10 Dirty Wall Street Tricks
By Barry Ritholtz - February 22nd, 2009, 6:40AM
Another classic Paul Farrell rant — the 10 “dirty tricks” Wall Street lobbyists likely will use to help jump-start a new bull market:
- Gridlock helps the rich get richer
- No Glass-Steagall revival
- Keep rating agencies ‘official’
- Limit new derivative regulations, keep ‘shadow banking’ alive
- Offload toxic debt into a government-owned ‘bad bank’
- Support executive pay limits — in public, anyway
- Create accounting standards loopholes
- No limitations on SEC hiring
- Invest heavily in lobbying
- Major PR brainwashing: Yes, yes, a new bull is coming!>
He raises many interesting and valid points; go read the entire angry screed.
>
Source:
10 dirty tricks to jump-start a new bull, fast!
How Wall Street lobbyists, PR hot shots will limit reform, brainwash America
Paul B. Farrell
MarketWatch, Feb. 9, 2009
http://tinyurl.com/10-dirty-tricks
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February 22nd, 2009 at 7:34 am
woke up this morning to all night with the tvset on *…to microsoft peacock station and their fav late night series “Life Behind Bars”
so the Fox is next in lineup with Glen Beck **rerun of the week .. did ya see that 3some of Worst Case Scenarios .. Santelli coup was brought up
** I wonder just what caused Glens jump ship .. better wages or failure to assist in elect’g the GOP to WH
* I miss the days of wake’g up to I/0 at signoff to Star Spangled Banner and the AirForce flying high
February 22nd, 2009 at 8:26 am
I occassionally read Paul Farrell’s column, but in general am turned off to gloom and doomers like this man. He seems bitter about something in his life, and frankly, I have a problem matching my thinking to what I read that he is thinking. The always half empty guys are right occassionally, and now might be the time, but he is just not my cup of tea.
That said, many of the more conservative hosts on tv and radio are pretty strange fellows. I read the Wikipedia entry on Larry Kudlow, and what a loser of a life…alcohol and cocaine addition, dropped out of graduate school, married 3 times, degree in history…and this is what is taken for conservative thought?
Similarly Rush Limbaugh, many others…the point is that like Obama, none of these individuals is better than the average investor.
I am more conservative in my thinking than many of the bloggers here..but I am not angry about life, like Paul Farrell, and tend not to trust ranters and people with one trick pony messages….
February 22nd, 2009 at 9:11 am
Bruce,
you’re a decent example of the Type that, given the faintest crack of an opportunity to do so, will assist in leading Us out of the current miasma engulfing, ever, more spheres of our, Today’s, existence..
will Future winds blow, hard enough, to work that type Fissure? we’d have to admit to ‘inhaling’, first, certainly..
I’m, of course, confident that the Weather, and the Climate that coddles the current State, will change, sufficiently, to allow a new day’s Dawn.
Til’ then, let us be sufficiently well-stocked and battened-down, Not, buttoned-up.
http://www.thefreedictionary.com/Batten
of course, it’s def. 2 (b)
February 22nd, 2009 at 9:13 am
OK by me, as long as I can make some money out of it. Except for the bad bank. That one’s no good. It won’t do anything anyway, despite popular opinion to the contrary. A bad bank is just fantasy based magic wand thinking, unless you’re the one who is lucky enough to sell Uncle Stupid some of your toxic inventory for as close to par as you can get.
About accounting, most of it involves estimates anyway. For example, even something as simple a depreciation involves “a systematic and rational allocation of costs”. Fixed costs in inventory are a best guess. Once you get past bookkeeping, most standards evolved to keep thieves at bay, I mean, standardize statements and reporting. Mark to market is just another best guess approach.
Invest in lobbying, OK. That creates jobs.
I’m not sure why the others are issues, as long as idiots aren’t allowed to run the show.
About accounting, I still think the tools to keep people honest are in place or close to being there and just need a little tinkering. SarbOx was envisioned to be used against normal accounting fraud. A little ratcheting up and it can be good to go on any company that accepts public money or, by law, to any group and not just publicly traded companies. The standards that concentrate on controls could put bank presidents and the like in jail if they screw up. Currently, the internal control standards concentrate more on phony inventory, ghost employees, timing misstatements, ordinary financial stateemt fraud, and similar things.
February 22nd, 2009 at 9:30 am
The validity of all this junk is well summarized by the comments on Glass Steagall. Is anyone… anyone…. calling for the reinstitution of Glass Steagall…..therefore if it’s not reinstituted that proves the wall street “conspiracy” has been successful?….. 90% nonsensical bs aimed at I’m not quite sure who since most of the readers of Marketwatch are hardly likely to be budding Che Guevaras.
Bruce in Tn Says:
February 22nd, 2009 at 8:26 am
“the point is that like Obama, ”
….And how did Obama get bracketed with Kudlow and Limbaugh……as far as I know he’s not been married several time, or gotten hooked on coke, booze, painkillers or Dominican ladies of the night …..nor do I think he’s ever boasted of his stock picking prowess.
February 22nd, 2009 at 9:31 am
About accounting loopholes and ordinary everyday accounting concepts….
Let’s again look at depreciation. You have book depreciation, Then, you have tax depreciation. Then you have adjustments for tax depreciation as they involve earnings and profits calculations (a tax issue and basically a third calculation). You have timing differences between books and taxes. You have 1245 depreciation recapture on disposal, and maybe a 1231 capital gain. There’s a lot more that could be involved.
The concept of depreciation is the expression of an estimate. Like mark to market. Only it’s easier to steal large amounts using mark to market than it is using depreciation. But you can still shave a little of the edges with book depreciation. Thus, SarbOx and it’s currently less than useful attention to detail. Mark to market will always look a little shady. It’s the nature of accounting and accounting estimates. There is no ‘correct’ once and for all answer and there never will be.
February 22nd, 2009 at 9:34 am
otto:
the point is that Obama won’t save your bacon either…extremes of left or right have no basis in your investments…politics do not belong…OK?
February 22nd, 2009 at 9:39 am
Bruce in Tn Says:
February 22nd, 2009 at 8:26 am
You know Bruce as an additional thought on these lines Kudlow/Limbaugh aren’t alone in the reformed drunks/addicts column what about Beck, Colson, Bill Bennett, Hitchens, the list is endless. Then why are all these neocons either former marxists or the offspring of former communists of one sort and another. There’s nothing worse than the reformed sinner…..don’t you know any…… they are usually in my experience a pain in the butt.
