Conspiracy of Optimism
Interesting discussion by NYT media columnist David Carr on a recent CNBC Power Lunch segment with Nouriel Roubini and Nassim Taleb: Predicting Crisis: Dr. Doom & the Black Swan.
As Roubini and Taleb were discussing a major restructuring of the economy, some of the questions were reflective of what we have previously described as the Conspiracy of Optimism (mad props to SocGen’s James Montier for that turn of a phrase).
Carr notes that numerous websites were somewhat aghast at the hunt for stock tips in the midst of such otherwise serious debate:
“Last Monday on “Power Lunch” on CNBC, there was a segment that many people noticed and passed around the Web. Under the rubric “Turning the Corner,” Bill Griffeth and some of his colleagues were interviewing Nouriel Roubini, a professor of economics at the Stern School of Business at New York University, and Nassim Taleb, a derivatives trader, author and theorist about randomness.
The two guests — known as Dr. Doom and the Black Swan, nicknames that usually land on people who do their best work with chain saws and thumb screws — were fresh off their appearance in Davos, Switzerland, where they were hailed as visionaries for having foreseen the financial crisis. Mr. Griffeth started things out briskly by saying, “What would it take to make you bearish on this economy right now?”
You mean bullish, his co-host, Michelle Caruso-Cabrera, interjected. They cracked wise about Freudian slips, but the entire segment, it turned out, was about trying to somehow find the horns of a bull on two ferocious bears.”
Carr then got to the meat of the issue: Cheerleading:
“The news media in this country are often accused of being contrary and pessimistic, but rarely is that the case. Amid carnage, economic or otherwise, reporters are trained to look for “glimmers of hope,” “signs that the worst is behind us” and “miraculous tales of survival,” especially those that involve a baby — or in this case, a 401(k) — somehow making it through a hurricane, tornado or mudslide.
And for people who cover personal finance, the narrative of big stock swings and instant profits has been replaced by cautious advice about hunkering down with T-bills and cash. Being a financial news anchor must seem like owning an ice cream parlor where spinach is the only flavor on the menu.”
I don’t know why I find it surprising that there is some pushback against happy talk on TV. But it is an unexpected refreshing change of pace.
>
Previously:
Predicting Crisis: Dr. Doom & the Black Swan (February 9, 2009)
http://www.ritholtz.com/blog/2009/02/predicting-crisis-dr-doom-the-black-swan/
Apprenticed Investor: Lose the News
Barry Ritholtz
The Street.com, June 16 2005
http://www.thestreet.com/story/10228215/1/apprenticed-investor-lose-the-news.html
Source:
This Just in: The Market Is Still Dead
DAVID CARR
NYT, February 15, 2009
http://www.nytimes.com/2009/02/16/business/media/16carr.html
February 16th, 2009 at 12:36 pm
I love the Feedback area on CNBC.com because I email them all the time, especially lately. I emailed them and told them how great Roubini and Taleb were as guests but that their stupid hosts kept interrupting them. I email them and tell them that when their hosts/journalists/whatever they are keep interrupting the guests and talking on top of each other, we can’t understand anything out of the cacaphony and we also miss hearing what the guest has to say. CNBC people are becoming prima donnas and it’s really annoying that they think we want to hear THEM more than we want to hear Roubini, Taleb, Seidman, etc. Maybe if enough of us complain, they will get the message!
February 16th, 2009 at 12:58 pm
Wow, that video is too funny. Talk about people talking past each other.
We have to change the entire system.
Uh-huh, so what sectors do you like?
We have to change the entire system.
Right, so what’s going to be the turning point?
Is my mike on?
Holy Cow.
February 16th, 2009 at 1:00 pm
Barry,
If you want to see a perfect example of what you’re talking about, look at the article “Why this Recession Seems Worse” on the CNBC home page. It is truly an amazing piece of obfiscation that completely fails to consider, or even mention, what really is different this time.
February 16th, 2009 at 1:02 pm
Look under the headline, “Is this recession worse than others?”
