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Book Review of: A Capitalist's Lament
How Wall Street is Fleecing You and Ruining America
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A Capitalist's Lament, by Author (Hardcover, 2016)|
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I don't know whether to say I am awestruck or blown away. This book is THAT good. Faust writes clearly and factually, yet with a wit that entertains. And he clearly understands this subject extremely well.
Thank you, Mr. Faust, for providing this important work to a nation that is still paying for what happened in 2008 yet has not seen any government action to stop it from happening again. The same behaviors that brought that down upon us are still the norm in Wall Street firms. They are still gambling, and still getting by with morally bankrupt behavior that enriches them while bankrupting others.
This is one of the most important books to come out in a long time. It exposes, with evidence and hard facts, the corruption, greed, and moral bankruptcy in our financial system. The author also proposes how to change things, so that investors are protected rather than preyed upon. Note that nearly everyone today is an investor either directly or indirectly. Note also that millions of people who never invested were deleteriously affected by the 2008 collapse because that collapse dragged down our entire financial system and our economy.
The wit Faust brings into this book is important. The subject itself is dark enough to invoke massive depression (no pun intended), yet his subtle humor keeps the reader from jumping off the nearest bridge or, for those of us less prone to such demonstrations, simply feeling ill. As I read this, I kept picturing Steve Carell's character Mark Baum (a real person) becoming physically ill during an exchange with a Wall Street psychopath in the movie "The Big Short."
The lawlessness in our failed state is staggering in its depth and breadth. Even the ostriches among us should have pulled their heads out of the sand (or out of another dark place, you know where) after 2008. The details of this, with incomprehensibly big numbers, escape people however. The way Faust presents the numbers, things become comprehensible. And I really like that. This book was badly needed, and now it's here.
The numbers are truly staggering. How does a handful of companies, for example, generate more debt than the GDP of all nations on earth combined? We're talking about figures in the trillions. Remember, a trillion is a million million. Or 1 followed by 12 zeroes. Or think of it this way. A second isn't very long, is it? But 6 trillion of them works out to 189,276 years.
Faust looks at leveraging, and what he goes into is almost surreal in its stupidity (not him, the ones who did it). One example was an "investment" leveraged 40 to 1. If you know anything about finance, that figure makes your head spin. It's insane, not merely stupid. Faust explains this leveraging stupidity and its effects in a very clear way; this alone is worth the price of the book.
The fantastically huge losses happened then, and will happen again, because people in Wall Street firms are hugely rewarded when they gamble with other people's money but suffer no penalty when they lose millions or even billions or even trillions of dollars of other people's money. They get outsized rewards for minimal effort by engaging in maximum risk, but the risk falls entirely on others. Faust does an outstanding job of explaining this, and quantifying the damages as he goes.
I find it quite interesting that an unemployed mother who steals a $10 item to feed her starving child will go to jail but a Wall Street Fat Cat who gambles and consequently destroys a city's employee retirement fund gets a multi-million dollar bonus. Does something about that seem a little bit off to you? Faust doesn't make this comparison, but he does provide example after example of where this gambling wreaked misery and destruction while the gambler (who provides no useful function to society) became fabulously wealthy.
In addition to various deceptive schemes and illegal practices regularly engaged in, the Wall Street gamblers charge all kinds of fees to milk their "clients." That discussion alone is rather shocking. And it raises the question, "Why do any business with these people at all?" That's a question Faust himself explores in this book. But he's not saying investing itself is the problem. It's all the lying, cheating, and stealing done by the stock market intermediaries in Wall Street firms.
At the outset, Faust makes it clear he is a capitalist. He's not advocating abolishing the stock market. He's advocating cleaning it up, so that it (once again) functions in a way that is useful to society. Currently, it's a casino that destabilizes the financial system and destroys wealth. It's intended to be a market that stabilizes the financial system and provides the raw materials (financially speaking) to build wealth.