February 22nd, 2009 at 9:40 am
Obi Won Kenobi: “these aren’t the droids you’re looking for”
Storm Trooper: “these aren’t the droids we’re looking for”
Erin Callan: “Our cash position is strong”
CNBC: “Lehman’s cash position is strong”
not dirty tricks, more like Jedi Mind Tricks
February 22nd, 2009 at 9:42 am
Frankly Otto, Obama has been pretty disappointing so far…
However, for those who expect a miracle, if we don’t get it…I imagine the sun will continue to change hydrogen to helium 24/7 and realists will continue to make money..
And if republicans win in four years, some of us will just note it, and go on with our lives…
February 22nd, 2009 at 9:44 am
Bruce in Tn Says:
February 22nd, 2009 at 9:34 am
otto:
the point is that Obama won’t save your bacon either…extremes of left or right have no basis in your investments…politics do not belong…OK?
…You clearly think Obama is an extreme leftist when in fact he show all the signs of being a pragmatic center leftist but then I suspect in your scheme of things any Democrat is by definition an extreme leftist. And you can hardly divorce politics from economics although I’m totally willing to agree ideology all to often gets in the way of good economic practice as we’ve seen over the last eight years.
February 22nd, 2009 at 9:47 am
Bruce in Tn Says:
February 22nd, 2009 at 9:42 am
Frankly Otto, Obama has been pretty disappointing so far…
…..Well after all he’s had three weeks to solve the greatest financial crisis since the great depression….get us out of Iraq….win the war in Afghanistan……bring universal world peace……cure cancer….solve Maddona’s marital problems ……what’s he waiting for…
February 22nd, 2009 at 9:52 am
ottovbvs Said::
February 22nd, 2009 at 9:47 am
…..Well after all he’s had three weeks to solve the greatest financial crisis since the great depression….get us out of Iraq….win the war in Afghanistan……bring universal world peace……cure cancer….solve Maddona’s marital problems ……what’s he waiting for…
comment:
And he will never amount to much if he has enablers like you making excuses for him.
February 22nd, 2009 at 9:57 am
since we’re being to, yet more, shining examples..
I’ll cross-post this, from nearby thread on “Nationalization”:
otto,
comparing SB to Luskin provides grand insight into you’re capacity for rational discernment.
thanks, again, for making that abundantly clear..
~~
February 22nd, 2009 at 10:01 am
Well let’s see:
1. No lobbyists in my administration…er, no.
2. Tax cheats…er, yes.
3. No Japan or Zombie banks…er, yes.
4.We’ll have a bipartisan approach…er, no.
5. Stimulus package?…er, when 80% of the spending occurs later than 2009?…er, no.
6. Otto, damn it man, just realize that extremes of either thought probably make you poorer…Dwight Eisenhower warned against the military industrial complex even though he was the armed forces chief for world war II…all parties have become skewed to the right or left…and expecting this administration to improve your statis in the world probably is not going to happen…You think Joe Biden is any smarter or better than Rick Santelli?…puleasssseeeeeee! Warren Buffett is down 45%…so what if he is leaving all his wealth to charity…his job is to make the people who invest with him better off…as the CEO of BRKA, he is not doing that job well right now…period. He’s liberal, and he’s lost here…so is Kudlow…so are many others…Obama was seriously underprepared to lead the country…now that he’s here we’ll just have to see how he does…frankly I don’t care who is president, it could be Tiny Tim…
February 22nd, 2009 at 10:02 am
status
February 22nd, 2009 at 10:17 am
Bruce in Tn Says:
February 22nd, 2009 at 10:01 am
….Yes surprising though it may be I do actually believe Joe Biden is better qualified to be VP than Rick Santelli who apparently represents your beau ideal of right thinking. I do wish you folks would get out of the comic book world where every snapshot becomes a motion picture
….. You can’t run an admin without some people who’ve been involved in lobbying it’s a matter of degree. I think there are two so far in the Obama admin there are two not two hundred
….Tax cheats omg no one in any govt has ever fiddled his taxes. In the scheme of things it aint important
…..Insolvent banks disappear with a wave of the wand like they did for Paulson and Bush..it’s reall simpple after all you could do it
….Bipartisan…..the public seems to have decided he made a much bigger effort than the Republicans
….Stimulus…..CBO 74% by mid 2010
You’re right about the consequence of extremism…….as the events of the last eight years would indicate
February 22nd, 2009 at 10:22 am
Mark E Hoffer Says:
February 22nd, 2009 at 9:57 am
“comparing SB to Luskin provides grand insight into you’re capacity for rational discernment.
thanks, again, for making that abundantly clear..”
……I guess only time will prove if his predictions are as accurate as theirs.
February 22nd, 2009 at 10:30 am
Otto:
Some people go their entire lives unhappy and hoping that people in power will be punished…
The only people that makes unhappy is that individual…
..Good luck.
February 22nd, 2009 at 10:31 am
The idea that deregulation – or little or no regulation – is preferable to stringent regulation (especially in finance and banking), is ridiculous. If one follows that line of thought to its natural conclusion, we end up Vikings – if I can take it from you and hold it, it’s mine (until someone takes it from me).
There is an interesting lesson to be learned when the past decade of criminality and chicanery by our banking, and financial institutions (exacerbated by the corruption of our law enforcement system) is compared to that of our neighbor to the north. Yes, Canada is in recession (we are, after all, their largest trading partner), but their banks did not generate toxic debt. Their domestic mortgage portfolios have a much smaller default rate. Their banks – which are rated the strongest in the world (by recent estimates) – are much more tightly regulated than ours. Therein is the reason why.
What really perplexes me is why anyone upper-middle class or lower would seek to have the laws that protect them from predation by the elite to be overturned. Such people seem to want to hold the door for the burglars who are stealing the family wealth from under their noses. Fools one and all, and not a conservative among them.
As for Paul Ferrel, I think he’s probably a pretty happy guy – who happens to see the perils of the folly of self-regulation. Since when is wanting to see the majority protected by the laws that bind us a negative thing?
Wake up, ya’ freekin’ morons.
February 22nd, 2009 at 10:33 am
dead hobo Says:
February 22nd, 2009 at 9:52 am
ottovbvs Said::
February 22nd, 2009 at 9:47 am
“And he will never amount to much if he has enablers like you making excuses for him.”
