‘Nationalize’ the Banks
Very entertaining interview in the WSJ by former OpEd page editor Tunku Varadarajan, about our boy Nouriel.
What makes it so much better than the run of the mill interview is the personal color that Tunku adds to the interview.
Very readable, quite amusing:
Nouriel Roubini is always dressed in black-and-white.
I have known him for nearly two years, and have seen him in a variety of situations — en route to class at New York University’s Stern Business School, where he’s a professor; over a glass of wine in his boyish loft in Manhattan’s Tribeca; at an academic conference, seated sagely on the dais; at a bohemian party in Greenwich Village, at . . . oh . . . 3 a.m. — and he always, always wears a black suit with a white linen shirt.
And so, in black-and-white he was, earlier this week, when he rushed into the office of Roubini Global Economics, his consulting firm in downtown Manhattan, and offered a breathless apology to this correspondent, who’d been waiting for half an hour. “Really sorry I’m late! Charlie Rose taped for way longer than he said he would.”
Mr. Roubini — a month short of 50 — is in huge media demand, the nearest thing to a rock-star among the economists who hold our fate in their hands these days. The peculiar thing, of course, is that he’s in demand because he specializes in predictions of gloom. (He has earned himself the sobriquet of “Doctor Doom.”) In person, though, he’s anything but a downer.
The man has instant impact on public debate. An idea he floated only last week — that our “zombie banks” be temporarily nationalized — aired first on Forbes.com, where he writes a weekly column. It has evolved, in the space of just a few days, from radical solution to almost received wisdom.
Last Sunday on ABC, George Stephanopoulos asked Lindsey Graham, the conservative Republican senator, what he thought about all this talk of bank nationalization. Mr. Graham said that he wouldn’t take the idea off the table. And on Wednesday, Alan Greenspan told the Financial Times that “it may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring.”
Mr. Roubini tells me that bank nationalization “is something the partisans would have regarded as anathema a few weeks ago. But when I and others put it in the context of the Swedish approach [of the 1990s] — i.e. you take banks over, you clean them up, and you sell them in rapid order to the private sector — it’s clear that it’s temporary. No one’s in favor of a permanent government takeover of the financial system.”
There’s another reason why the concept should appeal to (fiscal) conservatives, he explains. “The idea that government will fork out trillions of dollars to try to rescue financial institutions, and throw more money after bad dollars, is not appealing because then the fiscal cost is much larger. So rather than being seen as something Bolshevik, nationalization is seen as pragmatic. Paradoxically, the proposal is more market-friendly than the alternative of zombie banks.”
In any case, Republicans must now temper their reactions, he says. “The kind of government interference in the economy that we saw in the last year of Bush was unprecedented. The central bank — supposed to be the lender of the last resort — became the lender of first and only resort! With our recapitalizing of financial institutions, and massive government intervention in the markets, we’ve already crossed a significant bridge.”
So, will the highest level of government be receptive to the bank-nationalization idea? “I think it will,” Mr. Roubini says, unhesitatingly. “People like Graham and Greenspan have already given their explicit blessing. This gives Obama cover.” And how long will it be before the administration goes in formally for nationalization? “I think that we’re going to see the policy adopted in the next few months . . . in six months or so.”
Good stuff . . .
>
Source:
NOURIEL ROUBINI: ‘Nationalize’ the Banks
Dr. Doom says a takeover and resale is the market-friendly solution.
TUNKU VARADARAJAN
WSJ, OPINION: THE WEEKEND INTERVIEW FEBRUARY 20, 2009, 10:59 P.M.
http://online.wsj.com/article/SB123517380343437079.html
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February 21st, 2009 at 12:15 pm
are they waiting for 50 cent stock prices so that it looks as though they gave the banks as much of a chance as possible?
if so, they’ll only be waiting a few days at this pace
I’d rather own Ford than the XLF right now, pretty scary
February 21st, 2009 at 12:44 pm
“I think that we’re going to see the policy adopted in the next few months . . . in six months or so.”