Faust, indeed, runs an investment company (CSI Capital Management). But Faust isn't in it to see how much he can skin those who trusted him with their money. He's in it protect those assets and make them grow, through prudent investing and the avoidance of "get rich quick" (get poor faster!) moves. If it doesn't make sense, he walks away. I've been an investor for over 40 years, and I agree with everything he says about investing.
Many people are under the mistaken notion that what passes for the "government" of our failed state somehow fixed things so the gambling, lying, cheating, and stealing that resulted in the 2008 meltdown (and cost 6 million Americans their jobs and 8 million Americans their homes, that's a lot of unemployed and homeless people!) won't happen again. That is not at all the case. The same criminals who personally made 7 or 8 figures (half a billion dollars in one case) simply bought the legislators they needed to give the appearance (for political purposes) of reform. But nothing has changed except the labels put on the same old gross misconduct. Regulators with alleged "oversight" of these gamblers don't do anything either, and Faust explains this as well.
The issue just described is an extremely important one to understand. Faust doesn't just blithely state an opinion on it and expect you to accept by faith. He is, by education and training, an attorney. And he builds a case. A very solid one, at that.
Faust names the bad players in the 2008 financial meltdown. Except for one very minor player, not one of the bad players went to jail (see the Elizabeth Warren video on Youtube where she can't get a straight answer to a simple question).
So the "government" didn't punish them. Why did the voters not do so? Why does anyone actually do business with these companies? If you don't know who the bad players are, stop reading this review and buy this book immediately. Then come back and finish reading. This book will tell you which criminal corporations you can stop doing business with. Take advantage of that and sever all ties. If we stop funding these crooks, psychopaths, and terrorists, they will not be able to hurt us ever again. Very simple. Vote with your dollars.
When I drive by a BP station and see cars actually in the parking lot, I wonder if those people have any brains. Here is a company that has long been run by the same kinds of gamblers we find on Wall Street. They gambled with other people's lives and the environment, not just money. And, like their Wall Street counterparts, they are still doing it even though doing it has repeatedly gotten people killed. They blew up a refinery (and employees) in Texas, caused a major oil leak in Prudhoe Bay, and caused that disastrous oil platform "accident" in the Gulf. The only real voting power we Americans have is with our consumer dollar. Boycotts change things, voting for the same old criminals in our farsical "elections" does not.
I wrote this BP example because most people can drive by at least one BP station every day. Next time you do, count the voters. Shame on them for voting that way. It is clear to me that BP stands not for British Petroleum, but for Bad Players. They are bad players and get away with it, because consumers pay them for their bad playing.
Among other things that Faust advises the reader is to ensure your investment advisor is acting as a fiduciary, not as a salesman. Does the meaning of that seem unclear? If so, then buy this book at this very moment. Don't wait.
This book consists of 16 chapters arranged into 5 sections:
It's in Section V (two chapters) where he discusses how to reform this terribly corrupt, totally abusive system.
Now, one odd thing about this book. Though it does have an index (which is nice), it does not have a bibliography. So when you get to the end and find this, what are you to make of that?
In my own case, I have read dozens of cited/sourced papers and articles about the 2008 financial meltdown. Actually, I was reading about this corrupt, unaccountable system of bad players long before this meltdown happened. I was not at all surprised when it did happen. I was surprised it took so long. Jerome St Cyr said back in the early 1990s it was a casino and a house of cards, and that was before computerized day trading came on the scene.
I have also watched several video documentaries about this system and about this meltdown in particular. As suggested earlier in this review, I also watched the movie "The Big Short" and we normally don't count movies as sources but that movie was quite faithful to the facts.
Nothing that Faust presented has even a whiff of make-believe. I didn't take the time to look up the many points of data he presented, but I was already familiar with them having read them from cited sources. I'm a pretty critical guy (some of my reviews are downright brutal), but I have no criticism here.
The body of this book consists of 341 pages, all of them expertly written.