___________
Do tell – where were you and what were you doing when the crimes of Bushco were taking place?
February 22nd, 2009 at 10:37 am
dead hobo Says:
February 22nd, 2009 at 9:52 am
“And he will never amount to much if he has enablers like you making excuses for him.”
I don’t need to make excuses for him. He’s basically hitting them out the park at the moment and the opposition is in deep sh$%. This guy looks looks the biggest political talent since Kennedy and FDR and because the country has been run into a ditch both at home and abroad he’s got a huge opportunity to make a name for himself. Whether he will or not remains to be seen. But what do know is you can hardly start making decisions on that score after three weeks and anyone who says so is either a fool or totally blinded by partisanship. On the economic front for example as The Economist pointed out the odds are the stimulus bill while not perfect is when combined with the natural resilience of the US economy probably going to result in a turnaround by Spring and Obama will get the credit. Clearly you and Bruce are betting against America so we’ll have to see whose right.
February 22nd, 2009 at 10:38 am
Otto,
I completely agree. The President is doing what he did during the campaign. Did you notice how slow they seemed to be to react to things that came up? It seemed to take them forever, whereas the McCain team was always reacting lightning fast.
The problem?
McCain usually got it wrong. He’s an emotional guy. In many ways, he’s *worse* than Bush, because at least Bush knows he’s an idiot. McCain is the worst imaginable combination–a jock who thinks he’s smart.
Obama always got it right. He’s a thinker first and a doer second. He wants to get it right the first time, and if he doesn’t know that something’s going to work he’s not going to pretend that it will. We need to get used to the idea that major national decisions (wars, saving the banks) shouldn’t be decided by gut-level thinking.
Reactive, gut level “thinking” is what got us in this mess.
February 22nd, 2009 at 10:41 am
http://www.calculatedriskblog.com/2009/02/report-rbs-to-split-into-good-bank-bad.html
CR is reporting via times.uk that RBS is going Good/Bad, this should be interesting. Does the good bank get the equity stock, and shoots it to the moon, or does the bad bank get the equity and gets a big fat zero?
February 22nd, 2009 at 10:42 am
Bruce in Tn Says:
February 22nd, 2009 at 10:30 am
Otto:
Some people go their entire lives unhappy and hoping that people in power will be punished…
The only people that makes unhappy is that individual…
..Good luck.
Bruce is this you your talking about or me? I have no expectation that the people in power are going to get punished being a firm believer in the principle that shit rolls downhill.
February 22nd, 2009 at 10:50 am
Obama’s policies will not change the reality that is coming. That reality is the result of thinking that we didn’t need to invest in inspecting, improving and maintaining the dykes that would hold back the flood waters. Obama is trying to rebuild the dykes as the water and winds are topping them. One might suggest that moving the populace to higher ground would be more prudent. Problem is, there’s precious little higher ground, and what higher ground we do have is occupied and defended by the same people who should have fixed the dykes in the first place.
February 22nd, 2009 at 10:51 am
franklin411 Says:
February 22nd, 2009 at 10:38 am
My belief exactly. The misunderestimators of this guy are legion. From the Clintons thru media pundits, McCain et al to Republicans in congress. At the moment he doesn’t need to break a sweat and he can get them on the ropes as he demonstrated a couple of weeks ago. He’s probably got until the middle of next year and if the economy isn’t improving by then he’s in trouble. But on balance the odds are it will be on the mend…after all it’s been running since December 07 and will I think bottom sometime in the next six months.
February 22nd, 2009 at 10:55 am
Marcus Aurelius Says:
February 22nd, 2009 at 10:50 am
“Obama’s policies will not change the reality that is coming.”
Change the reality that is coming?….it’s here buddy….unless you think the SP is going to 150 as someone above suggested……This recession is going to bottom in the next six months bump along the bottom for awhile and start to turn in the spring of 2o10. Everyones entitled to their opinion but that’s my scenario.
February 22nd, 2009 at 10:57 am
ottovbvs,
Lighten up. I was using satire. You were thumping about how people are complaining that he hasn’t solved all the world’s problems in a couple of weeks. Calling you an enabler in this context is humorous. Look it up.
February 22nd, 2009 at 10:58 am
We will not bottom until 2015 – if we do everything perfectly. I don’t think that will happen. We’re in for a world of hurt. Neither optimism nor pessimism will have any measurable effect on the future. That said, it would benefit us to keep bailing, in that giving up the ship will certainly be worse than trying to save it.
February 22nd, 2009 at 11:06 am
ottovbvs:
My comment was not a dig at Obama. He has inherited problems that cannot be diverted. It’s not his fault, and he’s doing what he thinks is best. I support his efforts, but I don’t think they will turn the tide.
You are calling the spring of 2010 as the point of an uptrend, I’m calling 2015 as the bottom, if we are flawless in our responses AND very lucky. Truth is, I think we are past the point of redemption, and that our fate will follow the post-Antonine history of Rome (alas, I toot my namesake’s own horn).
February 22nd, 2009 at 11:10 am
AndrewShaw Says:
February 22nd, 2009 at 10:41 am
I know someone in the UK who has been very very badly burned by RBS. The British govt contrary to BR claim the other day are absolutely desperate to avoid de facto nationalizion of the banks. Having read oodles on this subject I’m coming around to the view that the bad bank concept is the way to go . There was some investment manager from CA on Fast Money the other night and he was proposing basically that the govt set up a bank, take all the toxic stuff at “Bank fixed” valuations and then liquidate over ten years if necessary. The banks are on the hook for 50% of the losses so they could be writing checks for awhile but it gets all this junk away from the three quarters of most banks that are still making money. The taxpayer is going to end up losing maybe half a trillion but it’s a small price to pay. The problem is primarily a political one of getting the loot to fund the bad bank which is going to be a couple of trillion. It sounded like a good solution to me. Having said that the Fed has already taken about 1.35 trillion of Bank collateral in return for cash, most of it still on bank balances at the Fed, and no one has raised a peep.
February 22nd, 2009 at 11:18 am
Marcus Aurelius Says:
February 22nd, 2009 at 10:58 am
We will not bottom until 2015
You’re comment noted. This prediction at roughly eight years would make the current depression substantially worse than that of the “great” one in the thirties when there were about 3.5 years of negative growth and actually give it a duration somewhat greater than that following the failure of Jay Cooke and Co in 1873 which is estimated to have lasted about 5.5 years. As I said everyone is entitled to their opinion.
