The Value of Investments

Dear Colleagues

The value of investments may be based on reality or on a rigged unreality. For most of the past 40 years a rigged unreality has made America look as if it was prospering, when in reality, all that was going on was that wealth once owned by one set of people was being moved to another set of people.

The practice of financial engineering to create value is more fiction than reality. But there is value ... real value in using science and technology and organization to improve productivity and facilitate doing more with less. There is real value when resources are used to create goods and services that people need ... but not always profit, when prices that are affordable are too little to cover the costs.

There was system rigging in the 1980s when the junk bond industry boomed ... and system rigging as the savings and loan industry imploded ... and more as the banks merged and merged and merged and fees and profits went up as services went down ... and eventually value sucked out of the consumers of houses and the whole house of cards started to crash.

On January 20, 2009 ... President Obama was sworn in as the 44th President of the United States ... and the New York Stock Exchange had its worst inauguration day ever. Hopefully this was because analysts have belatedly understood that President Obama does not like and will not tolerate the financial rigging that has done so much economic damage to the nation. Stock prices in the US are overvalued in an economy where financial rigging is eliminated ... especially banks that merely earn fees and do little for tangible economic purposes. If stocks are overvalued they go down in price.

But America has huge potential once the financial rigging is eliminated ... and people are employed doing things that have value for the people of the nations and the neighborhoods of the nation.

It is a step in the right direction for the stock market to go down ... to go down until the stock prices reflect a reasonable profit flow from the companies ... and value being delivered to the customers. Maybe this means the Dow should be at 3,000 rather than 8,000 ... and certainly not the 14,000 of the 2007 high. Sad that the banks ... and the financial services industry should divert so much of America's wealth into a financial black hole ... and sad that lawyers and accountants never alerted the public to this huge scam.

I for one am mad as hell ... and will do all I can to make the future work better for everyone ... hopefully, in the process, putting professional behavior back into the professions.

Peter Burgess