Golden Parachute
By Barry Ritholtz - February 27th, 2009, 4:00PM
Macro Notes
Corporate credit markets feeling the correction tooPeter Boockvar
The equity market correction over the past few weeks due to sovereign credit concerns on top of China policy tightening moves, mixed US economic data and a raised bar of earnings expectations has also gotten around to the credit markets over the past few weeks. Today, the investment grade CDS index is at 105 bps, up 4 from Friday and vs 84 bps two weeks ago. It was last at this level in late Nov in response to the news that Dubai was requesting a standstill agreement on their debt obligations. The KDP high yield index is rising to the...
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February 27th, 2009 at 4:15 pm
Ah yes, the September 2007 collapse of Lehman Brothers. I was going to say it seemed more recent than that, but come to think of it, it does feel like it was about 18 months ago. A very cool graphic nonetheless.
February 27th, 2009 at 4:16 pm
John Q. Taxpayer worked and sweated on average 45 years for Uncle Sam’s Taxpayer Bank. Upon his retirement, Uncle took his pension, canceled his golden parachute, told him he’d be happier working longer and not spending his time in idle rustication. Uncle Sam then took all the jobs, and spent what little money John had saved for his grandkids. “You ants never learn,” Grasshopper Uncle Sam explained merrily…
THE END.
February 27th, 2009 at 4:18 pm
what a racket
February 27th, 2009 at 4:34 pm
None of this would bother me, except the stupid fucking government, with my tax dollars, facilitated it. I would have much preferred a market solution, i.e., insolvency for the insolvents. Only Cayne and Fuld felt any real pain at the end, and that’s only relative to how prosperous they had felt before.
February 27th, 2009 at 4:42 pm
I couldn’t agree with you more Curmudgeon…I may have to change my name to Curmudgeon junior…I thought that Bush was stupid enough…but I think Obama may have him beat. I think if you run for elective office, you should not be allowed to have children and add your DNA to the gene pool..
It is as though these morons exist on a Pacific island surrounded by an ocean of investors screaming,”Don’t give us Zombie institutions..” And what happens?
They seem hellbent to do just that very same, Japanese thing…
It does remind me of the great Dashiell Hammett line…”Shut up, he explained…”
Humbug…
February 27th, 2009 at 4:42 pm
Bruce in Tn Says: February 27th, 2009 at 4:16 pm
John Q. Taxpayer worked and sweated on average 45 years for Uncle Sam’s Taxpayer Bank. Upon his retirement, Uncle took his pension, canceled his golden parachute, told him he’d be happier working longer and not spending his time in idle rustication. Uncle Sam then took all the jobs, and spent what little money John had saved for his grandkids. “You ants never learn,” Grasshopper Uncle Sam explained merrily…
THE END.
sometimes, when there’s nothing more to say, what was said needs to be re-stated.
IOW, x2
or, differently, Curmudgeon, we should wonder who Was “Stupid”, I doubt it was, as you suggest, ‘the Gov’t’..
February 27th, 2009 at 4:53 pm
this is our Kleptocracy at work…this has nothing to do with the “free market.”
February 27th, 2009 at 5:01 pm
@ Mark E Hoffer:
IOW, x3. Excellent tale Bruce. “You ants never learn”. Indeed.
And yeah, I know who the stupid were/are. And, yeah, like anyone out there “never learning”, I feel like a goddamned schmuck. It’s why you really can’t be too cynical.
“Want to know why you lost the game, again? Because it was never intended that you win, you stupid fucking ant. Now shut up and gather me some more food for the winter.” Thus saith the Grasshopper.