February 22nd, 2009 at 11:19 am
Generational Theft? Sorry, That Money’s Already Been Stolen
by billmon
http://www.dailykos.com/story/2009/2/22/11528/2240/518/700197
A great read just in case you missed it
February 22nd, 2009 at 11:35 am
wow. what an ugly turn this thread has taken, a festival of non-communication in a blog, fer gosh-sakes!
Peeps talking right past each other. Whooda thunkit?
Hey Bruce (karen too, if you’re out there), let me take a stab at a useful OT — I’ve been watching PRGN, and seen it rise up past 6 (on the stock buy-back, I think), and descend back to under 4, where it is currently yielding over 50%.
I am corn-fuzed. Clearly, the market is expecting a dividend cut, ’cause over 50% is not a real-world yield, at least not for a company that’s going to be around in a year or three. But if they had any thoughts of cutting the dividend, why do the stock buy-back ahead of the dividend cut?
Looking at the income statement and balance sheet, PRGN seems to be able to support the 50-cent dividend, at least based on the Sept’08 data — I expect the quarter to be reported to be absolutely horrid, and would expect a dividend cut to some lesser level based on that, but I dunno — I have no experience in that industry, no clue as to whether they are more soundly operated than their competition. Wikinvest has a nice discussion of the Batic Dry Index, which touches upon the major players in the shipping industry, and the differences in their contracts and approaches to their markets. PRGN seems to be pretty much in the middle, to my eye, but IANASE (I Am Not A Shipping Expert).
I look at the movements of the Baltic Dry Index, and it seems to be having a bit of a dead cat bounce, understandable seeing how far it has fallen and how quickly it got there. That said, looking at the levels it is bouncing off of, they are eerily similar to those of the bottom on 2002 (I have no long-term data, pretty sure it does not exist), so maybe we have seen the lows in international trade.
Inflation in commodities seems to be showing signs of life (maybe deflation is on the ropes, papered over with currency?), and rising commodities prices imply rising profits on shipping.
So here’s my puzzle — I can’t figure out if PRGN is a buy or a trap. I’ve seen no evidence of the quarterly earnings being posted, which happened about a week ago last year. Smells ominous to the suspicious side of my mind. Waddya think? Is it worth risking a toe?
February 22nd, 2009 at 11:47 am
dead hobo Says:
February 22nd, 2009 at 10:57 am
ottovbvs,
Lighten up. I was using satire.
I thought I was satirizing the folks who really believe this tripe. Put my rather pronounced reaction down to my aversion to misinformation.
February 22nd, 2009 at 11:50 am
What a loaded topic, BR!
I’d have to go with CNBC host Larry Kudlow trotting out Jerry Boyer & Don Luskin & Jack Gage & Fritz whatever-his-name-is to tell us “stocks are undervalued” and are “the best investment for the lang haul”, etc. Why doesn’t Ben Stein appear on that show anymore?????
February 22nd, 2009 at 12:21 pm
This is a most excellent read:
http://www.dailykos.com/story/2009/2/19/05524/5446/499/699191
February 22nd, 2009 at 12:22 pm
km4:
Just saw your link. Apparently, kos is really on top of the shenanigans. Nice to know.
February 22nd, 2009 at 12:48 pm
If folks can’t figure out Obama is a centrist, it’s a safe assumption they’re wrong about just about everything else. No way we even see the hint of a bottom until 2012. Too much delusional thinking to wash away.
February 22nd, 2009 at 12:52 pm
CNBC is doing its best on #10.
February 22nd, 2009 at 12:57 pm
Marcus Aurelius yes there’s about 3 or 4 posters over at Daily Kos ( Billmon is the best and as you know had Whiskey Bar for some time until he burned out ) that can compose economic diaries equivalent to BR on this blog, Calculated Risk, Economist’s View.
February 22nd, 2009 at 12:58 pm
Last night at 3AM, I came upon this realization and posted on Nationalization thread:
“I am confident in making a major call right now…I see the market rolling over once S&P breaks 750, likely this week…volume will pick up…market will drop 30% or so to 500, Dow to 5000 (Bill Gross’ call from 7 years ago will finally be proven correct). Gold miners will re-test Oct. lows. Once this happens, it will be time to cover all shorts and go long gold miners for a spell. I don’t know if it will be safe to buy and hold them for the ultimate boom, but with tight stops you could attempt it. This will be discounting a depression. If we have something worse than the Great Depression, S&P must go to 150.”
Now that I have some more time, I can add more color. I remain extremely bearish on housing, the economy and corporate earnings for reasons that I post ad nauseum. That said, when is the next leg down for stocks to start discounting this? We have been on a low volume sideways period since November (the Dow broke below that range last week…S&P and Nasdaq are about to). Using my favorite index of animal spirits, QQQQ, I have noticed a very good analog to current technicals…Sept. 1 2008. Both then and now, we are coming off a long, low volume side move. MACD, RSI and stochastics are identical now to September. The 1o and 21 day MA on QQQQ are identical, with 10 day crossing below 21 day. II Bulls are around 30% and falling hard both times. On total market put/call, the 10 day MA was 95 both times after bouncing…the 21 day is actually worse now…89 vs. 96 in Sept. Last September, the market went into a 2 month freefall and I believe that will happen again now. As for gold stocks, they should get hit too, as Gold/oil is 26, and gold is a crowded trade. If the S&P comes near my 500 target and sentiment washes out, I will for the first time in memory cover my shorts and play a bounce, using gold mining stocks. Real interest rates are negative and eventually, that will cause miners to rocket, but I think a gold plummet is coming first to shake weak hands out.
February 22nd, 2009 at 1:10 pm
Steve B. –
What’s up with QID? Maybe these ETFs aren’t for holding…
February 22nd, 2009 at 1:19 pm
I hope the American public is as smart as India Voters. Since, I was a small kid, I have always heard in India, since, people are uneducated, they are manipulated by politicians and media to vote. But the time and again in Indian elections, these uneducated, stupid people have proved to much smarter then the politicians and PR machine. So over the long run, underestimating masses is not a smart idea.