I agree with TheReformedBroker – how can this possibly wait for six+ months? Citi just joined the 2 buck club this week. Bank of America may join in the next week or two. There has to be a silent bank run going on at C and BAC. If you are over the FDIC limit at either bank you are crazy. Even so called “good” banks like Wells Fargo and JP Morgan are getting shellacked.
February 21st, 2009 at 12:51 pm
Why the XLF when the FAS is available? (FAS is the triple-levered long financials ETF)
February 21st, 2009 at 1:22 pm
Transparency. That is what it is all about. Whatever it takes to get it, the market is demanding it. Finance is built on trust. All of finance starts with:”This note/agreement/contract/bargain will be paid in a manner specified in this agreement”.
The trust in that statement is now in question, and will be, until ALL the assets are revealed. Unfortunately that will mean uncovering things certain people prefer remain covered. So the market will have to sink very low to develop the excuse for going in and cleaning up these firms. That will undoubtedly mean declaring the equity and bondholders on the hook for the losses that are not yet guaranteed – i.e. bankruptcy.
When you have no trust, you have to start at the very beginning. There is very little trust.
The believability of that statement constitutes the “credit rating” on that note.
February 21st, 2009 at 1:24 pm
WordPress to 10 cc: “Duplicate Comment Detected. Looks like you already said that”.
10 cc to WordPress: “Yeah, I did. Looks like you didn’t fucking print it though “.
February 21st, 2009 at 1:32 pm
As Matthew Yglesias wrote, “If I were Tim Geithner, I would keep offering these reassurances to executives at large banks right up until the minute I nationalized the first one.”
So here’s Obama’s strategy….he’s sending this link Don’t Worry Everything’s going to be Allright http://www.youtube.com/watch?v=r1GnWusCcYA to Bank CEO’s reassuring banks that nationalization isn’t coming.
Shock and awe !
February 21st, 2009 at 1:33 pm
Off-topic question (or maybe not?): What exactly happened yesterday at 11:45 that caused the almost vertical climb in the Swiss frank and the euro?
February 21st, 2009 at 1:34 pm
Do you think corporate treasurers and controllers are shifting their accounts out of C and BAC?
Talk about “moral hazard” personified – Paulson encouraging Lewis to pursue the high risk acquisition of ML. Lewis should have run, not walked, away from ML.
That WH statement Friday was less than wishy-washy a general endorsement of private ownership of the banking system.
None of the expensive, but half way, measures have done anything to stem the decline of C and BAC, they’re both headed to nationalization with a different term applied. Their stock prices are a leading indicator of nationalization prospects.
GM has a market cap of $1B, AIG $1.5B, CITI $10B and BAC $24B. Like Jim Morrison sang “No one here gets out alive”.
February 21st, 2009 at 1:34 pm
Ignore this sentence as I’m trying to fool WordPress.
“. . . in six months or so.”
Really? That long? We can piss away a lot of money first in six months.
And where was this deathly fear of SOCIALISM (noooooooo) and NATIONALIZATION (aaaaaaah) during the S&L crisis? I don’t seem to recall it then. What’s so different this time?
And who exactly is it that’s so horrified anyway (besides those who might lose their license to steal of course)? I don’t think Average Joe give’s a rat’s ass if banks are temporarily nationalized; as long as the ATM still spits out the twenties.
Which is why I don’t buy the “run on the banks” fear either. That was certainly the rational response back in the IndyMac days but now people have evidence that these things can be handled in an orderly fashion. And as OBR points out above, “If you are over the FDIC limit at either [any] bank you are crazy”.
February 21st, 2009 at 1:55 pm
Alan Greenspan supports it, so that gives Obama cover?!? No wonder the administration is running in the opposite direction.
February 21st, 2009 at 2:09 pm
Current Wall Street Gaze upon AS IS:
1. Sorry Shareholder, we wanna care but as you know we’re foregoing options and sticking with bonus renumeration, thank you.
