Comments on: The End of the Financial World As We Know It (and I feel fine) http://www.ritholtz.com/blog/2009/01/the-end-of-the-financial-world-as-we-know-it-and-i-feel-fine/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Wed, 15 Feb 2012 00:33:57 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: DL http://www.ritholtz.com/blog/2009/01/the-end-of-the-financial-world-as-we-know-it-and-i-feel-fine/comment-page-1/#comment-137365 DL Sun, 04 Jan 2009 19:41:53 +0000 http://www.ritholtz.com/blog/?p=15038#comment-137365 Bruce @ 2:18 Two points: (a) Yellen probably wants the Federal government to consume a much bigger share of GDP than is currently the case (and I disagree with that objective); (b) as for the question of inflation versus deflation, it's a question of time frame; there's also the matter of commodity prices versus housing prices, both of which go into the CPI. Bruce @ 2:18

Two points:

(a) Yellen probably wants the Federal government to consume a much bigger share of GDP than is currently the case (and I disagree with that objective);

(b) as for the question of inflation versus deflation, it’s a question of time frame; there’s also the matter of commodity prices versus housing prices, both of which go into the CPI.

]]> By: Bruce in Tn http://www.ritholtz.com/blog/2009/01/the-end-of-the-financial-world-as-we-know-it-and-i-feel-fine/comment-page-1/#comment-137362 Bruce in Tn Sun, 04 Jan 2009 19:18:43 +0000 http://www.ritholtz.com/blog/?p=15038#comment-137362 Well, DL, in case you and Lefty don't read the second half of this post...Janet Yellen,in that crazy language of economists, says, I think, she sees deflation ahead.. http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&date=20090104&id=9483804 "With an extended period of abnormally high unemployment in the forecast, it is increasingly likely that inflation will fall to undesirably low levels," she said. Well, DL, in case you and Lefty don’t read the second half of this post…Janet Yellen,in that crazy language of economists, says, I think, she sees deflation ahead..

http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&date=20090104&id=9483804

“With an extended period of abnormally high unemployment in the forecast, it is increasingly likely that inflation will fall to undesirably low levels,” she said.

]]> By: DL http://www.ritholtz.com/blog/2009/01/the-end-of-the-financial-world-as-we-know-it-and-i-feel-fine/comment-page-1/#comment-137355 DL Sun, 04 Jan 2009 18:29:31 +0000 http://www.ritholtz.com/blog/?p=15038#comment-137355 S.B. @ 1:02 “The system is being socialized, not stabilized”. That’s it in a nutshell. S.B. @ 1:02

“The system is being socialized, not stabilized”.

That’s it in a nutshell.

]]> By: DL http://www.ritholtz.com/blog/2009/01/the-end-of-the-financial-world-as-we-know-it-and-i-feel-fine/comment-page-1/#comment-137354 DL Sun, 04 Jan 2009 18:27:24 +0000 http://www.ritholtz.com/blog/?p=15038#comment-137354 leftback @ 11:33 “At some point in Q1 we will probably take one last ride on the ‘D-train’ - we will see liquidation …” That’s why I’m a little afraid to be long gold or short treasuries at the moment. leftback @ 11:33

“At some point in Q1 we will probably take one last ride on the ‘D-train’ – we will see liquidation …”

That’s why I’m a little afraid to be long gold or short treasuries at the moment.

]]> By: DL http://www.ritholtz.com/blog/2009/01/the-end-of-the-financial-world-as-we-know-it-and-i-feel-fine/comment-page-1/#comment-137353 DL Sun, 04 Jan 2009 18:24:15 +0000 http://www.ritholtz.com/blog/?p=15038#comment-137353 Andy Tabbo @ 11:58 “Increase the social safety net to individuals and simply let the bad firms fail” >>> exactly right Andy Tabbo @ 11:58

“Increase the social safety net to individuals and simply let the bad firms fail”

>>> exactly right

]]> By: Steve Barry http://www.ritholtz.com/blog/2009/01/the-end-of-the-financial-world-as-we-know-it-and-i-feel-fine/comment-page-1/#comment-137352 Steve Barry Sun, 04 Jan 2009 18:11:38 +0000 http://www.ritholtz.com/blog/?p=15038#comment-137352 When trying to figure out the proper P/E of a socialized stock market, should one take off a few integers? I mean if it were announced at the height of the market, Dow 14,000, that we would become more socialist, I think that would have tanked the market. When trying to figure out the proper P/E of a socialized stock market, should one take off a few integers? I mean if it were announced at the height of the market, Dow 14,000, that we would become more socialist, I think that would have tanked the market.

]]> By: Steve Barry http://www.ritholtz.com/blog/2009/01/the-end-of-the-financial-world-as-we-know-it-and-i-feel-fine/comment-page-1/#comment-137350 Steve Barry Sun, 04 Jan 2009 18:02:24 +0000 http://www.ritholtz.com/blog/?p=15038#comment-137350 otto: I would argue the financial system is NOT stabilized. I think you may be basing that on gut feeling, not hard evidence. The montain of debt that de-stabilizes the system is growing, not shrinking, albeit it is growing at a slower pace and mainly via the government. The system is being socialized, not stabilized. otto:

I would argue the financial system is NOT stabilized. I think you may be basing that on gut feeling, not hard evidence. The montain of debt that de-stabilizes the system is growing, not shrinking, albeit it is growing at a slower pace and mainly via the government.

