It's good to be a Congressman. Prove it's possible to get rich trading options without knowing about technical analysis. Always get out of the market just before TSHTF (that's a standard survival preparedness expression). Life is fair - for some people.
If I weren't already a Declinist, this book would make me so. When I go to the election booth, I don't see the option, "None of the above," below the candidate names. If Peter Schweizer's research is correct, I never stood a chance.
How do our nation's top politicians exit office with millions more than credible based on their salaries and perhaps some patient investing? Nobody has directly and fully answered that question until Throw Them All Out was published.
(Recommended reading:
Declare Independence from Party Affiliation)
The club Schweizer calls the 'Permanent Political Class' makes rules for itself. Members with no time to meet small business constituents do not spare any trouble to legally enrich themselves through earmarks, real estate deals, securities violations, trading on inside information, self-dealing with stimulus funds and literally every budget item.
This gets into the purpose of the nation's Capital from the perspective of elected officials. DC is a profit center for them and all that support them in various capacities. They use government to enforce sophisticated pay-to-play and don't-make-no-waves rules. There is little incentive for them to leave Washington, which is one reason they became the permanent political class.
Schweizer cites popular officials that play the IPO (Initial Public Offering) game. For example, he shows how Nancy Pelosi, the 60th Speaker of the United States House of Representatives with an estimated net worth of $58 million, bought 5,000 shares of V (Visa) at the privileged IPO price $44. This trade showed a profit immediately. The shares reached about $88 in a matter of days. However, Pelosi worked on major related legislation that was killed in the body she led. This helped avoid a strong negative affect on the price of the stock, and she benefited. The rest of us can't do it because we're subject to conflict of interest rules, unlike lawmakers. Plus without political favors to offer, we're not invited to participate in IPOs until after the price is run up.
Schweizer points out that if you're an elected official and you sit on an important committee, you are allowed to trade on information that comes your way. These officials can even help shape decisions that have economic consequences and then participate in the winnings. It stands to reason that if you're on the banking committee, you probably trade bank stocks, playing it both long and short. If you're a staffer, you may accumulate sensitive non-public information and sell it to hedge funds.
This book is a manual on ways to give money legally to elected officials. The Pay-to-Play regime and the flow of insider information can be used by even the most novice traders using an online brokerage account. One big story is how Congressman Spensor Bauchus used a private meeting with Fed Chair Bernanke and Treasury Secretary Paulson. Bauchus was in the role of Ranking Member on the House Financial Services Committee. He used the dire information presented to him in this meeting to bet heavily that the market would go down, using leveraged trades. Bauchus, working with Bernanke and Paulson from July 2008 to November 2008, scalped $50K out of the falling market after first having moved his funds to safety. The book has lots of war stories like that.
Here are some politicians cited without their titles for brevity in Part One in this book (Part Two gets into their cronies):
Chapter 1 - John Kerry; Tom Carper; Melissa Bean; Jared Polis; James Oberstar; Jeb Bradley; John Boehner; Jim McDermott; Amo Houghton; Johnny Isakson; Sheldon Whitehouse.
Chapter 2 - Max Baucus; Jim Moran; Dick Durbin; Rahm Emanuel.
Chapter 3 - Nancy Pelosi; Gary Ackerman.
Chapter 4 - Dennis Hastert; Carolyn Maloney; Judd Gregg; Ken Calvert; David Hobson; Heath Shuler; Bennie Thompson; Maurice Hinchey; Jerry Lewis; Harry Reid.
Congressmen are big winners in the stock market. They cultivate companies in their loyalty structure from whom they get insider information often at the committee level. There are many ways they get rich while serving constituents, especially if you know what big deal Warren Buffett will do and when. Many names are given in this book of successful inside information operators within Congress.
While Throw Them All Out is our wake up call, it is also a potential training guide for future politicians. After all, Congress is unlikely to change the substance of rules that allow them to make a killing year on year. We should not aspire to do what they do. This would land the rest of us in prison and earn their contempt for us.