February 27th, 2009 at 5:03 pm
One final thing before ending the day….I got to see a little of Power Lunch…(Uh, oxymoron…only Bill G. doesn’t hear a rattle when he nods his head)..and all the hosts were so excited that the DOW was down less than 30, even with all the “awful” news…well, didn’t end that way, and it has much further to run…
….and by the end of the day, who is the gloomiest?….Well, let’s see….
http://www.cnbc.com/id/29432216
Pros Say: U.S. Recession Looks Endless
“The Economic Cycle Research Institute’s Lakshman Achuthan said figures can be made to say anything you want them to say, but here’s the reality: there is no end in sight to this profound recession. ”
Sorry I’m OT again…but I am not used to “my” recessions lasting this long, nor having as little chance for an upside in the near future…even a couple of my partners are getting worried now, having tried to catch the falling knife a couple of times in the last year, and sustained some pretty good cuts…
February 27th, 2009 at 5:03 pm
The stupid fucking government facilitated it when they lowered the tax rates to allow this kind of nonsense, in addition to the deregulation parade. But that was the Reagan-Republican government, most closely honored and emulated by Bush the Junior.
February 27th, 2009 at 5:08 pm
I agree with Myr. There is no such thing as a “free market” that is actively supported and defended and propped up by gargantuan, sprawling military forces that are spread and projected all over the Earth. A market that is supported at its base by ginormous military might is by definition not a free market. The rule of law itself is completely dependent on the threat of coercive punishment by a functioning quasi-military apparatus (courts, police, prison) whose legitimacy is ultimately based on a nation-state’s ability to militarily defend or project itself. This is why I am not enamored of expressions like “let the market work it out” — because the expression invokes a falsehood, as if there is some Platonic “free market” out there, yearning to be unshackled.
February 27th, 2009 at 5:10 pm
And someone doesn’t know how to write- WaMu’s Killinger may have DEPARTED with $44 million but he sure as hell didn’t PART with it- at least not they we (or the folks at JPMorgan) know of.
February 27th, 2009 at 5:14 pm
It’s really too bad these guys didn’t pour all of their ill-gotten gains into Madoff’s pockets…. that would be a perversely enjoyable form of justice!
February 27th, 2009 at 5:19 pm
Paul,
Proof positive of what you’re saying came out today. Remember the Republican poop-flingers who said that Chuck Schumer caused IndyMac to fail?
Well, the Inspector General released his verdict today: OTS regulators ignored YEARS of red lights, sirens, distress flares, etc… that IndyMac was failing.
http://www.latimes.com/business/la-fi-indymacweb27-2009feb27,0,4269053.story
February 27th, 2009 at 5:46 pm
Sadly, it is not just the banksters.
Was Lee Raymond’s $400M retirement package at all in proportion to his service to ExxonMobil?
How about Les Alberthal, who fiddled while EDS burned, to the point of being sufficiently disconnected that he had his office phone disconnected, so that he could not possibly be intruded upon in his inner sanctum? I don;t recall the specifics of his retirement package, except to note that it required a corporate write-down against earnings.
Or how about his successor, Dick Brown, who was brought in to “save” the company, and actively ran it into the ground by orchestrating a series of ginormous hugely unprofitable deals and was eventually “asked to leave”? He got a million bucks a year for life, along with lifetime health care and a wad of cash so large as to reduce earnings by 6 or 7 percent (can’t recall the exact numbers)?
And then there was a guy (again, can’t recall the specifics) who was hired in as CEO of an Eastern US technology company, and let go after 6 months — with the reason being he “wasn’t smart enough” — collecting a huge bonus for that.
I’ll bet that others here could contribute other stories of non-banking corporate compensation abuse, sufficient to fill this space to an incredible depth. For a long, long time the corporate compensation in the USofA has been seriously broken. The only reason that we see so many examples of this in the financial industry is that they are “closer to the money”.
I have no solutions for this, as a real solution would involve conscience and that’s just not gonna happen.
February 27th, 2009 at 6:00 pm
Paul S Says:
February 27th, 2009 at 5:03 pm
The stupid fucking government facilitated it when they lowered the tax rates to allow this kind of nonsense, in addition to the deregulation parade. But that was the Reagan-Republican government, most closely honored and emulated by Bush the Junior.