2. Bond and Preferred Participants: what Paulsen did to those Preferred, if anything could be undone, scared us a bunch. So you are us and we are you. Stand up and make them make us take more cash. And again and again.
3. Commercial Banks: hey folks up there in [ 2 group ] get the government to get on those bastards, too dumb to leverage and now they should pay. Their deposits are a source of hope and they don’t know what to do with them anyhow: short CMRE and send in the regulators.
4. Receptive: are you kidding? World Wide Recession takes times, not receptivity. Note that Japan is still here. Denial, hell, self preservation.
Goldman Sachs, Well Fargo, JPM Chase, Morgan Stanley must have incentive. I’m talking senior management’s self interests — Supply Side, Milton Friedman, Philips Curve, Natural Rate all represent the logical extreme. The Self Interest of these folks, and they are the Treasury, is now viewed, and I guess it makes sense, as Systemic Risk. Without a French Revolution, think cockroaches.
Therefore: What Incentives must these WS Princes be given, is there anything, to let us bury the dead.
February 21st, 2009 at 2:53 pm
Why does it have to take so long just nationalize them now! Please, Politicos come clean with the American People. Enough with the bull-shit already! Why does it feel like we have nothing but snake salesmen and women in Washington?
February 21st, 2009 at 3:01 pm
@ rktbrkr
Agreed about Merrill- I think the government forced that situation- however BAC bought CW without coercion from the federal government. It appears BAC was able to make incredibly stupid decisions without the government’s help.
also there appears to be confusion on the previous thread- just so everyone understands- Freddie and Fannie buy mortgages on single family homes to $625,500- conforming loans go to $417,000 and what is now called “high balance” conforming loans go to $625,500. I do believe both these bracket of loans would qualify under the Recovery and Reinvestment Act.
February 21st, 2009 at 3:07 pm
Also- I NEED HELP- my posts to this blog from my home computer always end up in TBP’s spam folder. The posts are cleared later and do post but it is hours after I made the comment. Any suggestions would be greatly appreciated. My comments do post immediately from my office. Also- my email I use at home is Gmail- might this be causing a problem?
February 21st, 2009 at 4:10 pm
European banks may need £16.3 trillion bail-out, EC document warns
http://www.dailykos.com/story/2009/2/21/142822/939/516/700199
Yikes if 20% of this true then Obama had better move ASAP on nationalizing Cit and BofA for starters like next week.
February 21st, 2009 at 4:17 pm
I feel that Nouriel is behind the curve. Receivership should have been implemented nov-dec last year. Wait another 6 months??? Does he really think Citi bank will last that long? Get ready because as soon as the stress tests are done you better be ready to take them over. We should have been Swedish by now!
I’ll be staying at IKEA until it happens.
February 21st, 2009 at 5:56 pm
Alright, alright, you’ve worn me down, Barry. Let’s nationalize (but it’s like biting on tin-foil every time I think it).
Too many smart people I respect say that’s the move, so I guess I’ll defer to their judgment. Seriously though, take Greenspan off that list. Like Porsche87 says, that just makes most of us want to run the other way.
February 21st, 2009 at 6:30 pm
There are just too many Americans who think government should disappear. When you have 300 million people roaming around, I try to understand what they exepct? 300 million people making their own rules and settling their own matters with a gun?
Instead of denying the existence of governement, they should try to make it more efficient.
February 21st, 2009 at 6:35 pm
And I know where we can get lots of money to pay for it even after we cut banking wages to GS SCHEDULE PAY GRADES:
“Chairman of the Domestic Policy Subcommittee, Congressman Dennis Kucinich (D-OH) today sent a letter to Ms. Mary Schapiro, Chair of the Securities and Exchange Commission (SEC) requesting documents that could reveal which government agency told the SEC to ‘stand down’ rather than take enforcement action against the Stanford Group in October 2006 as has been reported by the New York Times. Recent media reports have indicated that the SEC was aware of improprieties at Stanford Financial Group as early as October 2006, but withheld action at the request of another government agency. In a report published in the February 17th edition of the New York Times, an SEC official said that an inquiry had been opened on Stanford in October of 2006. According to the Times report, an associate regional director of enforcement said the SEC “stood down” on its investigation as a result of the intervention of another federal agency. Stanford is now the focus of an $8 billion fraud investigation and, presumably, an earlier inquiry would have spared many Stanford investors and triggered similar inquiries into other funds which lacked transparency.”