February 16th, 2009 at 1:02 pm
“The news media in this country are often accused of being contrary and pessimistic, but rarely is that the case. Amid carnage, economic or otherwise, reporters are trained to look for “glimmers of hope,” “signs that the worst is behind us” and “miraculous tales of survival,” especially those that involve a baby — or in this case, a 401(k) — somehow making it through a hurricane, tornado or mudslide.”
Cheerleading? I’ll admit I don’t watch CNBC, but I don’t see any evidence of cheerleading in the MSM. However, I suspect after tomorrow that will change.
I just grabbed the “Top Stories” headlines for Yahoo Finance:
Government pension agency braces for recession
World markets fall as Japan’s recession deepens
Wall Street might search for motivation this week
Oil edges higher on OPEC talk of more output cuts
Japan economy shrinks at fastest rate in 35 years
Doesn’t sound like cheerleading to me.
February 16th, 2009 at 1:20 pm
Thanks for the topic, Barry…even my man Leftback has accused me of being pessimistic, lately..I believe his term was even more downbeat than Mish.
Barry, I am over 50, and I have enjoyed the last few decades investing for myself…very much. Do I think we might have a depression? Yes. Am I depressed by it? Not in the least.
I think some of us are realistic..we are like Sgt. Friday..”just the facts, m’aam”..and the facts that I see are that the MSM is coming around to the recession/depression…and since most of them are trained in journalism I don’t expect them to be able to read an earnings statement and make head nor tail of it.
I hope it doesn’t last….I make much better returns in bull markets…but if it does, I will get through it without losing my shirt…and so will most of the bloggers on this site…
February 16th, 2009 at 1:25 pm
While I respect Roubini and Taleb I think it’s accurate to say both have called six of the last three recessions. Roubini has been “bearish” since ‘06 and if you can’t call the date of a collapse you have done zero. Right now they look like successful witches that all of us must pay attention to…..OK, but not really.
February 16th, 2009 at 1:33 pm
That interview really nauseated me as I watched it at the time. That smug “know it all” Caruso-Cabrera made some comment like: “The fact that these guys are now treated like rock stars must be a sign of some sort of bottom.” I can’t disagree with someone trying to make a “contrarian” argument, but she was basically dismissing these guys, who happen to have some serious assertions about current conditions.
Someone needs to explain to MCC that a B.S. in economics and dating a rich banker does not make you smart. And also, such qualifications do not give her the grounds to dismiss the arguments of people who are orders of magnitude brighter and more educated than herself.
I actually think MCC is better than the average CNBC hack (Kernan, Kneale, Griffith, Herrera, Bartiromo, Burnett) and I enjoy her libertarian stance on many issues, but she is one smug woman.
February 16th, 2009 at 1:42 pm
@howard0339
what you are saying is ridiculous- NO-ONE can call a date of collapse- they can only bring you the information that would indicate that a collapse is likely. I have been bearish since 2004 knowing the housing market would collapse and I was amazed that it took as long as it did to finally get to the point where there was not one more fool to take another flipped house off someone’s hands at a profit. I knew it wouldn’t last even with people telling me that this time would be different. When everyone around you is jumping into a “no way you can lose” investment that is when you should be running as hard as you can in the opposite direction.
February 16th, 2009 at 1:51 pm
@AT: For someone who’s been so wrong so often recently, it’s astonishing just how smug, arrogant and cocky MSS still is. That little crooked, fake smile drives me insane every time I see it. She and others are just a tad too sure of their brilliance for my liking, especially in light of just how wrong they’ve been for so long. Do these people ever admit they’re wrong?
I actually switched over to Bloomberg for good last week. I just couldn’t stand the circus on CNBC any longer.
February 16th, 2009 at 1:52 pm
That’s MCC, not MSS.
February 16th, 2009 at 1:57 pm
For the last few weeks I have been feeling like a young infantry soldier that realizes only through the grizzly sights and acts of battle that the war so waited to fight was far too horrific to witness, let alone desire. And just like in war there are far too many casualties to justify any posture of righteousness for finding yourself on the “winning” side. Trust me, we will all pay reparations for this. There are statues of irony and sadness in so many places that it is hard to imagine things ever resembling the normalcy many of us were unaware of. I know things will improve and it will simply take the great revolver of time – but I am impatient. I am impatient in hearing those that feel the need to be righteous and lecture the oblivious, the ignorant or even the choir. I am impatient in those that feel the need to self-promote even in the face of such national and world crisis. I am impatient with human nature and all our inherent shortcomings. I am impatient with myself and all the irony of circumstance. But most of all I am impatient with the process – in realizing we have only started our collective journey down this broken road to our uncertain tomorrow.