Reply:
Nonsense. The stupid fucking government facilitated it when they went running around worrying the sky was falling just because a few banks were failing. Regardless of how we got here, and really, the lizard-brain stuff is so tiresome, it’s what’s been done since to which all of the above owe their lovely parachutes. Implicate whomever (Bush/Paulson/Bernarke/Geithner, et al), but as today’s bail-out (maybe 3′’s the charm ?) of Citi illustrates, it is an ongoing process, with no end in sight.
February 27th, 2009 at 6:42 pm
such language on a Friday evening!
My virgin ears!
February 27th, 2009 at 6:47 pm
This is not turning well. I must admit I favored the O’man over wrinkled dude and hot pants, because it felt like the country needed “something different.” I also thought Obama would be smarter about shit. I must admit to a lot of disappointment.
The stimulus really sucked bad. It should have been solely focused on providing aid to the newly unemployed and providing surgical stimulus to business. (i.e. huge tax credits to buy machinery, kit, create new businesses, etc.) He should have had a secondary “U.S. infrastructure” stimulus that was focused on transforming/upgrading the infrastructure of the U.S.
His Treasury Secretary really, really, really SUCKS. He is clearly over his head and not ready for prime time. This guy is definitely a “Number Two” type…I’m not a Larry Summers fan….but Larry Summers or Volcker would have been INFINITELY better….get some people up there with some “gravitas”….Geithner scares me…..and he scares “the market” a lot.
February 27th, 2009 at 6:52 pm
Man, its the weekend, and this infographic was amusing
Lighten up and have some fun — it will be Monday before you know it!!
February 27th, 2009 at 7:05 pm
Agreed Barry.
I’m drinking excessively and heading to a comedy club tonight for some laughs…..
Cheers. We’ll always have our family and our health…hopefully.
February 27th, 2009 at 7:12 pm
Barry, it’s not amusing if you’ve lost your job, your house, and God knows what else.
February 27th, 2009 at 7:31 pm
A bigger proportion of non-investment grade companies will go bust in the US and overseas in the coming years than during the Great Depression, according to Moody’s, one of the world’s foremost experts on credit.
By Edmund Conway, Economic Editor
Last Updated: 7:42PM GMT 26 Feb 2009
The fun is just starting.
February 27th, 2009 at 7:51 pm
Sensing the common mood, there’s not much to add. It’s really good to have a vent site, and people are doing their home work and sharing it.
Except that change is really needed, and while BO is really doing some good things, he’s pulling an Abe Lincoln: work on the most important and ignore the corruption.
That won’t work this time.
February 27th, 2009 at 7:54 pm
Either Bush’s SEC, OCC, and OTS were either an alphabet soup of incompetence, or they were ordered to do everything in their power to prop up what they knew was bulls*** with the hope it would fall apart on the next guy, allowing them to pass the blame. Take your choice.
This is Bush’s Recession (Depression?), and there’s not wiggling out of that fact.
February 27th, 2009 at 7:56 pm
Has anyone talked about how Jeff Immelt said on CNBC a few weeks ago the dividend was safe for the year and they had plenty of cash? I can’t figure out the right take on this…is it:
1) he is incompetent
2) he’s a liar
3) things have gotten much worse in 3 weeks
4) he figures CNBC is strictly entertainment anyway
February 27th, 2009 at 8:05 pm
I hate to say it but I see a divide in this country something great! Perhaps all the red states from the Mid-West Plains, all the way down to Texas, revolting and saying we no longer think or feel like the people on the coasts. What the hell they’ll have the bread-basket and an ocean port open all year long. Wasn’t that the reason Russia attacked Afganastan? I for one, being raised in the Heartland, feel like I have been raped by my fellow citizens on the coasts!
February 27th, 2009 at 8:09 pm
AND Bernanke testified the other day there are no zombie bank in the US. Disgraceful, all of it.
February 27th, 2009 at 8:10 pm
LFC, that is what is fucked about our system of government i.g. no one is to blame! EVER! FDR is held up as a hero…have you ever really studied FDR?