February 22nd, 2009 at 1:29 pm
@Mitch:
What do you mean? QID made a 77% total return in 2008 (don’t forget to add over $10 in distributions back to the current price)…people want to kill me when I tell them I didn’t lose 40% last year like they did. This year, it is up a few pennies, because QQQQ is down only less than a buck and it has been volatile. For me, I’m happy and I have held over a year and just added more. I feel confident now is the time to own QID as outlined above. It should get back to 100.
February 22nd, 2009 at 1:31 pm
I’m so glad to see some acknowledgment of:
on this blog, even if it’s just a quote. BR would do well to take this issue up himself. He has rightfully blamed them in the past for their part in the crisis, but has never offered a good solution regarding them in my opinion. Expecting the rating agencies not to act in their self-interest is foolish, but it’s made even worse by the government offering them protection as “Nationally Recognized Statistical Rating Organizations”. Also, basing capital requirements on their ratings is silly too. Even before this debacle, the rating agencies had a reputation for being too slow to alter their ratings. The rating agencies clearly have too much power, and the government and Basel II are to blame for this.
February 22nd, 2009 at 1:48 pm
Ah, Wall Street and there accountants remind me of the NBA – rules are to be broken just so long we get bigger audiences. A travel isn’t a travel anymore they lost that rule the day Earl the Pearl Monroe set foot on the floor. Or shoudl we say double-foot/feet? Our whole society has been traveling down the proverbial slippery-slop for years. Like other generations there will come a time to do a step-function back, a regrouping if you will. No, a whole relignment. But then again Rome went on for years!
February 22nd, 2009 at 2:20 pm
Remember, Washington’s run by 40,000 lobbyists not 537 elected politicians.
Well, there’s the heart of the problem isn’t it? Is it not crystal clear that the only chance to reverse the systemic corruption begins with public financing of elections? It may not be the only step but without neutering the lobbyists, nothing changes.
So Wall Street’s army of lobbyists will have to pull off some fancy tricks, many at odds with today’s demands for “change” by the president and political reformers.
That’s what will make the next few years so fascinating to observe. If my small circle of family and aquaintences is at all representative, it seems that many of the comfortably numb are beginning to wake up. They may not yet understand exactly howthey get screwed, but the “of the people, by the people, for the people” myth is starting to unravel.
If nothing else, that means that Wall Street/Washington’s efforts to continue screwing us will not be taking place off-stage, in the shadows behind the curtain with most of the audience asleep anymore. It won’t stop them from trying but they will have to pull it off from center-stage with a big spotlight on them.
February 22nd, 2009 at 2:20 pm
Justin:
Traveling, carrying, and walking . . . hell, if I could have gotten away with all of that, I’d have been a HS all-star. I can’t even watch an NBA game anymore – my SO can’t stand me blowing my whistle every 30 seconds.
February 22nd, 2009 at 2:36 pm
It sure looks like Obama’s first hundred days, are going to become America’s worst hundred days…
Great rant here on that, and on White House Press Secretary Robert Gibbs attack on CNBC’s Rick Santelli.
http://www.sliderontheblack.com/politics-money-and-markets/white-house-press-secretary-robert-gibbs-must-resign-for-santelli-attack/
I have to agree with “Bruce in Tn.”
Has their been a single campaign promise that’s been kept?
And as far as the markets?
You’ve got Greenspan, Dodd, and Graham saying “Nationalize” them, and Tax-Cheat Timmy, and the the administration saying no?
Who’s on first?
You know we’re in trouble when they have to wake Volker from his 2 p.m. nap to calm the markets.
I’m thinking it’s 50:50 that the DOW breaks sub-6000 by the G-20 meeting.
Michael
PS: Is there a ” 2 x short Geithner” ETF yet?
February 22nd, 2009 at 2:43 pm
Michael Cerulean:
“Has their been a single campaign promise that’s been kept?”
Yes, there has:
http://www.politifact.com/truth-o-meter/promises/
(from the St. Pete Times – not exactly a liberal/Democratic Party mouthpiece)
As for the worst hundred days – pick ANY hundred consecutive or non-consecutive days of Bushco, and tell me how these benefitted our constitutional democracy.
February 22nd, 2009 at 3:27 pm
And the thre common themes are:
1) Lie
2) Cheat
3) Steal
I do believe it’s biting them severely in their cancerous rectums. This ain’t ovah!
February 22nd, 2009 at 3:36 pm
@Steve Barry -
Your thoughts on picking up gold stocks after another leg down in the market really resonate – thanks for sharing that. Which ones do you like? ABX? GDX? Juniors?
Disagree that the double inverse etfs are appropriate for a buy-and-hold strategy. Check URE and SRS performance for 2008 – Both down significantly. That should give you pause…
As for the politics, Obama inherited the mother of all messes which cannot be argued. That said, he’s already made some disturbing missteps, namely letting Nancy Pelosi hijack the stimulus bill.
February 22nd, 2009 at 3:54 pm
ottovbvs,
I thought Obamessiah was going to turn around the Bush disaster in no time flat? I thought he had the “Plan to move away from the last 8 years,” and that seeing as how he was inevitable SIX MONTHS AGO to win – why has the market dropped 2,800 points since then? Where is his plan? A real vote of confidence!!! I thought the entire world would be rejoicing in our hope and change. Seems like the same old cronyism to me:
Blagojevich, Burress, Geithner, Daschle, Richardson, Kellifer, Flynn, Dodd, Moran.
Full Disclosure: I hate all politicians equally!
February 22nd, 2009 at 4:02 pm
Steve Barry @ 12:58
QQQQ got down to $22 in October of 2002.
It does seem very probable to me that it’ll get back there before long.
February 22nd, 2009 at 4:12 pm
drey @ 3:36
QID and SDS should be considered separately from the others.
February 22nd, 2009 at 4:18 pm
Damn. I knew I’d miss something if I went to church. Must be warming up outside. Lizard-brains everywhere.
IMO, Marcus Aurelius is correct. The good times are over for a long time. We’ve not yet hit bottom. Not even close.
Ottobvs–get your facts straight. While there was a moderate recovery between 1933 and 1937, followed by another banking crisis and plunge in economic performance, output and employment did not return to pre-GD levels until 1940. The GD lasted over a decade. It took an empire-expanding war to pull us out of it.
At present, we have two nearly-failing states within our sphere of influence. One is just south, where in Mexico, the drug lords are becoming virtually as powerful and well-armed as the military and police. Great piece on that in this weekend’s WSJ. The other is Pakistan, particularly in its west, as the Taliban has become a shadow government beyond the reaches of official Pakistan.