February 16th, 2009 at 2:05 pm
@Mannwich
Welcome!!! I completely switched over to Bloomberg in 2006. I can’t tell you how much better it is hearing both sides of a story. Sorry CNBC. It’s similar to the difference between U3 and U6 (Table A-12) of the Employment Situation.
February 16th, 2009 at 2:07 pm
howard0339 Says:
“… Roubini has been “bearish” since ‘06 and if you can’t call the date of a collapse you have done zero.”
________
If you’re a cigarette smoker, and can’t pick the exact date you’ll get cancer or emphysema, does not make the event any less likely to happen, nor does it make your doctor’s advice to quit any less valid.
I was anticipating a general economic collapse during the dot com boom, based on the speculative frenzy and “we’re all rich” (although we have done nothing to earn anything)” zeitgeist of that time. What I didn’t foresee was the inflation of a housing bubble – and complete and utter insanity and criminality of those involved – of the magnitude we’ve just experienced. When you hear statements such as “real estate NEVER goes down” with financing being provided to people who don’t have a snowball’s chance in hell of making good on that financing, you can bet that the shit will soon be hitting the fan.
Bill Regardie, who published a quite successful, glossy, CRE mag in the days before the S&L crisis was Responsible for this little nugget of wisdom: The time to get out of anything is when the bullshitters begin believing their own bullshit.
Even with that insight, he didn’t get out in time, and his once dominant publication went bust.
As you say, Roubini was bearish in ‘06. Seems to me, that was a really good time to get out.
February 16th, 2009 at 2:11 pm
It’s one thing for the MSM to “discuss” the financial crisis (after all, it would be pretty ludicrous to ignore it) or report data such as the numbers from Japan.
However they seem to be very uncomfortable (for obvious reasons) when the message from folks like Roubini, Taleb or Simon Johnson steers the discussion too close to the real heart of the matter such as banks being insolvent and in need of nationalization, the wisdom of relying on the same “experts” whose economic ideology led us into this mess to determine the best way out or the fundamental issue of whether we will finally break the grip of the banking cartel and return the government to the people …or we will not.
February 16th, 2009 at 2:12 pm
I saw the interview and thought that the mismatch was perhaps as great as Pilot interviewing Christ…
February 16th, 2009 at 2:17 pm
About Roubini, I admire his brilliance, attention to detail and conviction. On the other hand, he admitted his 401K is in stocks and it is down the same as everyone else’s. This makes me wonder, is he an absent minded professor or is his forecast partly just an act? I’m not kidding here.
February 16th, 2009 at 2:19 pm
Barry,
Cabrera, last week, in a discussion of this interview claimed Taleb has been making the same statementsfor thirty years, and has made money only thee times in thirty years.
I sent CNBC an email asking for evidence of this and to invite Taleb to defend himself. they didn’t respond .
It is not just the insesant cheerleading, it is the attempt to discredit anyone who is not a bull, and of course provide no evidence. They never do this with the bulls. No matter how wrong they are.
February 16th, 2009 at 2:21 pm
@Mannwich: MCC is always in “pose” position: body slightly turned, head tilted… may be hoping for a modeling career. CNBC: stopped watching their nonsense several years ago; Bloomberg on mute is excellent; on only if something deemed important
@guidepostings
reread your post several times… poetically expressed. .. many feel the helplessness and great frustration of casualty we have yet to witness.
February 16th, 2009 at 2:36 pm
@Stressertalk: Exactly. That cocky little “pose” (she also likes to stick out her well-endowed bosom, which is clearly her biggest “asset”) drives me completely insane. She’s not even remotely good looking enough to be a model and not smart enough (or not nearly as smart as she thinks) to be weighing in on serious economic/market-related issues.