February 27th, 2009 at 8:14 pm
Another possibility for Immelt:
His henchmen are incompetent liars (likely both)
February 27th, 2009 at 8:31 pm
Barry,
I have just seen a guest light Larry Kudlow up!! It was on the Friday Night (02/27/09) CNBC Reports aired at 8PM EST with Melissa Lee. You have got to post a copy of this. Damn, I wish I had recorded it! Man, it was great!!
If you can somehow get a copy of the prelim to the 8PM show, that would be good too. That is where it actually started. Larry was doing his typical political ranting (closing out his show and handing off to Melissa) when Melissa challenged Larry and his political rants.
Well, 2 minutes later when the show started, Larry and one of Melissa’s guest just went at it big time for several minutes. Melissa attempted to call Larry down numerous times of which Larry totally ignored and the outbursts continued unabated. This was the hottest I have ever seen Larry get and the guest was dishing it right back at Larry. It was great!
Post this sucker!!
Definitely worth a look if you didn’t see it. I am sure there are a lot of people that visit this site that would also enjoy seeing it. I would absolutely love to see it again.
February 27th, 2009 at 8:33 pm
usphoenix,
It’s all done quickly so public opinion can overcome the roar of pain from lobbyists and congress.
That is an interesting point about ignoring corruption and doing the work. I agree it won’t work this time. The only hope i hold out is IF Obama i s trying to game the war profiteers:
Procedure for gaming the war profiteering gamers:
1) Put the war costs back on blatant display in the official budget.
2) Put a bunch of social safety net bennies in the budget.
3) Boldly talk about adding troops.
4) Announce a slowed down withdrawal from Iraq and more troops for Afghanistan.
So far, so good (for the war crowd), right?
5) After one year, 30% unemployment, street riots, luxury cars trashed and burned by the poor, supermarkets emptied while the cops look the other way the President does the following.
6) Announces government budget austerity measures slashing the defense budget by 75% (750 billion bucks). Most of the overseas bases are abandoned, Guantanamo is returned to Cuba and the troops are pulled back in a massive airlift.
7) The military is assigned to built temporary quarters for the poor and keep order around food outlets.
9) The President looks depressed and sad about having to cut defense spending.
10) Good will for he USA goes off the charts. A new business boom starts globaly.
11) Truman committee on war profiteering keepd lobbyists at bay.
I know, Obama doesn’t read TBP and I’m full of poopy. Hey, I can dream.
February 27th, 2009 at 8:42 pm
But isn’t the bigger game breaking our system in order to compete with there system? Duh!
February 27th, 2009 at 8:45 pm
JTS,
you’re selling the Heartland short, beyond the Breadbasket, they have tremendous, Untapped, Oil & Gas reserves( no, not Oil Shale )
See a good map of N. & S. Dakota,+ E. Montana for starters.
here: http://northdakotaoilandgas.com/ is an intro pimp sheet..
our O&G Wealth goes on y on, just don’t tell the MSM (it ruins a good PsyOp)
also, forget, not, Coal and Coalbed Methane.
and, remember, Methane=Natural Gas
as the ol’ adage reads: “Believing Lies is increasing your Liabilities.”
though, past that, to your Q: re: FDR, people don’t work that hard–to understand the multi-faceted *Reality of History, it’s, far, easier, to sit back and take your State-administered RDA of approves thought, then to begin question, let alone seek..
February 27th, 2009 at 9:16 pm
Dammit BG! Never thought I’d wish I’d watched Kudlow. Sounds like the only way it could have been better is if the guest had pounded Larry with a boom mike. It’s just a matter of time, of course.
And have you seen how Cramer’s now a five-star Obama Hater?
Did you folks know that Cramer used to send huge amounts of money to Democratic candidates? Big bundles of checks…one of the original “bundlers” who pollute both major parties.
It would be reasonable to expect he changed his affiliation thanks to tax treatment or something, but the obvious answer is that he’s an insecure pussy who can’t stand sharing the spotlight with Santelli.