February 21st, 2009 at 7:26 pm
Yea, I love those people that say all the government should do is provide for security. Then you start asking them how they got to town, oh a government built rode, have they been to the library lately, or do they send their kids to school, or have they bought property lately, you know property rights and filing deeds and on and on. Then they say that is reducing the argument to extremes. Yea that’s right extremes.
These people have no clue about what this place would be like if they got their wish, starve the beast (they have just about succeeded). They would live in anarchy and the guy with the biggest gun wins. Me I’m mounting a 50 cal (which you can now buy at your local friendly gun show) on my truck. Take that all you government hating rifle luving patriots.
February 21st, 2009 at 7:26 pm
So who wins and who loses under a nationalization scheme? Is it like bankruptcy, where the bondholders win?
February 21st, 2009 at 7:36 pm
Is not nationalization the problem and not the answer? All nationalization means at this moment is equity will be wiped out and thus with the growing chorus of rumor the equity is going to zero. Yet no one bothers to explain what nationalization is, how it would be implemented, how it would help the economy or how it would save the taxpayer money. And no one bothers to explain on what criteria the government will choose which banks to nationalize. And yet, as has been explained by some, the government cannot takeover some of the largest banks without creating a huge conflict of interest as then how will the nationalized banks be managed and recapitalized to not put existing banks at a competitive disadvantage.
It is this lack of specificity that leads me to believe that there is no there there. Nationalization is the perfect scare to manipulate the market yet, because of gullible politicians who have been manipulated throughout this crisis, this panic may force the worst of all possible outcomes. For once the government steps across the nationalization threshold it will take years, if not decades, for the capital markets to ever earn back the trust of investors. Unless the government takes the time to first make public the financial position of every financial services company there will always be the question of why the government chose to wipe out the private investors of a few companies and who influenced their final decision.
February 21st, 2009 at 7:44 pm
It is incorrect to say that finance is built on trust. No trust is required as long as the lender structures the deal such that he wins whether he gets paid back or not. Generally speaking, this means only lending out a portion of what the collateral is worth. If the deal is structured properly, the lender HOPES the borrower doesn’t pay.
February 21st, 2009 at 8:13 pm
This message is for free marketeers. Please don your humble mousketeer hats:
JOE SCARBOROUGH: You also talked about the possibility of class conflict.
ZBIGNIEW BRZEZINSKI: I was worrying about it because we’re going to have millions and millions of unemployed, people really facing dire straits. And we’re going to be having that for some period of time before things hopefully improve. And at the same time there is public awareness of this extraordinary wealth that was transferred to a few individuals at levels without historical precedent in America . . . And you sort of say to yourself: what’s going to happen in this society when these people are without jobs, when their families hurt, when they lose their homes, and so forth?
We have the government trying to repair: repair the banking system, to bail the housing out. But what about the rich guys? Where is it? [What are they] doing?
It sort of struck me, that in 1907, when we had a massive banking crisis, when banks were beginning to collapse, there were going to be riots in the streets. Some financiers, led by J.P. Morgan, got together. He locked them in his library at one point. He wouldn’t let them out until 4:45 AM, until they all kicked in and gave some money to stabilize the banks: there was no Federal Reserve at the time.
Where is the monied class today? Why aren’t they doing something: the people who made billions, millions. I’m sort of thinking of Paulson, of Rubin. Why don’t they get together, and why don’t they organize a National Solidarity Fund in which they call on all of those who made these extraordinary amounts of money to kick some back in to [a] National Solidarity Fund?