February 16th, 2009 at 2:39 pm
I watched the video too and laughed when they made the slipup. Now that I think of it will I be laughing a few years from now if the economy doesn’t improve and we are worse off than ever? Are we that out of touch with how difficult things are getting or just so apathetic? I guess you can be if your getting payed to give news that really doesn’t affect you.
February 16th, 2009 at 3:04 pm
i was gonna post the interview on my blog and title it:
2 Geniuses v. 6 Idiots
but felt too kind that day and moved on.
nice running with this, props to Carr as well.
February 16th, 2009 at 3:13 pm
I have the same criticisms of CNBC that most other bloggers have.
HOWEVER, I think it’s possible that there’s some method to their madness. That is, maybe there are a lot more people “out there” who are interested in having someone “holding their hand”, and telling them that everything’s going to be all right, than there are people who simply want the truth (good or bad).
So maybe CNBC can charge more for advertising if they are constantly trying to brainwash people into thinking that stocks can only go up, and that the economy can only get better (Bloomberg TV and CNBC Europe notwithstanding).
February 16th, 2009 at 3:15 pm
National Eyes = http://www.stimuluswatch.org/ <—
CLICK to find your state of city’s upcoming STIMULUS bill projects. The web site is updated every 10 minutes.
February 16th, 2009 at 3:36 pm
The markets are down 30-40% from 2006 levels. Boy, that Roubini sure was wrong!
February 16th, 2009 at 3:36 pm
Wall Street Optimists explained:
http://usphoenix.net/The%20Arts/doomsday_parade.htm
February 16th, 2009 at 3:38 pm
@10 cc:
The discussion about Japan is over. They won the race. If the numbers are even worse next quarter, as poited below, then they will be the first developed country in a depression since the GD..
http://www.bloomberg.com/apps/news?pid=20601080&sid=awafhm2zA41A&refer=asia
Japan’s Economy May Shrink 20% This Quarter, Institute Says
February 16th, 2009 at 3:56 pm
While it had been building up for some time, I did also see this awful segment live last week. I am also now a new Bloomberg subscriber, esp. since it is only a buck and a half per month from Dish. I’ll easily make that back from not needing to drink as much. Sold my shitty 60% loser GE last week too, I would say it goes to zero like the rest of the financials, but Berkshire will probably jump in at some point, so not ready to short it either.
I can’t put an exact figure on it, but CNBC has cost me money in the last 12 months. Back during some of the major weekend news cycles last year, CNBC was running the bleeping infomercials, they only broke into the weekends a couple times and only rarely carried overnight coverage of the international feed, leaving huge coverage gaps.
It’s not worth complaining to the network, these guys work for one of the dogs of the Dow, they must have an assignment to singlehandedly raise GE’s price by pumping the index.
February 16th, 2009 at 4:00 pm
@Bruce: Stop it with all of these little “facts” of yours! You’re depressing me with all of this “gloom & doom” nihilistic talk.
February 16th, 2009 at 4:01 pm
Barry,
You should see Krugman’s reaction to the CNBC interview. I thought his comparison to the Monty Python skit was apt.
February 16th, 2009 at 4:05 pm
Manny:
Had a big windstorm at my house last week (no, Barry wasn’t there…..
) and used a chainsaw all weekend…now that, my friend, is a lot harder work than picking investments…still sore today..
February 16th, 2009 at 4:12 pm
someone once said: “Bull market climbs a wall of worry and Bear Market descends the slope of Hope”.
Hope… we have plenty of it.
February 16th, 2009 at 4:19 pm
guidepostings Says: February 16th, 2009 at 1:57 pm
gp,
with this: “I know things will improve and it will simply take the great revolver of time..”
simply, for clarification, what makes you so confident that, merely, the passing of Time will improve our lot?
February 16th, 2009 at 4:28 pm
Yes…CNBC…the network where they call it an “exclusive” when they interview their own Chairman (Immelt of GE). Where their top personality dispenses advice while throwing chairs and using a meat slicer on dolls. The network of Kneale and Kudlow. The network that encouraged currency trading for average investors in their Portfolio Challenge…I’ll stop before I get rolling.