February 27th, 2009 at 9:26 pm
@Steve Barry
“Has anyone talked about how Jeff Immelt said on CNBC a few weeks ago the dividend was safe for the year and they had plenty of cash? I can’t figure out the right take on this…is it:
1) he is incompetent
2) he’s a liar
3) things have gotten much worse in 3 weeks
4) he figures CNBC is strictly entertainment anyway”
I wanted to add another poss answer:
5) The SEC(and CNBC) never hold anyone accountable for their previous comments.
How many times did we hear John Thain go on CNBC last year and say he didn’t need more capital and then turn around within a few weeks and…raise more capital! There are many more examples of course.
February 27th, 2009 at 9:50 pm
John Bogle of Vanguard fame wrote a very telling book in 2005 entitled: THE BATTLE FOR THE SOUL OF CAPITALISM. The front cover quote is “How the financial system undermined social ideals, damaged trust in the markets, robbed investors of trillions-and what to do about it.” Well worth the read.
The take away from the book I had is that the US economy has moved from ownership capitalism to managerial capitalism. Companies that were managed for the benefit of the owners and society are now managed for the benefit (and profit) of the managerial class- CEOs. The goal is to make the insiders rich, the product, the owners, the ethics be damned. A good prophetic book.
Where have you gone Bogle, Buffett, and Volcker? All now pushing 80 years old (or more), doesn’t seem like we have those kind of men, super smart, ethical and leaders that are young and full of piss and vinegar. We’re left with the greedy power hungry amoral people that like wars better than building. Maybe there is hope, but the economy is going to be a tough nut to crack after years of greed, abuse and destruction.
February 27th, 2009 at 10:02 pm
Hey taxpayers,
I’m hereby offering to run any company into the ground for half the price these guys did. Same results, half the price!!!! Think about it……
February 27th, 2009 at 10:03 pm
We are at a point in time were the growth engine of the past has reached its’ exponential pinnancle. No one has an idea what industry (that is currently in its’ infancy) will take over and propel us further. Nanotech was supposed to be the wave of the future, then alternative energy, both have had decades of capital investment with little return. It may be Biotech, I don’t know, but will be watching the sector & industry etf’s to see where the money flows. I personally am not that excited about big changes in my life and now we have a nation experience its’ biggest “change” in the past 5 decades.
February 27th, 2009 at 10:11 pm
“doesn’t seem like we have those kind of men, super smart, ethical and leaders that are young and full of piss and vinegar. We’re left with the greedy power hungry amoral people that like wars better than building.”
farmera1,
do you understand the basic building blocks of “Bureaucracy”? what you describe is a, wholly, predictable un-holy outcome thereof..that, coupled with the 168. full-spectrum assault by the PC Police, and its cohorts, lead to the diminished state of affairs you’re alluding to..
the type of character, that you were describing as “non-extant” was Useful for Building Economies/Societies–you’re smart enough to figure the rest, no Econometrics, or other State-annointed Fallacies, necessary..
w/ that, I’ll take leave, for the interim duration.
February 27th, 2009 at 10:29 pm
I am not a trader like most of you, but I have learned much from this site. When John Bogle said that the market had gone from being a place for investors to a place for speculators, everything suddenly made sense, and I decided that I would get out of the market. It’s taken too long to do this, given the situation. But the players really have killed the golden goose.
February 27th, 2009 at 10:40 pm
am I the only one who thinks the PPT (plunge protection team!) was out in force today and ran out of ammo?
February 27th, 2009 at 10:54 pm
@KidDynamite:
Sounds plausible…the PPT is really not very creative…and now they are not very powerful either. In my estimation, they are soon going to get very frustrated that any fake rally they start just burns up more of their capital and they will quit. Of course, it had to eventually end this way, because when you fool with the market’s true clearing price for so long, it creates a massive timebomb.