A bit later, Zbig made his fears explicit.
BRZEZINSKI: And if we don’t get some sort of voluntary National Solidarity Fund, at some point there’ll be such political pressure that Congress will start getting in the act, there’s going to be growing conflict between the classes and if people are unemployed and really hurting, hell, there could be even riots!
Yikes! Somebody wants money! Scream socialism and government tyranny! Help Rush! Help Hannity!
February 21st, 2009 at 8:14 pm
JOE SCARBOROUGH: You also talked about the possibility of class conflict.
ZBIGNIEW BRZEZINSKI: I was worrying about it because we’re going to have millions and millions of unemployed, people really facing dire straits. And we’re going to be having that for some period of time before things hopefully improve. And at the same time there is public awareness of this extraordinary wealth that was transferred to a few individuals at levels without historical precedent in America . . . And you sort of say to yourself: what’s going to happen in this society when these people are without jobs, when their families hurt, when they lose their homes, and so forth?
We have the government trying to repair: repair the banking system, to bail the housing out. But what about the rich guys? Where is it? [What are they] doing?
It sort of struck me, that in 1907, when we had a massive banking crisis, when banks were beginning to collapse, there were going to be riots in the streets. Some financiers, led by J.P. Morgan, got together. He locked them in his library at one point. He wouldn’t let them out until 4:45 AM, until they all kicked in and gave some money to stabilize the banks: there was no Federal Reserve at the time.
Where is the monied class today? Why aren’t they doing something: the people who made billions, millions. I’m sort of thinking of Paulson, of Rubin. Why don’t they get together, and why don’t they organize a National Solidarity Fund in which they call on all of those who made these extraordinary amounts of money to kick some back in to [a] National Solidarity Fund?
A bit later, Zbig made his fears explicit.
BRZEZINSKI: And if we don’t get some sort of voluntary National Solidarity Fund, at some point there’ll be such political pressure that Congress will start getting in the act, there’s going to be growing conflict between the classes and if people are unemployed and really hurting, hell, there could be even riots!
February 21st, 2009 at 8:16 pm
Note to Billionaire “Philanthropists”. :
Thanks a lot.
Now pay your taxes. We know the charity thing was a dodge..
February 21st, 2009 at 8:57 pm
Old Chinese Proverb:
Accredited Investors who invest in disaccredited banks soon become Disaccredited investors.
It’s about nine p.m. Do you know where your money is?
February 21st, 2009 at 9:16 pm
BAC bonds are getting pretty cheap the last few days. 78 cents on the dollar for senior 6-year paper. 10% yields. You would have to do a lot of homework to tell if this is cheap or not. Probably not enough trustworthy info to tell.
Couldn’t help myself, bought back some BAC common at $3.40/sh. A small bet that that stock just gets diluted not completely wiped out. One negative: Lewis just sold a bunch of shares so he is definitely taking nationalization seriously, whether partial or complete.
February 21st, 2009 at 10:44 pm
Those waiting for nationalization to save the day are going to be as disappointed as Iraqis greeting liberating U.S troops. See you at SPX 150.
February 21st, 2009 at 10:57 pm
Pete from CA Says:
February 21st, 2009 at 1:33 pm
Off-topic question (or maybe not?): What exactly happened yesterday at 11:45 that caused the almost vertical climb in the Swiss frank and the euro?
Funny you mentioned that…I happened to be trading the Euro at the time. “That” was either a C wave up or third wave of some beginning initial move higher. The action intraday on the Euro was a rather TEXTBOOK example of an Elliot Formation…. Wave 2 retraced 50%…the Wave three was 2.618*Wave 1….Wave four corrected 38.2% and was .618 as long as Wave 2….the Fifth Wave was 1.618*Wave 1 to finish off the pattern….it was BEAUTIFUL and quite a little money maker for some…
It was also the reason I had a bullish bias on SP500 for the afternoon….