February 16th, 2009 at 4:29 pm
Manny:
Time to leave the salt mine, but if you read these actual stories it can drive you crazy…don’t try this at home…now just look at the two opinions:
http://www.bloomberg.com/apps/news?pid=20601080&sid=aiuxsuSRDmKk&refer=asia
Japan Economy Goes From Best to Worst on Export Slump, Yen Gain
First:
“Manufacturers have been left with big structural excesses in capacity that need to be worked out,” said Hiroshi Shiraishi, an economist at BNP Paribas in Tokyo. “It’ll take years.”
…and later in the SAME article….
“The situation isn’t as bad as looks,” said Sugiura. “Companies are saying that, while the downturn is severe, they can survive. They’re adjusting very, very quickly.”
I would like to see Maria comment on these two divergent opinions…I did watch the Celebrity Jeopardy episode with her in it where she descibes the invertebrate in the backyard as a ” computer worm” and the entire audience fell into an embarassed hush…
Back for more mayhem tomorrow…
February 16th, 2009 at 4:31 pm
@globaleyes: Thanks much for the Stimulus Watch link. Fascinating. How very depressing to see how much money gets poured down a hole to realize so little.
February 16th, 2009 at 4:33 pm
I think Burnett is surprisingly knowledgeable and actually interviews for the purpose of getting information. She stands out in that sea of know it alls. To the few of you who seem to glean actual trading information from TV of any kind: TV is entertainment. Period. Semi-hot babes babbling about what to buy is a sure ticket to disaster. A few years back, before Bartaromo crashed and burned, I was at a big party and was amazed at the number of major hitters who got stock tips from her. A relative at Goldman told me that whenever Maria shot off her mouth the phones rang off the hook with guys buying what she touted. And Goldman clients are major league. I think a lot of us do whatever the one with the biggest tits tells us to do (two marriages later) and will probably continue to do so until a babe with big brains walking through a door actually appeals to us (”Wow, will you check the size of them brains on that one.”). Like the 35th of Never. I’ll end up with the babe who invents the atomic fork.
February 16th, 2009 at 4:52 pm
IF CNBC were a restaurant its anchors would all be dishwashers !
February 16th, 2009 at 4:57 pm
Mark E Hoffer:
I surmise from your fatalistic attention to my otherwise sorrowful comment that you believe the rapture is rapidly approaching.
My pragmatic leaning is that we are simply on the downside of the natural cycle. As unfortunate as that reality is – and as aware of the desperation that will surely bring dislocations of war and societal madness – the silver lining I hang onto is the rebirth of a vibrant culture that inevitably springs out darkness. Sadness beckons art to fill the desolate voids of this topical madness we have been obsessing in.
Finance and commerce may well be the circulatory system of the world, but culture and art is its heart. I look forward to its rebirth.
February 16th, 2009 at 5:06 pm
Puplava had a really good Faber interview last weekend. You can get it from financialsense.com or get a summary plus link to the interview at http://www.worldofwallstreet.us
MontyHigh
February 16th, 2009 at 5:06 pm
I caught the “interview” live. I was pretty excited, I love the worst case scenario and Doom and Swan together is as good as it gets. What a disgrace. It was as if they put them on to mock the bearish perspective. It was like watching two doctors who found that silicone implants cause cancer being interviewed by a bunch of strippers. “Yeah, but what if you get B’s instead of double D’s?” Clowns…
Every time I see MCC or Kneel Down Kneale or Kudlow or Francis or Bart “report” all I can think is “Please! Take the markets’ c*ck out of your mouth so I can get some balanced info here.” On Friday they asked people to email in signs that things are NOT as bad as we think!
February 16th, 2009 at 5:09 pm
Great post.
When I saw this interview I was dumbstruck at the shameless, over-the-top childishness of the CNBC staff. But it’s not just them – there’s a gal anchor in the mornings over on Bloomberg who gets so excited when the market rallies, she actually coos! It’s enough to make a geezer bear like me look forward to a bounce by 11!