Perhaps this is where we find our salvation from our economic troubles. I guarantee that it won’t come from a bunch of bureacrats trying to prop up failing markets by creating the monetary illusion that they aren’t crashing.
Go long guns, ammo and gold.
February 22nd, 2009 at 4:27 pm
Marcus said, “What really perplexes me is why anyone upper-middle class or lower would seek to have the laws that protect them from predation by the elite to be overturned. Such people seem to want to hold the door for the burglars who are stealing the family wealth from under their noses. Fools one and all, and not a conservative among them”.
I believe those people are the unfortunate victims of superb perception management. It didn’t start with Vance Packard’s book The Hidden Persuaders but he certainly cleared up how people can buy a car or tooth paste because they think it will help them get laid. I suspect that neither our amoral friend in Tn or our laconic pillar of erudite clipped phraseology in Pennsylvania belong to the poor or middle class. So logically they respect each other’s elevated views and sniff at our naivety about life in general and economics in particular. They have some money and it sure as hell ain’t THEIR fault that the world appears so messed up. It really ain’t that bad, you know. Perhaps they can make this world a “BETTER WORLD” by patiently educating us on the fact that might really does make right. They love to play with us but don’t get them mad. It’s really ugly when these guys realize they are as fallible as the rest of us. And heaven forbid that they are “forced” to feel some obligation to do some good that they haven’t already done. Conscience is for suckers like us, you see.
I guess I’m just too weak and low class to keep from pulling the tails of fat cats.
Hi Mr. Hoffer, how’s it going? Hey, dead hobo, always remember that if it makes money it’s okay.
February 22nd, 2009 at 4:33 pm
“Go long guns, ammo and gold.”
And this comes from a guy who just went to church…..
JESUS H. CHRISTY!
I always thought Orwell’s doublethink where people applauded because there ration of chocolate had beed raised (yes, RAISED) from 200 grams to 150 grams was an absurdity. Now I’m not so sure.
Winston, come on back.
February 22nd, 2009 at 4:43 pm
What is the difference between a government bureaucrat and a business manger?
A) One makes a lot more money.
B ) One is greedier.
C ) One is a lazy, leftist commie.
D ) One thinks money trumps morality.
Hint: The answer is in the mirror.
February 22nd, 2009 at 4:50 pm
AGG:
I’ll not defend church. It’s just another human institution, with all the flaws attendant to all human institutions everywhere.
But it’s not doublespeak, regardless of what I did this morning, to acknowledge the reality that a) fiat currency is barreling towards oblivion, that; b) we have at least two failing states within our empire’s sphere of influence, one of which is quite close by, and that; c) war is always a great way to juice economic performance. War is Keynesianism on steroids. Particularly if it results in an expanded empire.
So, I say again. My recommendation is to go long guns, ammo and gold.
February 22nd, 2009 at 4:52 pm
I hear that Warren Buffett is starting to talk like one of those “glass half full” types along with Greenspan, Volker and many other depressing fellows. Whay’s wrong with these people?
Turn on the TV. Watch a three Stooges tape. Remember, laughter is the best medicine. Life is full of wonderful, beautiful, amazing, spectacular, intersting things if you just keep a PROPER attitude (If you got da money) .
Have a nice day, Bruce. Avoid depression, have a beer with your bling.
February 22nd, 2009 at 5:02 pm
The Curmudgeon Says:
February 22nd, 2009 at 4:18 pm
Ottobvs–get your facts straight. While there was a moderate recovery between 1933 and 1937, followed by another banking crisis and plunge in economic performance, output and employment did not return to pre-GD levels until 1940. The GD lasted over a decade. It took an empire-expanding war to pull us out of it.
Curmudgeon: My facts are straight buddy. So spare us the generalizations and concentrate on the precise facts. After a huge drop 1929-1933 GNP had returned to 1929 levels by 1936 actually, not 1937. In that year and 1938 it fell back very slightly but was still way above 1929 levels and resumed its climb by late 1938. On the employment front when FDR took office in March 1933 it was a whisker below 25% and he had it back to 14.5% by 1936 but it spiked again in 37/38 to around 19% and then fell again in 1939. These unemployment numbers by the way DON’T include those employed on WPA and other govt projects, if they were the number for 1936 would be 9.5% and 1937 14% respectively. I suggest you re-google GNP in the great depression.
February 22nd, 2009 at 5:04 pm
So, you say again. go long guns, ammo and gold.
1) You are right about the fiat currencies eventual oblivion. This has been true since Tricky Dick yanked the gold standard.
2) Europe during the middle ages was a gigantic failed state. They functioned through feudal kingdoms. So it was and so it will be again. Are you a cop? Those people are the ones who will be “in charge” of your guns, gold, amo and anything else they want to take from you. Your main survaval tool is your brain and how well you can serve those in power. Things are just objects of value that make you a greater magnet for thieves.
3) Security is an illusion. You are rich and you’ve got pancreatic cancer. See what I mean?
4) Fear is healthy but it must be put in balance. Most successful human relations are based on cooperation, not coercion. Those potential failed states as well as our own are the fruit of greed, coercion and lack of cooperation.
We will all go back to being people who honor contacts (each other’s word) not because it’s prissy but because civilization can’t survive without it.
February 22nd, 2009 at 5:16 pm
Michael Cerulean Says:
February 22nd, 2009 at 2:36 pm
It sure looks like Obama’s first hundred days, are going to become America’s worst hundred days…
…What a pity the country doesn’t agree with you. The problem for the GOP in having the likes of Santelli, Limbaugh and Joe the Plumber being the front men for grievance ranting is that basically they are regarded as buffoons a bit like Sharpton. Now Sharpton may have done himself a bit of good as Limbaugh obviously has and Santelli may (although he went very quiet very quickly) but I’m not sure he’s done much for the cred of the Dems. Jumping on every little grievance whiner is not the way the GOP is going to get back to power but I don’t they’ve figured that out yet.
February 22nd, 2009 at 5:17 pm
I meant “Honoring contracts”. We already honor contacts here at TBP.
February 22nd, 2009 at 5:21 pm
Big Tony Says:
February 22nd, 2009 at 3:54 pm
Full Disclosure: I hate all politicians equally!
………Judging by your comments I doubt it.