The system is being socialized, not stabilized.

]]> By: karen http://www.ritholtz.com/blog/2009/01/the-end-of-the-financial-world-as-we-know-it-and-i-feel-fine/comment-page-1/#comment-137348 karen Sun, 04 Jan 2009 17:54:32 +0000 http://www.ritholtz.com/blog/?p=15038#comment-137348 I'm jumping up and down! (I'm a financial lunatic, afterall.) My favorite line, so far, from the piece: "Indeed, one of the great social benefits of the Madoff scandal may be to finally reveal the S.E.C. for what it has become." I’m jumping up and down! (I’m a financial lunatic, afterall.) My favorite line, so far, from the piece: “Indeed, one of the great social benefits of the Madoff scandal may be to finally reveal the S.E.C. for what it has become.”

]]> By: Andy Tabbo http://www.ritholtz.com/blog/2009/01/the-end-of-the-financial-world-as-we-know-it-and-i-feel-fine/comment-page-1/#comment-137337 Andy Tabbo Sun, 04 Jan 2009 16:58:22 +0000 http://www.ritholtz.com/blog/?p=15038#comment-137337 I love that OpEd. These guys hit on my two primary solutions: 1) Increase the social safety net to individuals and simply let the bad firms fail; 2) Introduce counter-cyclical bank reserve requirements. Per 1), think about all the Trillions of Dollars we're pledging and how much moral hazard we've introduced into our business landscape? Giving money to the losers at the expense of the winners. I think it would be far better to have just set up some massive DIP funds to handle the tsunami of bankruptcies while at the same time massively increasingly unemployment benefits. This would be a FAR more efficient means of dealing with the current economic shitpile we're facing than this flailing-about, crisis-to-crisis, manic method of dealing with these problems. Per 2), during and economic expansion, why can't we have banks INCREASE their reserves at some measured rate? And then when we have economic contractions, why can't we LOWER those reserve requirements? I know this would be difficult to implement and arbitrary in nature. For instance, what would qualify as "expansion" v. "contraction"? However, it seems like an idea worth analyzing. I love that OpEd. These guys hit on my two primary solutions:

1) Increase the social safety net to individuals and simply let the bad firms fail;
2) Introduce counter-cyclical bank reserve requirements.

Per 1), think about all the Trillions of Dollars we’re pledging and how much moral hazard we’ve introduced into our business landscape? Giving money to the losers at the expense of the winners. I think it would be far better to have just set up some massive DIP funds to handle the tsunami of bankruptcies while at the same time massively increasingly unemployment benefits. This would be a FAR more efficient means of dealing with the current economic shitpile we’re facing than this flailing-about, crisis-to-crisis, manic method of dealing with these problems.

Per 2), during and economic expansion, why can’t we have banks INCREASE their reserves at some measured rate? And then when we have economic contractions, why can’t we LOWER those reserve requirements? I know this would be difficult to implement and arbitrary in nature. For instance, what would qualify as “expansion” v. “contraction”? However, it seems like an idea worth analyzing.

]]> By: leftback http://www.ritholtz.com/blog/2009/01/the-end-of-the-financial-world-as-we-know-it-and-i-feel-fine/comment-page-1/#comment-137330 leftback Sun, 04 Jan 2009 16:33:18 +0000 http://www.ritholtz.com/blog/?p=15038#comment-137330 Bruce and Mannwich: I would buy PST/TBT for my grandmother, were she still with us, as insurance against the depredations that are bound to befall the unprotected as the US government rushes to protect the guilty and punish the innocent. I am long gold and short the 10-year note - as a core position - from here to eternity, or at least until we have sound money and a US deficit under control. Added to that I will trade around these positions with TBT and GDX. The December rally in Treasuries was almost all EoY cosmetics for bank balance sheets. At some point in Q1 we will probably take one last ride on the "D-train" - we will see liquidation in gold, oil and other commodities, P/E contraction, and a safety rally in Treasuries - I assume that there will be another period of forced deleveraging and hedge fund blow-ups are likely to be the trigger this time. I am going to try to stay long my core positions in VLO/COP and rare metals. After this phase is done, you can be "all-in" TBT/GDX or any other favorite reflationary vehicles. All aboard!! When you think about social security, the TARP and all of the other programs, it is really all over for the $, and the same dynamics apply to sterling as well. Germany will save the Euro by holding rates well above zero. Someone has to stop the insanity. Bruce and Mannwich: I would buy PST/TBT for my grandmother, were she still with us, as insurance against the depredations that are bound to befall the unprotected as the US government rushes to protect the guilty and punish the innocent.

I am long gold and short the 10-year note – as a core position – from here to eternity, or at least until we have sound money and a US deficit under control. Added to that I will trade around these positions with TBT and GDX. The December rally in Treasuries was almost all EoY cosmetics for bank balance sheets.

At some point in Q1 we will probably take one last ride on the “D-train” – we will see liquidation in gold, oil and other commodities, P/E contraction, and a safety rally in Treasuries – I assume that there will be another period of forced deleveraging and hedge fund blow-ups are likely to be the trigger this time. I am going to try to stay long my core positions in VLO/COP and rare metals. After this phase is done, you can be “all-in” TBT/GDX or any other favorite reflationary vehicles. All aboard!!

When you think about social security, the TARP and all of the other programs, it is really all over for the $, and the same dynamics apply to sterling as well. Germany will save the Euro by holding rates well above zero. Someone has to stop the insanity.

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