February 16th, 2009 at 5:13 pm
gp,
do me a favor, and confuse me, not, with one ‘awaiting the rapture’..
this: “Sadness beckons art to fill the desolate voids ..” may be True, though Human Action, not, merely, the passage of Time, makes it so..
IOW, We animate Time, and that which it Measures: Time, itself, is Sterile.
February 16th, 2009 at 5:25 pm
Mark E. Hoffer:
In our intellectual/semantic dual you play the asshole with a sword.
http://www.youtube.com/watch?v=1cdYrBsWhtk
February 16th, 2009 at 5:30 pm
CNBC truly blows but they are simply reflecting the idiocy of the floor traders. Listen to the old man himself, Arthur Cashin, go on about how “they” took the market one direction or another. Who is “they” if he’s not one of them? Is there collusion and if so why is not illegal? (Of course there is and of course it is.)
And poor Bob Pisani. Day after day he starts his segments with “it’s simple folks” then proceeds to point to commodities or the banks or sand or whatever as the absolute cause of the market’s movement. That’s the beauty of the NYT piece — nobody ever just says “damned if I know” even though they’re all just guessing. Why? Because they make money on the instability.
As with all guessing and gambling, some will get it right. Ignore CNBC, WSJ, Fortune, Barron’s and the rest of the self-serving bogus media (and a special shout-out to IBD with their burn-the-poor-for-fuel Ayn Rand editorials — bloody pigs).
Do your own homework and know your risk tolerance. That’s really about all one can do.
February 16th, 2009 at 5:33 pm
http://krugman.blogs.nytimes.com/2009/02/10/nouriel-roubini-and-nassim-taleb-on-cnbc/
February 16th, 2009 at 5:40 pm
gp,
given your response to my request for clarification, you engendered a similiar reaction on this side..
let’s just call it even..
FFR: it would be “duel”, not ‘dual’
http://www.thefreedictionary.com/duel
though, maybe Time, alone, will learn you..
February 16th, 2009 at 5:42 pm
I for one couldn’t watch the interview as I knew CNBC would show disrespect for these two men. This country was founded on people having a different from your own, but when they are consistently correct you should respect it. This is a case where CNBC is consistently wrong and should be taken out behind the woodshed and put out of its misery. Hey I have woodshed bring them here.
February 16th, 2009 at 5:43 pm
perhaps tool would be more appropriate for you.
http://en.wikipedia.org/wiki/Tool_(insult)
February 16th, 2009 at 5:43 pm
@Bruce: Yes indeed. I guess the power of denial lives on with far too many. The irony of that is denial seems to be a natural human defense mechanism that actually makes things worse in the end and does little to no “defending”.
After all, most people don’t want to be labeled a “gloom & doomer” or “debbie downer” or anything. My wife is the only person that I know who takes me serious (only because she has to live with me and listen to me repeat myself for effect) about what we’re facing and I’ve been droning on and on about it for 3-4 years now. From everyone else I usually get a blank stare, accompanied with utter silence, or a comment akin to but “where I live is different” or “my profession” (e.g. health care) is recession-proof.
February 16th, 2009 at 6:01 pm
Marc Faber says Best Stimulus Plan is to Cut Government By Half – http://www.cliffkule.com/2009/02/best-stimulus-cut-government-by-half.html
February 16th, 2009 at 6:24 pm
Bruce,
Makes one wonder if Japan will take the opportunity to think about rebalancing their economy. Probably not.
Japan is a lot like the US in one respect. They’re ruled by a financial/industrial oligarchy under the pretense of a democracy. The average Japanese has borne the burden of their long malaise. Their elite have been just fine. Our own elite seem to be in the process of trying to ensure that the same scenario plays out here.
I suspect though, that the Japanese were always more realistic about this than their American counterparts. Hence their proclivity to save rather than consume while here at home, we borrow and spend and consume while deluding ourselves that we live in a representative democracy where the people we elect will return the favor by looking out for our interests.
February 16th, 2009 at 6:39 pm
Mannwich.