February 22nd, 2009 at 5:28 pm
ottovbvs,
The GOP echo chamber is trying unsuccessfuly to do the same think it has done for oh, about 12 years. It’s not flying this time. That said, we are watching our new president carefully. He was left with way too much power by Bush and Cheney. He may use it to good purpose but then that leaves us at the monarch’s mercy. I hope congress reigns in the executive powers in the coercive government areas (war, intelligence, etc.). People are awake. The tired blab from the fascists sounds like a broken record. Maybe they are too comfortable with their oxycontin to notice. Good.
Obama is no saint but he, unlike Bush, is a patriot. Sure, he likes power but he knows we are in deep shit (sorry Bruce for the glass have full thing) so he is trying to minimize the corruption in DC. We just have to keep the pressure on our reps and Obama.
February 22nd, 2009 at 5:38 pm
@Drey:
As DL said, QID is a separate animal to me from the other inverse ETFs…I don’t care about any of the others. I’m as skeptical of QID as any paper instrument, but I follow it so closely, I can accept the risk. I know how it is performing at all times. I cannot vouch for any other inverse ETF.
As for the gold mining play, I have no time to do the research on individual stocks, so I’ll buy GDX.
February 22nd, 2009 at 5:38 pm
AGG Says:
February 22nd, 2009 at 5:28 pm
Basically agree, but then we don’t want St Francis of Assisi as president. We tried that with Carter. I want someone with minimal character flaws, imagination, great communication and management skills, the general good at heart, and all the low cunning and deviousness of FDR.
February 22nd, 2009 at 5:46 pm
For those worried about war:
I have good news. We really, really can’t afford it any more. What’s different now? Hillary was just begging the Chinese to keep buying treasuries. What’s with that? Why make it public? Because the Chinese made it public first. The Chinese are long term thinkers. They just raised their “US deficit spending is BULLSHIT” flag. We have major economy problems. We can’t fund both war and stimulate the economy because our Treasury bonds will go tits up. China said, “You try it and we’re out”. So watch how we majically get lots of peace all over the world for a while. The defense (offense) contracts can be chopped no matter how much yelling and screaming we get from f22 makers.
We are in for quite enough pain now. Hell. they could contract KBR to supply MREs to food shelters. The armed forces have uge contingents of people who do nothing but plan on how to whip up a temporary city from the plumbing to the houses and streets lickety split to provide for folks in trouble instead of combat troops. There are myriad possibilities for retooling from swords to plowshares. We just need, as a country, to decide that cooperation is better than coercion. I DO believe in a better world.
February 22nd, 2009 at 5:53 pm
@Ottobvs: Sorry buddy, but virtually all economists agree that the GDP did not end until the US entered WWII. If you want to claim that your interpretation of the economic data is more prescient than mine and theirs, so be it. But you are no less general in your assertions and interpretations than am I.
AGG: Thanks for the lecture. I happen to know that life is ever uncertain, and I’ve got a fairly good understanding of human history to fall back upon in case I ever forget. It may come as something as a shock to you, but my advice to go long guns, ammo and gold was a bit tongue in cheek (except perhaps the gold part). It was just my way of saying that economic failure often begats that most Keynesian of stimulus plans, i.e., war.
And for the record: I do not believe any politician of any stripe will or can save us from ourselves. We have become fat, lazy, selfish and stupid over the course of our half-century plus of world hegemony. We’re too lazy and selfish to even have enough children to replace ourselves. No politician can hold back the vast sweep of demographics that, in my view, is the “big picture” reason for what ails us and the rest of the developed world. Until humans start growing more humans, all the economic manipulations in the world can’t and won’t make the economy sustainably grow. Ask Japan.
February 22nd, 2009 at 5:55 pm
“GDP” should be “GD”
February 22nd, 2009 at 6:23 pm
The Curmudgeon Says:
February 22nd, 2009 at 5:53 pm
@Ottobvs: Sorry buddy, but virtually all economists agree that the GDP did not end until the US entered WWII. If you want to claim that your interpretation of the economic data is more prescient than mine and theirs, so be it. But you are no less general in your assertions and interpretations than am I.
…….I see you’re sticking with the generalizations not to mention putting words in my mouth. Obviously the Depression did not completely end until 1941 but there was already significant recovery in that GDP which after all is the principle measure of depressions had returned to 1929 levels of around 850 billion by 1936/37, fell back to around 825 billion in 1937/38, but was up at around 900 billion by 1939. Dont these numbers seem small. Unemployment had also dropped considerably as my numbers demonstrated even though population increased by about 10% over the thirties. Unfortunately I can’t embed the Dept of Commerce numbers that tell this story.
….I can tell by the “sky is falling” tone of your last para that you don’t do nuance. Clearly judging by this comment no one has told you the US population is expected to be at 400-450 million in 2050.
“We’re too lazy and selfish to even have enough children to replace ourselves. No politician can hold back the vast sweep of demographics that, in my view, is the “big picture” reason for what ails us and the rest of the developed world.”
February 22nd, 2009 at 6:45 pm
“….I can tell by the “sky is falling” tone of your last para that you don’t do nuance. Clearly judging by this comment no one has told you the US population is expected to be at 400-450 million in 2050.”
Not if the immigrants stop coming. Ex-immigration, the US population is not growing at all, but is barely maintaining itself. Western Europe and Japan, not even. But you are correct, no one has told me that the population is expected to be 400-450 million in 2050 in the US, or at least no one that knew what the fuck they were talking about. If they were making that prediction, and had any grasp of the facts, their prediction had to be based on continued in-migration of over a 1 million people per year, which might or might not obtain. But unless birth-rates increase, it would be the only way the US is getting to that number in forty years.
And please, these are easily researchable facts. And it is not doomsaying to point them out. Just because they don’t fit your feeble, emotion-addled view of the world does not make them any less real.
February 22nd, 2009 at 6:55 pm
“1 million” s/b 1% or 3 million
February 22nd, 2009 at 7:11 pm
I think the immigration will stop here. Moreover, I think we will experience massive emmigration. The midweat went bust during the great depression and it’s still underpopulated. Why? No jobs. Machines do the farming mostly. I don’t think Americans are lazy. I think we work too damned hard. Why is it okay to go nuts working for 20 years to get rich and then do nothing but criticize the rest of us the rest of one’s life? We do have cultural cognitive problems. We have a faddish value concept that keeps slipping and sliding around. It doesn’t breed stability or children. At any rate, we can all hopefully agree that we all will have to make do with less for some time now. We’ll get over it.
