Put a Tarp on it

I like words. I especially like the words that have multiple meanings depending on how the word is used. The important thing about words is that you never really know the meaning until there is context built around the word that is being used. One such word is tarp.

In my minds eye, I’ve envisioned that a tarp is something, usually blue, that you use to cover up another object. In the federal government’s most recent bailout, deemed the Troubled Asset Relief Program (TARP), we have been led to believe that the TARP is meant to “protect” us therefore we as taxpayers should be reassured.

However, the use of every word becomes clear(er) based on the context of the other words and ideas that follow it. With this in mind, I thought it was fitting that the Federal Reserve is now unwilling to disclose the recipients of almost $2 trillion since the $700 billion bailout package was passed. This is a change of heart on the part of the Federal Reserve and the Treasury since they both agreed to “congressional demands for transparency” before the signing of the bill. Considering that this approval of the bailout was with taxpayer money, it would only seem “fair” that taxpayers and guerrilla journalist news organizations, like Bloomberg, have access to the knowledge of where the money actually went.

With the Fed’s unwillingness to reveal the information that is the rightful property of the public, I now know what kind of “tarp” we are looking at. Let us explore the exact etymological nature of the tarp that Congress, as opposed to Progress, passed.

First, tarp is the shortened version of the word tarpaulin. According to Merriam-Webster’s Online Dictionary a tarpaulin is “a piece of material (as durable plastic) used for the protecting of exposed objects or areas.”

However, if broken down to its most basic elements tar-, according to the Dictionary of Word Roots and Combining Forms, falls under two possible meanings. The first is the Greek tarph which means thicket. The other possibility is the Greek tarphy which means thick or close. Given the context of the Federal Reserve’s handling of the TARP program I now have a better understanding of what this program is about. So far the TARP program has proven to be a thicket of bureaucracy meant to be so thick that it is essentially closed off from the public.

Now let’s look at the suffix portion of the word tarpaulin. The –paulin portion is derived from the word pall. What is a “pall?” As a verb pall means “to lose strength or effectiveness.” Another verb definition of pall is “to cause to become insipid.” What is insipid? Insipid is the “lacking in qualities that interest, stimulate, or challenge.” Has the government’s TARP program managed to lack a stimulating effect as was initially promised? I think so but some would argue that the “true” effects would not be felt until at least six months from now.

Since we looked at the verb definition of the word pall, let’s move on to the noun definition. This is my favorite definition of the word pall because it seems so fitting. The noun form of pall means “ a heavy cloth draped over a coffin” or “something that covers or conceals; especially: an overspreading element that produces an effect of gloom.”

Again, it is context that helps us understand the meaning or intent of all the words that are conveyed. Given the context of the TARP program and what has followed so far, I think I have a better understanding of what is happening and what is to come.

If only I knew this was the definition of the TARP program before the vote took place in Congress, I would have been even more outspoken against it. However, my new found knowledge allows me to feel comfortable about what is likely to occur next. There will continue to be a lack of transparency until the death. This would make perfect sense to have a tarp handy so that we as taxpayers don’t have to see the carnage. I have only come to this conclusion because of what I have seen and not what I would like to see. Touc.

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    • at Tuesday, November 11, 2008

    Commentary on Gold

    I was scanning the news headlines on MarketWatch.com and came across this story, titled "Getting it Right and Still Losing." In the article by Mark Hulbert, it is mentioned that experienced investment newsletter writers Harry Schultz, Howard Ruff, and James Dines have lost a significant amount of their investment funds by investing in gold and silver during the market turmoil of the last year. According to Hulbert, the losses sustained by these three market professionals ranged from 64.9% to 70%.

    Mark Hulbert's conclusion in this article is that although the newsletter writers had foreseen the coming declines they didn't know exactly when it would occur and therefore were unable to take advantage of the profit opportunities by maneuvering their money on the opposite side of the market downdraft. Because Mark Hulbert has been reviewing newsletters for quite a while it would appear that his conclusions about these three market professionals is accurate. Unfortunately, just as the newsletter writers got the gold market wrong, so too does Mr. Hulbert in his assessment of the actual reason why these people failed to come out winners.

    Despite their experience, the mistake that Harry Schultz, Howard Ruff, and James Dines made is very simple. They believed that if the stock market was going to collapse then gold and silver would be the place to invest all of your money. Unfortunately, when the price of stocks fall so too does the price of gold, and to a greater degree, gold & silver stocks.

    The only time that gold and silver prices rise at the same time that the stock market falls is when the government itself is on the brink of bankruptcy. While it may be the assertion of the newsletter authors that the government is on the brink of failure the process of actually getting to that point requires a significant amount of bailouts.

    So, what evidence do we have to show that gold and silver actually does go down more than the general stock market? Below is a table that shows the performance of the Dow vs. the price of gold and the gold stock index (XAU.) This table was originally created by David Marantette, former publisher of the Goldstock and Dear Dow Letter. In his research, Marantette wanted to emphasis the importance of this concept so he included the available data from the period during a gold bull market (1975-early 1980) to make his point.





    Marantette picked all periods that the Dow Jones Industrial Average fell by 10% or more and compared that performance with the price of gold until 1984 and the Philadelphia Gold Stock Index (XAU Index) from 1986 until March 2001. I gathered the data from May 2001 until October 2007. Take note of the fact that out of thirty Dow declines of 10% or more the price of gold/gold stock index declined 28 times. Of those 28 declines, gold fell by a greater percentage than the Dow Industrials in 27 instances.

    Given what has been demonstrated the lesson should be clear, gold and gold stocks cannot climb higher at the same time that the Dow Jones Industrial Average is in a declining trend. If the newsletter writers believed that gold was the place to be when the stock market declines then it stands to reason why they lost so much money. Timing wasn't the problem, instead it was the lack of understanding of the relationship between the selloff in the general stock market and a selloff in the price of gold and gold related assets. Touc.
    at Tuesday, November 11, 2008