February 27th, 2009 at 10:58 pm
Given news release (bloomberg) after the close about BAC overstating it’s books by $44 Billion, we shall see Monday a.m. if the PPT is out of ammo. I’m thinking they will be surely tested.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aax9SfdVNbiE&refer=home
Bank of America Loans Valued at $44 Billion Less Than Books Say
By David Mildenberg
Feb. 27 (Bloomberg) — Bank of America Corp.’s loans are valued at $44.6 billion less than what its balance sheet says, according to the bank’s annual report released today.
Bank of America said that its loans have an estimated fair value of $841.6 billion, while the carrying amount of the loans is $886.2 billion.
“It’s an academic exercise that reflects the liquidity discount that is severe these days,” said bank spokesman Scott Silvestri. “These are loans that are not held for sale and we intend to hold them to maturity.”
Loan values have slumped as more borrowers have missed payments on their credit card, home and other types of loans and investor demand for mortgage-based securities has dried up.
Bank of America reported total shareholders’ equity of $177.1 billion as of Dec. 31, according to the regulatory filing issued after the close of trading today.
“That’s the heart of why these companies are trading where they are,” Friedman Billings Ramsey & Co. analyst Scott Valentin said in an interview. “Technically, if you mark-to- market the entire balance sheet, most of these banks are insolvent.”
The Financial Accounting Standards Board, the private group that oversees accounting rules, passed a rule in 1991 to require that companies disclose at least once a year the “fair value” of all their financial instruments, including those they carry on their balance sheets at historical cost.
Bank of America reported total shareholders’ equity of $177.1 billion as of Dec. 31, according to the regulatory filing issued after the close of trading today.
The Charlotte, North Carolina lender’s shares declined 26 percent after the U.S. government’s third attempt to rescue Citigroup Inc. raised concerns that other banks may also need help. Bank of America lost $1.37 to $3.95 at 4:15 p.m. in New York Stock Exchange composite trading.
February 27th, 2009 at 10:59 pm
P.S. forgot to add, little wonder Ken Lewis has stapled his lips together. In China, they’d find him face down in a ditch.
February 27th, 2009 at 11:11 pm
Are you kidding me???
AIG, golden parachutes, bailouts with taxpayers dollars out the wazoo, and now this?? Incredulous.
AIG Sues U.S. Government to Recover $306 Million in 1997 Taxes
2009-02-27 21:22:57.859 GMT
By David Glovin
Feb. 27 (Bloomberg) — American International Group Inc.,
the insurer in talks to restructure its federally funded
$150 billion bailout, sued the U.S. government to recover
$306 million in taxes.
In a 52-page complaint filed today in Manhattan federal
court, AIG said the U.S. government “erroneously and
illegally” assessed taxes, penalties and interest on the
company for several complex transactions in 1997.
The suit comes as the U.S. considers restructuring a
bailout to include a government backstop protecting AIG against
further losses on credit-default swaps and help it stave off
bankruptcy, a person familiar with the matter said yesterday.
The company is preparing to disclose a record fourth-quarter
loss of about $60 billion, the person said.
The case is AIG v. U.S., 09-cv-1871, U.S. District Court,
Southern District of New York (Manhattan).
For Related News and Information:
AIG capital structure: AIG US CAST
AIG cost of capital: AIG US WACC
Top legal stories: TLAW
Bloomberg legal resources: BLAW
–With reporting by Hugh Son in New York. Editor: Peter Blumberg
To contact the reporter on this story:
David Glovin in U.S. District Court in New York
at +1-212-732-9245 or dglovin@bloomberg.net.
February 27th, 2009 at 11:14 pm
Did anyone see Erin Burnett say that she was questioning owning stocks for the long-term (10 yrs) during the 9 am EST hour? That’s all we need are more host-ators trying to create a new normal. I guess it will allow me to start buying at lower levels once some of this other crap starts getting fixed (…some decade).
Also, I’m not a gold bull, but I saw something today that Schiff put out a few years ago. In part, he highlighted that the price of gold and the Dow were about the same (gold slightly higher) in 1980. In 1932, the Dow was about $41.20 and gold was $20. Today, we’re obviously 7:1 for the Dow. The comparison may be less relevant today because of the Dow’s shortcomings.