February 22nd, 2009 at 7:26 pm
The Curmudgeon Says:
February 22nd, 2009 at 6:45 pm
Not if the immigrants stop coming. Ex-immigration, the US population is not growing at all, but is barely maintaining itself. Western Europe and Japan, not even
……It hardly matters what their prediction is based on. After all the main source of population growth in the period 1840-1920 was immigration. Check the census bureau which is “easily researchable”…If my feeble , emotion addled, memory is correct their prediction is for a US pop in 2050 of around 410 million based on both organic growth (which is still occurring contrary to your assertion) and immigration. There are other estimates out there that have it as high as 450 million, hence my providing a range. Either way we are far from doomed demographically….quite the reverse in fact.
February 22nd, 2009 at 7:36 pm
“correct their prediction is for a US pop in 2050 of around 410 million”
Oops a literal… that should have been 400 million not 410 but they give a range as I recall from somewhere around 360 million to around 500 million. But most estimates have it 400 to 450 million…it’s gone up about five million in the past six years!
February 22nd, 2009 at 7:38 pm
If y’all really want to cut bait, overpopulation is one of the world’s biggest problems (the US is not excepted), and it’ll get worse before it gets better. I can remember when we were taught that the oceans had an inexhaustible supply of food that would feed the burgeoning global population. Shit’s all fucked up.
February 22nd, 2009 at 7:39 pm
…last comment has huge economic ramifications – currently and into the future. Resource allocation, and all.
February 22nd, 2009 at 8:14 pm
@Curmudgeon
If you check here you will find the Census Bureau model numbers, as well as a bunch of additional models including for immigration.
http://usphoenix.net/Business,%20Government,%20Society/pop-article.pdf
The fact is, excluding a prolonged depression that would cause the birth rate to drop, the birth rate has remained fairly constant and immigration (including illegal) has been increasing. The birth rate alone says we are growing exponentially. We can easily forecast a 2050 population in excess of 450M. SO there.
February 22nd, 2009 at 8:26 pm
CNBC certainly has the PR angle covered. And, forgive the off topic nature of this, please, Santelli is a child. That said, he will become a cable sensation (FOX?) and will be cashing seven figure checks because, well, that’s just how stupid a large chunk of America is.
Scott in Chicago
February 22nd, 2009 at 11:38 pm
I was a dc politico from 73-85, then went into the biz. Since then I’ve worked both sides of the NY/DC corridor. With respect to this lobby post, it misses a few points.
The financial services lobby is anything but united. Most of the heavyweights like GS who spends at least $6M/year, (not including political giving,) have lost their stature. Their actions are indefensible. The entrenched ABA, SIFMA and even the Business Roundtable are conflicted. Do they support Citi, BAC, etc. or do they save the grander system at the expense of their corporate advisory boards?
In order for the white shoe firms to prevail they will need to think outside the box. Is there any evidence of creative thinking these days? Beyond defending bond covenants to their dying breath, while letting equity holders take the hit, I don’t see much in the way of solving the crisis.
In the past few weeks the strains and pressures between this old guard and both the Obama Administration and The Hill have become more glaring. We’re going in the wrong direction right now.
Nerves are raw. What The Street has yet to embrace is that it must fight populism, lack of knowledge and legitimate outrage in a short amount of time as financial services reform is just around the legislative corner.
In previous years, The Street has been able to stand its ground, (play the obvious cards it has,) and pretty much get its way. This is why the SEC, FINRA and NASD have come under sharp criticism of late. In addition consumers of financial services products have also been weak and unable to mobilize into a voice of reason. (I challenge any reader here to tell me one advocacy group that has clout for investors.)
However, in spite of the bleak outlook Wall Street is not a homogeneous industry. Many firms conduct business honorably. This includes firms on both the buy and sell side. Its now time for these firms to get in the game; to step-up and advance the virtues of capital creation lest inexperienced and conflicted legislators regulate while carefully watching the latest polling data.
To take a page from the over-used expression about the difference between capitalism and a centrally planned economy, one should never forget that capitalism is indeed problematic and in need of review. Its saving grace is that its vastly superior to ALL other economic systems.
In the past six months there have been many show hearings on Capitol Hill. Of all these I was struck by the House Financial Services Committee review wherein they summoned the heads of major American hedge funds. The hearing started out testy, but very quickly Members began to receive information and analysis that was offered with sincerity and integrity. By the time the hearing was over, Members were asking the hedge fund managers about what they would do to cure the woes of the global financial system.
As Barney Frank gaveled the hearing closed he commented that it was refreshing for Members to hear directly from the leaders of a group of investment interests rather than its lobbyists. At least that day, the industry made valid and legitimate points. However, far more work is needed and since most of the major players on The Street are deeply wounded, (and have diminishing credibility,) its up to the next tier of managers, leaders and investment professionals to step forward and insure the American system of capitalism, which is still truly the envy of the world, can lead this economy back to growth and vibrancy. That is unless you’d prefer watching a string of back-loaded deficit spending packages skewed towards political interests. The point that’s lost with this article is that the old-line firms are going to have great difficulty asserting their will. In a reform debate Goldman, Morgan, Citi, are not the enemy. The enemy is naiveté and the perception that Uncle Sam can cure all that ails.
February 22nd, 2009 at 11:51 pm
“However, far more work is needed and since most of the major players on The Street are deeply wounded, (and have diminishing credibility,) its up to the next tier of managers, leaders and investment professionals to step forward and insure the American system of capitalism, which is still truly the envy of the world, can lead this economy back to growth and vibrancy.”
BR,
as above, yon Market, yet, beckons anew..
as always, when given the Lead, stretch it out–the Turtle is, still, in the Race..
February 23rd, 2009 at 8:57 am
ardano Says: “To take a page from the over-used expression about the difference between capitalism and a centrally planned economy, one should never forget that capitalism is indeed problematic and in need of review. Its saving grace is that its vastly superior to ALL other economic systems.”
I agree mostly. Too bad the population in generaly kept to busy to watch the back doors being unlocked.
On population .. the business enviroment needs expansion and imo the world ecosystem needs balance and humans are messing up the balance.
On the laborious population .. business needs consumers and laborers need balanced levels of competitors.