ordinary income level versus allowing them to put earnings into the fund and then only paying long term capital gains. Now that is a joke and has been paid for by a lot of donations from the hedge fund community to people on both sides of the aisle.

Your point about the headwinds is of MAJOR importance. Why do I say this? Simply because in the ’80s and early to mid 90s Wall Street was structured with a wide array of firms and fairly plain vanilla type clients. Included in those clients were: state funds, bank portfolios, mutual funds, insurance companies, money managers. The business was to a large extent fairly simple and straightforward.

Starting in the latter part of the 90s we saw an EXPLOSION of what the street called “fast money.” These types of accounts were hedge funds, proprietary trading groups housed within the Wall Street investment banks, and other types of heavily levered investors (REITS, Real Estate Investment Trusts). With all due respect to many great people at these types of clients, IMO there were also plenty of enormous egos (Masters of the Universe) who thought they were smarter than everybody and smarter than the market itself.

I am all for smart people playing the game the right way and making money. That said, there were more than a handful who were simply large egos run amok and used massive leverage to grow portfolios. These entities are now being unwound because they no longer have access to the funding needed to manage their business. What have a lot of these accounts done? They have restricted the ability of investors to redeem their money. As a result, a lot of their investments are overhanging the market. I empathise for plenty of peopel on and off Wall Street. For some of these other individuals, though, I have no empathy.

Does that make sense?

Thanks.

To your point of retaining humility;

I am am wondering about the level of market speculation and its impact. In the last 4 years it has been a Wild Wild West. With the current scenario, I am wondering how much of a head wind it will create for creating stability in in the financial markets, or is this much of a concern?

As I mentioned to another reader I do think that CDs will gradually start to move higher later this year as bank demand for cash continues to grow even greater.

While longer term rates are starting to rise and IMO will continue to rise, the very shortest term rates (1 mo, 3mo, 1yr) rates will likely stay low for a longer period (remember how the Federal Reserve indicated that they would leave the Fed Funds overnight rate at 0-.25% for an “extended” period.

CDs are a bit of a mixed bag. They are typically shorter term although some CDS do go out to 5yrs.

As shorter term instruments they are more tied to the short end of the yield (Tsy interest rate) curve. The other factor at work, though, is that banks are going to have increasing needs for cash. That need will likely start to push up rates on some CDs. I thnk that as we go through the year you will see rates slowly but surely move higher as the banks cash needs grow.

Hope that helps.