The scenarios seem to me are that we should expect gold to rise, the Dow to fall, or a combination of both. As someone working in a long-only fund company, all of those scenarios make me vomit. I can hedge/risk manage my financial portfolio fairly easily, but doing it with my career is a bit more of a challenge as a W-2. Maybe I need to volunteer for one of those zombie bank CEO jobs. With 3 kids under the age of 4, I think I’ve got the zombie schtick down quite well at times. Now, I can get paid for it?!?! Awesome!!!
That being said, gold to oil is a bit out of whack. Maybe there’s a chance to nibble at USO, DIG, et al.
February 27th, 2009 at 11:58 pm
It’s always fun to point fingers when things goes to hell. No one gives a damn about wasteful spending when things are great and hence the hypocrisy in our system.
It’s easy to blame these bastard for taking free money and run… put yourself in their shoes, you would have done the same. Greed isn’t limited by one’s color, race or intelligence.
February 28th, 2009 at 12:15 am
More like a parade of recessions that will leave the country on the brink of insanity by 2020 to finally take care of the debts. Not one massive recession.
I personally have not been effected by this recession at all(I work as a sales rep for a major food company). My wife is a teacher for a modest 35,000.
We actually have been spending more since prices have come down on some goods has come down.
February 28th, 2009 at 4:12 am
It didn’t take long for faith in Obama to fade. Welcome back to sobriety friends.
If I were Obama I would set the nation on one course. Prepare for the demographic shift that is about to descend upon us. That is to train for medical facilities and seniors homes and to build them. As the boomers flood into retirement it is best to be prepared and I don’t think the US is.
As the boomers pass on into oblivion those seniors homes can be converted into low cost housing for the next generation so they should be built in a way to prepare to accommodate for that shift. That should solve US housing needs for a generation and it would give everyone involved productive work that has value and a function going forward.
February 28th, 2009 at 6:15 am
Do any of you think Monday is a repeat of October 19th 1987? 1000-1500 points down. I’m thinking this market will only bottom at zero. Really sad state of affairs, you’re all welcome to our mountain hideout if this gets ugly. Bring your own gun and ammo. Cheers it’s the weekend and Mondays days away.
February 28th, 2009 at 7:16 am
Markets dont go to zero
They panic enough primates to sell it reaches the point that the non-monkeys come in and buy stuff cheap.
And that is always a key trading question — are you a panicked monkey or not?
February 28th, 2009 at 7:38 am
Barry,
There is always hope:
http://www.marketwatch.com/news/story/Overall-market-remains-above-November/story.aspx?guid=%7B53B4E4AF%2DDE56%2D44E2%2DADEB%2D4EB55EEC7697%7D
MARK “NO TOES” HULBERT
The bullish case
February 28th, 2009 at 7:57 am
I very much enjoyed some of the comments earlier in this thread…but part of what gets our goat here is what people who came before us already learned..”Don’t throw good money after bad” “It’s a rathole”
“Fool me once, shame on you….” All of these old adages are general wisdom we see from our forefathers who have lost their minds, too, whether it was tulips, Florida land, Tokyo real estate, and so on…this looks like a neverending story:
http://www.nytimes.com/2009/02/28/business/28citi.html?_r=1&ref=business
Latest Citigroup Rescue May Not Be Its Last
When we have the Japanese Zombie model to go by, then our own supposedly rational government is now writing the manual on how to build a Zombie, it gets frustrating to those of us who have to suffer the governmental idiocy time after time. But also frustrating is the “two-fer” aspect of this…that if this doesn’t work, in addition, we get onerous debt that will cripple our future as we try to pay it off…
February 28th, 2009 at 7:59 am
Interesting take by some here on the fledgling Obama administration (OTOH, if you DO study FDR, as Justin suggests, you will notice the great negativity regarding his Presidency is concentrated among recent, right-leaning, non-historians – his contemporaries kept electing him). Of course, Obama will be pilloried either way – if he continues past policy, or makes a clean break with it. This was one of the things we knew we knew – as D. Rumsfeld would say – prior to his election.
