Tuesday, February 17, 2009

Guard Dogs in Demand



Flipping through the pages of the February, 2009 Robb Report I noticed an unusually large number of ads for guard dogs, mostly German Shepherds. Several of the dog ads were of dogs pictured with children, so cute. But also, a bit sinister, when you think about it. Why now? The American economic downturn is so severe that wealthy clients are likely to need guard dogs, maybe more guard dogs?

Today news came of another possible Ponzi scheme, from the Stanford Financial Group (no relation to the university) of approximately $U.S. 8 billion. The Wall Street Journal says "The SEC filed civil charges against R. Allen Stanford, alleging he orchestrated a scheme centering on an $8 billion CD program. Federal agents raided Stanford's headquarters" in Houston.

Now more than ever, I suppose those who have money want to keep it and keep themselves safe. Alas, it's likely too late for those who invested with Madoff and Stanford. If only those on guard at the SEC had protected investors from those crooks. At least the SEC acted on recent Stanford Financial complaints.

But where were those on guard at the SEC when collateralized debt obligations (CDOs) were created from a mix of subprime loans, corporate loans, and commercial and residential real estate? If CDOs hadn't been created, it is conjectured that the financial bubble that has burst and exploded so disastrously might not have happened. Many have now lost life savings, and may face unemployment and foreclosures...It's probably the worst, most serious financial disaster this country has ever seen.

We all could have used better protection and regulation.

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