I don’t know what the “reason” was or what the press reports will be to explain away the move…but it was a wonderful example of an elliott pattern intraday….
- AT
February 21st, 2009 at 11:16 pm
“Nationalize’ the Banks”.
Absolutely!! But they won’t. They’ll just keep throwing good money after bad while wrecking the hell out of our balance sheet in order to save their contributors. That is why I have been on the other side of this trade for well over a year. And IF they finally get the cojones to nationalize the banks, the dollar is going to get hammered. My trade works that way too.
February 21st, 2009 at 11:21 pm
andy, lol with you and your elliot. didn’t work so well on gold : ) sold my ugl on friday for 40.30…
February 21st, 2009 at 11:28 pm
Karen…good for you. Better to be way too early.
February 21st, 2009 at 11:34 pm
Pat G., ??? you have no idea of my history with gold or gold miners. nor my musings with andy.
February 21st, 2009 at 11:39 pm
You’re right. But if you sold anything related to gold, I think you made a mistake. But that’s just my opinion.
February 21st, 2009 at 11:50 pm
Pat, not with the % of net worth i have in gold. i have to sell a bit on the run-ups. we can jump or dump $50-$100 a day now. my ugl was for trading. : ) only wish i’d kept a log of andy’s sell calls on this run up. : )
February 22nd, 2009 at 12:02 am
I am looking to short gold, just a little edgy about when to start.
February 22nd, 2009 at 12:02 am
Now I understand. I apologize.
February 22nd, 2009 at 12:10 am
No apologies, pls. This is all in fun. Good night…
February 22nd, 2009 at 3:00 am
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 somthing worse than the Great Depression, S&P must go to 150.
February 22nd, 2009 at 8:39 am
Small businesses turning to barter & script to stay in operation. Why shouldn’t we nationalize the banks, they aren’t issuing mortgages or business loans. And what are they doing with the hundreds and hundreds of billions of virtually free money the Fed & Treasury have been gifting to them?
Hard to say how widespread this is but think of the impact on the velocity of money and the GDP and tax receipts. The barter exchanges claim they report the value of goods and services to the IRS but obviously those can be understated or done direct party to party like ABS!
Ironically this barter news comes from Charlotte home of Bank America and Wachovia. But then again they were more interested in owning west coast mortgage mills and NYC brokers than running banks.
http://www.charlotteobserver.com/breaking/story/553166.html
February 22nd, 2009 at 9:07 am
It was a good interview but Tunku laced it with some WJS ed page spin if you were looking out for it. For example he downplayed Roubini’s allocation of blame to de-regulation/lax regulation as a principle cause for the mess because of course that doesn’t accord with WSJ editorial policy. I do find all this nationalization talk a bit silly. If it was the silver bullet obvious to all why haven’t they done it…..a sentimental attachment to free markets?…….cultural fear of the word “nationalization” …………I doubt it.
Steve Barry Says:
February 22nd, 2009 at 3:00 am
“S&P breaks 750, likely this week…volume will pick up…market will drop 30% or so to 500, Dow to 5000 ”
You’re forecasts are noted. They sound about about as rational as Hassett and Luskin to me but we’ll see.
February 22nd, 2009 at 9:16 am
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 10:26 am
Here’s a link to a story that answers my question about who wins/loses under nationalization:
http://www.savingtoinvest.com/2009/02/what-would-happen-to-my-money-if.html
It looks like the bondholders have a good chance of coming out ahead if nationalization happens. But the Obama administration doesn’t want to nationalize. Could it be that Mr. Santelli is not as ideologically pure as some people seem to want to think he is? Could it be that Mr. Santelli is speaking for an investor demographic (bond holders, since that’s his gig) who were hoping the gov’t would buy them out at top dollar under some nationalization scheme and are now mad as hell because it ain’t gonna happen?
I MUST be wrong. There’s no way a Wall Street (in this case, Chicago) traitor could be so cynical as to use ideology to help his cronies profit, is there?