Similar deal hear. When I go to parties people always ask me what I think about the markets etc…I just try to avoid those conversations now….talk about sports and entertainment….I try to avoid the discussion where I talk about
a) The debt/credit crunch ravaging the entire global economic system;
b) Decades of excessive government interference that have caused much of the problems we have now, including but no limited to:
i. Fed monkeying around with interest rates causing aberrations in the natural economic cycle;
ii. Massive subsidies for homebuilding which helped create the bubble;
iii.Tax credits if you buy large SUV/trucks;
iv. The ethanol/biofuel DEBACLE/DISGRACE which caused the blowoff spike in Ag products and is contributing to the destruction of Rain Forests and world hunger.
v. CAFE standards imposed on automakers which forced the Big 3 to make “small cars,” rendering them more uncompetitive than they otherwise would be.
vi. SARBOX. Answering the pitchfork crowd looking to hang all businessmen “cause we lost money in the stock market and can’t be our fault,” Congress responds by passing a terrible piece of legislation, incentivizing companies to list outside of the U.S. or to go/stay private.
vii. Maintaining our role as World Police, causing America to spend 100’s of billions every year to support the Empire.
viii. The “War on Drugs” that has done nothing to prevent drug use but has done everything to foster organized crime, violence and a severely overcrowded prison system. (Note: I don’t use drugs at all, just an observation.)
But I’m trying real hard to stay positive about our future….
February 16th, 2009 at 6:45 pm
I don’t know, the whole thing that makes me happy these days is thinking about Sports Illustrated Models but that’s just me… YMMV….
February 16th, 2009 at 6:56 pm
Don’ you get it? It’s not a Conspiricy of Optimism. It’s the Audacity of Hope.
February 16th, 2009 at 7:00 pm
@try2bamused
You’re referring to Betty Liu. She does seem to get depressed when the market is tanking. I think it’s pretty funny.
February 16th, 2009 at 7:16 pm
Andy – logged in to take issue with iv. Ethanol … we need to break the oil monopoly .. its an engineered option
the iii. SUV/trucks tax credits and v. CAFE standards imposed … it seems you don’t support medling … those two are opposite ends otherwise … imo iii. was an initative to help ramp up Iraq war needs (to bad the Pentagon didn’t ask for uparmor from the getgo)
again imo v. somebody needs to push towards the next step … in general .. energy policy growth and not business as usual .. because gas @ $4.50 a gallon is a big part of our current recession IMFO
and imfo the last 8 years seem so engineered .. diabolically engineered
February 16th, 2009 at 7:31 pm
A comment from a character in a film I watched this weekend startled me. The character’s comment was in reference to the number of locals in her Minnesota town who die every winter via freezing because they attempted to walk in sub-zero snowy weather to find assistance after their cars had slid into a ditch, rather than staying inside the car as troopers always intoned.
She said the deaths, “culls the place of the stupid ones”
Does it feel like we’re in the midst of an economic “culling” of sorts…given all the assorted economically lethal animal traps (of a mental kind) laying about?
The newest ‘culling traps’ include: “my area is different”, “my field is recession-proof”, “Yes I’m still unemployed but I’m afraid to ask my bank for a mortgage loan modification cuz it will hurt my credit score”, “All we need to do is to give the consumer and markets some confidence” and “the stimulus will turn the economy around”.
The older mental ‘culling traps’ are legendary: Real estate always goes up; we’ll never have a national downturn; the problems are confined to sub-primes and They Are Contained; CDS mitigates the risks; securitization mitigates the risk; markets are self-regulating; BRIC and emerging markets will pull anyone out of a recession; and “the economy will turn around in two quarters.
Did I miss any?
The idea that we’re tossed into a field of traps for an overdue economic culling is hard to shake.
February 16th, 2009 at 7:43 pm
Maybe CNBC should broadcast from outside LittleRock tomorrow
http://www.flickr.com/photos/keithelder/3278255527/
February 16th, 2009 at 8:41 pm
God I love this blog. It’s getting hard to keep track of this thread.
@GP: really liked your first post. But then I picked up a scent of arrogant AH. I still like your posts and hope you keep them coming. To coin a phrase, my misspelled words and all .
