Here is the real story of Goldilocks and the three bears (as told by a bear).

Once upon a time there was a family of three bears, a mama bear, a papa bear and a baby bear. This family of bears lived in a quiet cottage in the woods.

One day, waiting for their porridge to cool, they decide to take a leisurely walk in the woods, as bears are known to do. While they are out on their walk, a little girl named Goldilocks, who happens to be playing in a field nearby, discovers their house, and also the porridge inside, which, let’s be honest, is not really porridge, but a metaphor for the collective savings of the three bears, which they wisely keep under their mattress for fear of an economic collapse.

Being curious, and an expert burglar, Goldilocks managed to break into the three bears’ house, though she later claimed the front door was left "wide open." Once inside, she examined the first bowl of "porridge’" (a metaphor for U.S. Treasuries). "This porridge is too cold!" she exclaimed.

So she whipped out her cell phone and ordered the Federal Reserve to take some kind of policy action to to try and force this "cold porridge" out of the hands of domestic holders and into the equity markets where returns would look great, even to bears, as long as the bears don’t notice that the returns are due solely to the devaluation of their paper currency.

Moving on to the second bowl of "porridge," which is clearly gold, Goldilocks noted, "This porridge is too hot!"

So she dumped it onto the open market, even going so far as to sell gol… er, "porridge," that she doesn’t even own and can never ever possibly physically deliver in order to make it unattractive to bears.

Finally, she moved to the third bowl of "porridge," which in this case is a metaphor for some U.S. dollars that the baby bear kept under his mattress to use as "writing paper."

"Ahhhhh," Goldilocks said. "This porridge is just right."

Then, she abruptly fell asleep in the baby bear’s bed. (Editor’s note: Certain metaphorical acts committed by Goldilocks, such as raising taxes, browbeating foreign trading partners for structural deflation, etc. have been omitted for the sake of brevity.)

As she was sleeping, the three bears came home. "Someone’s been eating my porridge," growled the papa bear.

"Someone’s been eating my porridge too," growled the mama bear.

"And someone’s been messing around with my paper and used it all up!," cried the baby bear.

Just then, Goldilocks woke up, saw the three bears and screamed. "Help!," she cried. "Print more money!" she demanded. "Buy something… anything!" she screamed.

But it was too late.

By 10:30 a.m. the corporate debt market had locked up and forced selling by overleveraged hedge funds was filtering into commodities and equities.

By 11 a.m. the first round of trading curbs kicked in, but this had a perversely ill effect of withdrawing even more liquidity and bids from the market.

By noon the Federal Reserve had called a special meeting with Wall Street’s money center banks to see which, if any, could remain operable through the end of the week.

Goldilocks, meanwhile, was vilified in the press for her reckless breaking and entering and total disregard for good porridge.

The bears felt vindicated, but not particularly good. After all, in a real bear’s market, no one wins — not even the bears.

Source:
The Real Goldilocks
Kevin Depew
Minyanville,Jan 09, 2007 10:49 am
http://www.minyanville.com/articles/index.php?a=11904 

Category: Federal Reserve, Markets, Psychology

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

6 Responses to “The Real Goldilocks (As told by a bear).”

  1. Sailorman says:

    Might these indices indicate the process is starting?

    http://www.eurobondonline.com/abx-HE-AAA-06-2.Htm

  2. Steve Goulet says:

    Depew is hilarious. I like this differentiator:

    8. Once a quarter, before market opens, Roger Ailes will appear live on camera and eat a poor person.

  3. BDG123 says:

    Well, I wouldn’t have been so upset if Da Bears had won the Super Bowl.

    While I don’t buy all of this counter-counter-counter-counter sentiment jibberish that housing cannot correct or be the cause of any equity repricing because every one is watching it or any of the other pablum, I don’t buy into the view that all things dollar are dirty. So, would the author have us chuck our dollars for what? Yuan? Yen? Bolivars? Rubles? Riyals? Ruppes? Pesos? That’s a joke. Sounds like he might be confused with Aesop’s Fable.

    I’ll tell you what I believe as if it really matters. Any mess will be disproportionately felt by people holding all of those currencies above and more. The majority of the world’s wealth is concentrated in the US, Europe and Japan and that isn’t going to change. Hopefully, the pie will get bigger and more global wealth is in the cards for everyone but I’m very dubious of that happening because those countries are doing little to create their own wealth. They are just going alot for the American ride and if the music ends, they are all going to be scrambling for chairs. And, there are very few chairs.

  4. gmoney says:

    prev poster clearly hasn’t been to china

    they are making things actually producing capital

    we are finance based, with the huge advantage of being the petro currency (for now)

    times are a changing
    but don’t take it from me
    go to china you’ll see

  5. BDG123 says:

    So…….what would you like to talk about re China? 90% of exports are multi-nationals. ie, American companies NOT Chinese. National companies which show little profit but are propped up by cronyism and corruption. Money supply growth last seen at such a level in the U.S. pre 1929. Blather of graduating 600,000 engineers a year when it’s really closer to 100,000 and most from schools with no standards and sub par educational programs. In other words, McKinsey says they aren’t able to compete in global markets because of their piss poor schooling. Corruption on a level never seen in countries like the US thus resulting in “pet project” overinvestment in real estate and basic industry rather than market based investment. Over 80,000 humans rights incidents reported last year and countless others covered up by a communist society. A mercantilist export driven economy where domestic consumption at 30% is the lowest of any leading economy ever recorded. EVER. Bad loans given to crownies and allowed to continue to pile up to the amount that taken into account with mercantilistic loans dould bankrupt China with a serious slow down in American consumption.

    What a great story. You’ve been listening to that propaganda machine and been taken hook, line and sinker. You buy the Yuan. I’ll stick with the dollar. Let’s come back in ten years and see.

  6. Francois says:

    BDG,

    Gee! Minus the Communism, what you described look eerily like the USA circa 1870-1910. Endemic corruption, racial segregation (how many human rights abuse just right there?) women with no right to vote, possess assets or pursue any career save a few, miserable workplace conditions. (Anyone think unions were born out of a vast communism conspiracy? LOL) And let’s not start about the education system; as an example, any physician who wanted to be someone HAD to hold a European (French or German) diploma and training.

    And less than half a century later…who was da man?

    Bottom Line: China may very well crash and burn. They got scores of tough problems to solve if they want this century to be theirs. But I would not brush them aside so easily.

    And BTW, there is India too…

    Francois