February 22nd, 2009 at 11:57 am
franklin411 Says:
February 22nd, 2009 at 10:26 am
I don’t think the bondholders are at huge risk under a nationalization whereas the stockholders are done. I don’t think the piece you linked to really sets out all the pros and cons of nationalization. The negatives are considerable which of course is why they are very nervous about doing it. Top of the list in my opinion is scaring off private capital in the future but also in the present in the shape of a run for the exits by stockholders at sound financial institutions. There are also huge legal ramifications, for example Citi owns the biggest bank in Mexico and having the US govt as largest stockholder would make this ownership illegal.
February 22nd, 2009 at 2:48 pm
karen Says:
February 21st, 2009 at 11:21 pm
andy, lol with you and your elliot. didn’t work so well on gold : ) sold my ugl on friday for 40.30…
Karen. What are you talking about? Were you drunk last night?
I advised people to exit their long gold positions into the 980′s. I had “one” target at 988 and said there would be psychological resistance into the 1000 zone, so it might be best to exit longs. I did not recommend shorting it and I did not say it was “over for gold”.
Back at 900 I said I could see gold grinding up to 1000…I said there were wave count targets up near that level….and now we hit them. Now it’s time to just see “how the market acts” up here to get a feel for what will happen next.
If gold “blasts” through 1000 and the previous high, then I will be surprised and I will be forced to go back to some much longer term analysis and do a major recount on gold. I’m very willing to admit when I’ve got the wrong count and will make adjustments when I’m presented with new evidence.
If you can’t see the gold is an extremely crowded trade right now, then you’re blind. It’s very possible that it could keep on chugging like any good mania (see crude at $100, then 120, etc…), but commodities do indeed go up the stairs and down the elevator. So when that thing breaks down, it will be a VIOLENT move lower. (Observe the crude chart from $147 to 32 in a few months.) I’m neutral on Gold right now. I wouldn’t be long because running with herds is hazardous to your health. I wouldn’t be short because fading panics/mania is also not good for you health. My bias is to wait for signs of real peaking action and then look for good points to enter short positions.
Please keep the smugness in check Miss KISS.
February 22nd, 2009 at 3:39 pm
Andy, sorry to have rubbed you the wrong way : (
wasn’t drunk, maybe that was the problem… unless you can be drunk on pelegrino water. in all fairness, you posted this:
Andy Tabbo Says:
January 29th, 2009 at 8:58 pm
Quick note for those who follow the Dollar Index and gold….
I’m not a big fan of gold at all, but I can easily make a case for gold going to 990-1016, which would be a good selling point. Too many Gold bugs out there and too many gold commercials. Sentiment is too bullish…specs are too long, but we can see a decent rally coming….
The Dollar Index looks very bearish to me right here….
and then this:
Andy Tabbo Says:
February 12th, 2009 at 3:08 pm
Gold bugs…I would consider trimming a little length…that market looks like its getting a little tired and lots and lots of people talking about it on CNBC…..
and this:
Andy Tabbo Says:
February 12th, 2009 at 3:46 pm
I-Man. I’m not suggesting a short in Gold or bailing out of all your length, I’m just suggesting that the CNBC Hype-O-Meter is starting to register higher and higher…I’m seeing RSI divergence now intraday….the whole shape of the pattern from the 700 lows actually looks more “corrective” to me….If I see Pete Najarian say something like this tonight:
“LOOK People. This is easy. Stick with what’s working! It’s gold. Take a look a that Chart. GOLD IS GOING HIGHER, the miners look good…The GLD looks great…just stick with it. Also, we saw all sort of Call buying today…”
SOLD.
and finally this:
Andy Tabbo Says:
February 14th, 2009 at 1:37 am
Lots of money tied up in gold which is looking VERY tired at this point.
I was probably overly sensitive to the the capital letters in SOLD and VERY and I apologize for coming across as smug when i meant to be fun and funny.
February 22nd, 2009 at 11:13 pm
Karen.