February 16th, 2009 at 8:44 pm
I am shocked by the pessimism on this board. GE is around 11 dollars a share. Wells Fargo is around 16 dollars a share. Both are blue chip companies that will definitely survive, especially after the recent bailout; yet, they are being priced as if bankruptcy is imminent.
The problem with Mr. Market is that he tends to swing wildly in both directions. From 2004 to 2007, he swung too high, and now, he is swinging far too low. CNBC and other media channels mimic the information given to them. Their constant repetition of bad news creates a self-fulfilling loop that leads consumers to believe the sky is falling. In reality, every major country in the world is working together to ensure more money is pumped into the economy. To be bearish now is to bet against every major country in the world. Even if you believe you are smarter than every major government, once the stimulus money gets into the hands of consumers, you will also be betting against worldwide consumers. The key issue is getting the stimulus money into the hands of consumers that will spend it, i.e., the middle class and poor. The current stimulus package, while imperfect, accomplishes that task by spreading its largess across multiple and diverse fronts, from high-tech workers to construction laborers.
Will inflation occur because America is printing trillions of dollars? Yes, but in an era where housing prices–the primary source of most Americans’ wealth–have deflated, inflation is not an imminent threat. Focusing on inflation now is like a commander refusing to send tanks and planes against invading ground forces because he is reserving them to fight a distant, advancing Navy–yes, fighting the Navy will be important, but allowing ground troops to invade now is unacceptable, because failing to properly combat them will result in immediate defeat.
I own and am long General Electric (GE) and Wells Fargo (WFC). By mid-2009, the market should begin swinging back to normalcy as the stimulus payments reach consumers. If you can time the exact moment that Mr. Market will moderate himself, good luck to you. For those of us not blessed with prescience, we can only buy now and hold for the long term. Mr. Market will regain his optimism at some point–trillions of dollars are enough to make even the most depressed person happy, at least over the short term.
(Disclaimer: under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result.)
February 16th, 2009 at 9:22 pm
@auden5: The only problem I have with your post is that IMHO, too little of the Stimulus plan money is going to make it past the fat cats. More trickle up at taxpayer expense.
Smarter than every major government is irrelevant. More corrupt and self-serving – that’s relevant.
IMHO smart is an irrelevant term. Arrogant and in control seem to be the operative words.
February 16th, 2009 at 9:27 pm
wow that interview was actually cringeworthy. michelle caruso and bill griffith should be hosting a daytime talk show…oh wait. roubini and taleb should boycott that channel.
February 16th, 2009 at 9:49 pm
I meant that goofball dennis something, not bill griffith.
February 16th, 2009 at 10:54 pm
auden5:
Good Luck with all that…..
February 16th, 2009 at 10:57 pm
@howardo339
> I think a lot of us do whatever the one with the biggest tits tells us to do (two marriages later) and will probably continue to do so until a babe with big brains walking through a door actually appeals to us (”Wow, will you check the size of them brains on that one.”).
I have Meredith Whitney’s phone number if you’re really serious. You know what they say: Three’s a charm.
February 16th, 2009 at 11:02 pm
dead hobo:
Roubini has another 20 years to retirement(or at least till he taps his 401k). Why wouldn’t he be in stocks right now? He never said he was a market timer, right?
February 16th, 2009 at 11:02 pm
GE – going below $10. Give it time.
Futures looking a bit wobbly tomorrow (and Nikkei looking uglier by the second). Getting that sinking feeling again. Too late to unload WFC and back up the truck for some more SRS?
February 16th, 2009 at 11:36 pm
@auden5- GE and WFC are not priced for bk. they still have over $180bln mkt cap between them. C, AIG, FNM, FRE are priced for bk. BAC and some English banks, too. Low price alone does not indicate bk, you have to look at shares and therefore market cap, too.
February 17th, 2009 at 12:29 am
S&P futures currently $18 below fair value. Let’s see if that holds up until tomorrow morning.
February 17th, 2009 at 12:35 am
yeah, but did you see gold? : ) $960 at the moment…
February 17th, 2009 at 2:20 pm
@auden5: “To be bearish now is to bet against every major country in the world. Even if you believe you are smarter than every major government…”
How can anyone not be smarter than government?