Obama is trying to remain centrist – to appease the right – and in doing so will sow the seeds of his own failure. I agree that Geitner is a terrible choice to head Treasury, but so would have been anyone else I’ve ever heard of. The Captains of Business and Government are who steered us here – can you imagine the uproar that would have ensued had he chosen Roubini or Ritholtz?
Honestly – who among us would support or condone the radical overhaul of our government and economy by this man? Heads, he loses – tails, he loses.
In the end, we have made our own bed. We elected men not interested in supporting the middle class (created, in the largest part, by FDR, BTW), and who assured us that we would be well served by the greed of and our subserviance to those who wear the golden parachutes. We allowed our Constitution to be weakened incrementally, all the while being assured that it was “quaint” and no longer applicable to, or essential for, our pre-ordained, manifest greatness.
There is a chart currently posted around the internets tubs, which clearly illustrates the growth of deficit spending under Republican administrations and shrinking of that spending under Democratic administrations, yet the great “truth” that had been foisted on the common man is that the opposite is certainly true.
As your thirst for economic relief grows to the point of being intolerable, remember that it was the men you invited to the party who drank all of the punch, and who then relieved themselves in the community drinking well.
February 28th, 2009 at 8:20 am
http://www.quote.com/news/story.action?id=ZAX059f9034
GDP = Going Downhill Precipitously
Saturday February 28, 2009 07:10:11 EST
Feb 28, 2009 (Zacks Investment Research)
” Surprisingly, most of this drag came from lower spending on food, which subtracted 1.53 points following a 0.75 point drag in the 3rd quarter. You know things are tough when the fall in spending on food has almost as much of a negative impact on the economy as spending on autos.”
February 28th, 2009 at 8:25 am
Barry, I’m not panicked, although if I was fully invested, that may be closer to case. Monday will be interesting as people will be reading the paper and watching the news closely this weekend. There may be lots of people calling their brokerage and mutual fund companies this week to get get them out. Thanks to you and others here I got out with only a modest haircut. As Andy Taboo has pointed out we may be near a tradable bottom, but not The bottom. I know markets do not go to zero, but what is happening now is something most living have never experienced.
February 28th, 2009 at 8:26 am
Kudlow, Norquist, M Lee, “a lefty” Matt Miller, others
http://www.cnbc.com/id/15840232?video=1047962861&play=1 10:28
Cant find the follow-up return of Larry, what a clown
February 28th, 2009 at 8:36 am
In case anyone wants documentation regarding Cramer’s prior enthusiastic support for Dems, here’s one:
http://www.newsmeat.com/media_political_donations/Jim_Cramer.php
And this is just out of pocket…doesn’t cover donations (unreimbursed of course, because that would be illegal) that he might have encouraged from staff, family, traders, etc.
Where did the love go? Well, he does have a tendency to change his mind…sometimes within the same sentence.
February 28th, 2009 at 8:42 am
Barry said “Markets dont go to zero
They panic enough primates to sell it reaches the point that the non-monkeys come in and buy stuff cheap.”
Funny you should say that, beacuse I have pondered it myself. While I don’t think the S&P will actually go to zero, why couldn’t it approach ridiculously low levels of valuation and many component stocks go to zero if they have zero value? Stocks are called equities, as they represent equity in firms…like the equity in your home. Just as homes can be underwater and have negative equity, stocks can have negative equity and eventually, markets realize this and the stock trades to zero (Enron, WorldCom, Lehman, etc). They never go negative, though they likely at that point have negative equity. Assets equal liabilities plus equity…the financial companies are proving to be such a black hole that for all intents and purposes the S&P is heading toward zero…where it does finally bounce, I wish I kew. I would have to know what is hidden on every balance sheet and what is hidden in the Cayman Islands, and what other ponzi’s are out there…there is no way of knowing that…the SEC has ensured we do not have access to all the correct data.