Thanks for the compilation. It actually is a PERFECT illustration of some of the advice I might give to a client who really wanted to be long Gold at 900, on Jan 29th….
It starts with my saying that while I don’t like the market, I can easily make a case for a run to 990 – 1016 and it ends with me warning my clients, who are long, to start trimming in the 950′s and then a complete exit into 988, given the psychological resistance awaiting at 1000. That would have been a decent 7-8% return across three weeks in a trade I didn’t particularly like. I would say that displays a “flexible” approach to markets.
You also missed the note where I admitted it could conceivably run much higher and snap the old highs, which would be bullish. But even if it were to do that, the market would eventually give us a dip to get back in, if you so chose to be involved. Better to be out wishing you were in, then to be in wishing you were out.
I’ll take the singles and doubles everyday….
Good luck with those home runs….
I basically took offense to the smugness of it because…..In the last 15 months, I’ve wasted my time here giving this board A LOT of extremely good advice on the SP500 using the analysis you sort of mocked.
And now, after I suggest that LONGs get completely out of Gold at 988 with1000 looming, you basically suggested I was wrong about Gold? Because I suggest EXACT levels (targets) you might get the impression that I actually believe markets will reverse at those levels. That’s the not what I’m professing at all. Nobody can do that. The idea is to get “close” and not be part of some dramatic reversal the wrong way. I could be wrong about gold short and long term. It WOULD NOT be the first time. And I’ll be the first to admit when I’m wrong….nobody’s harder on me than me.
I’m done posting Technical Analysis here. No more soup for you.
Good Luck.
February 23rd, 2009 at 1:43 am
AT,
just b/c that one can’t read, I wouldn’t take it, too, personally..
you’re posting of your TA insights are a Gift that, I’m sure, many appreciate, I know I do.
karen,
w/ this: “only wish i’d kept a log of andy’s sell calls on this run up. : )”
his target was 990-1016, let’s see, Au’s currently U$D ~1002
where’s the error?
if you are better off drunk, maybe we can incentivize Jeff to send you a replacement for that case of Wine you’re fixin’ to lose.. and, yes, relax, no offence meant..
February 23rd, 2009 at 6:59 am
AT, please ignore karen. If I remember correctly she was bullish on SPX two weeks ago, while you were bearish. Unlike you she doesn’t have a clue. We all appreciate your posts and this blog would lose much of its appeal if you would stop posting TA here.
February 23rd, 2009 at 9:26 am
Not to pile on but I have found Andy’s analysis on the S&P to be extremely valuable and if it is no longer going to be posted that will be a big loss for this site. AT, do you post that same info anywhere else and/or have a newsletter?
February 23rd, 2009 at 9:59 am
AT,
Agree with the above. Your analysis often provides me with greater confidence in my own positions and your input is greatly appreciated on this board.
Short Man
February 23rd, 2009 at 10:18 am
AT,
don’t let the haters get you down. Your advice has been invaluable, especially during this leg down. (Target’s still 600, right?)
February 23rd, 2009 at 1:50 pm
I hate it when people get on others for their investing decisions. There’s a good natured ribbing and then there’s an indictment of someone’s investing rationale and a hell of a wide gulf between them.
You bought the stock/etf/options, you reap the consequences, blaming others for your decisions is not an option. Booo! Bad form!
February 23rd, 2009 at 5:58 pm
Andy, there are numerous people on this site who appreciate your insight. I, for one, and perhaps some others who understand EW to one degree or another, use your experience to verify our own counting alternatives. Just last week I was shown an alternative count by you – I didn’t get to see your response in time though, hence I didn’t get a chance to respond either, but I appreciate it. I’m hoping that this decision of yours on TA postings is an act of temporary madness (at someone who didn’t quite mean to upset you). Alas, some of us are not much of comedians and end up hurting other people instead! BTW, that famous line you quoted from Seinfeld, usually contains a time period at the end – so let’s make it “… for one week”. :-)