If you want to know what someone’s biases are, ask them why the markets are _____ (fill in the blank) that day.

What you will more often than not get are a series of rationalizations, twisted logic, and distorted reasoning that use the market action as a justification for whatever pre-conceived notions they may already have.

I saw examples of this in not one but two places today: From someone I expect to know better, and someone I do not.

Jeff Saut of Raymond James wrote: “The stock market has been doing some “voting” of its own since the election and the results are not good. Indeed, the S&P 500 (SPX/735.09) stood at 1005 on Election Day, but has since lost some 27%.”

Charlie Gasparino, a CNBC reporter (and Dick Fuld’s Sergeant-at-Arms), goes even further. In the DailyBeast, he writes:

“But for all of that they can’t believe what they are witnessing: An economic agenda that is contradictory at best, and possibly reckless in its extreme. Policies that will certainly make a very bad situation even worse, and when things do get better, they will certainly not enough be better to compensate for the pain we are experiencing. That’s what I’ve been hearing now from many of my sources on Wall Street who voted for the president, including one I received on Friday, when after days of denying that it wouldn’t nationalize the big and troubled bank, the Obama administration, nationalized Citigroup.”

I would think Saut would know better than this; I have no such expectations from Gasparino.

Hey Charlie: Does Citi still have its prior shareholders from before? Is the same management team there? Then they have NOT been nationalized — yet. When they finally are, trust me, you will know it.

Now, I can make an even stronger rhetorical argument than these guys did. The things that are bothering markets is more or less the same story that some that’s been slowly seeping into people’s stubborn brains for the past few quarters.

The top was made in October 2007, and since then, we have seen:

• This is the first quarter in the history of the S&P500 to have ZERO EARNINGS;

• The ongoing drip drip drip of never ending bailouts — with taxpayers funding its costs — is pressuring prices.

• The worst recession in many generations started over a year ago, and shows no signs of ending anytime soon;

• The market is tanking is due to the lack of nationalization — we’d better off getting it done sooner rather than later;

• The overall market trend has been down (relentlessly so) for the past 18 months;

• The overstretched consumer has retrenched and is now in savings mode;

• The US has deficits are horrific — and are only going to get worse;

• Consumer sentiment is so bad its spilling over to everything else.

• The leadership of corporate America has been shown to be so inept and incompetent that potential buyers of these businesses are marking them down to reflect this;

These are just a few obvious factors off of the top of my head. You can blame either Obama or Bush (or both), but the reality is the forces driving the market are much bigger than either of them.

Smart investors know that the day to day action amounts to little more than noise. What matters most are trend, earnings, and economic activity.


UPDATE March 2, 2009 5:59pm

This is my favorite comment of today:

“Look at the UK, where a left-leaning government under Blair presided over the same issues as the US with a neocon Bush government. This is a repudiation of credit-based economies and unsound monetary policies, not political ideology.”

Amen . . .


“Atlas Shrugged!?”
Jeffrey Saut
Raymond James, March 2, 2009


Is the Worst Yet to Come?
Charlie Gasparino
Daily Beast, 3/2/09


Category: Markets, Psychology

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

88 Responses to “Markets Are Rorschach Inkblot Tests”

  1. JustinTheSkeptic says:

    I just bought some bank stocks for the first time, because Bove said they are a buy. lol

  2. A year ago, he said they wee a generational buy.

    I think that means if you bought them, you had yo hold them for a generation until you got back to break even.

  3. DL says:

    To say that the market is a Rorschach test is being too charitable to may of those who opine.

    In a proper Rorschach test, the “testee” is attempting to be honest about his (or her) perceptions.

    Not so with the “perma-bulls” or the Obama haters.

  4. Paul Jones says:

    I know I’m just a nobody peon who’s opinion counts for squat, but isn’t this all about a bad business model?

    That is to say, no matter what management team, what level of capitalization, the Big Finance model just isn’t competitive?

    That the lender is too far away from the borrower, and that when you deal with that many clients, you spend more grey matter on the logistics rather than the key decision which is credit worthiness?

    Looking forward to your book.

  5. leftback says:

    “A year ago, he said they were a generational buy.”

    Sure. He meant that there will be a new generation of banks by next year.
    Agreed on the ink blots. Most commentary is inane and after the fact.

    Sell hope and greed, buy despair and fear is a better guide.
    Always with an eye to a variety of macroeconomic indicators, of course.

  6. Since October ’08, the DOW has lost roughly 45% (from 11,000 to 7,000), most of which came after the election. As a matter of psychology, I think the election has had something to do w/ its performance. My theory:

    When hope turns to fear, as it did just before the election with the collapse leading to the TARP, people want to believe in something that can save them from their pain and give certainty to their future. That desire is often translated into wishing for a messiah, or a great and visionary leader, to rescue them. Barack was for many that great and visionary leader for which they had hoped, or so they thought. But, as you say, this is much bigger than any one man, or even any one political party, can fix. IMO, folks are gradually beginning to realize there is no saviour. There is just us. And looking in the mirror the morning of the hangover, it’s not a pretty sight.

  7. mhm says:

    “Then they have NOT been nationalized — yet. When they finally are, trust me, you will know it.”

    Is this the half-pregnant phase?

  8. Andy Tabbo says:

    I guess it would make for a very boring telecast if everyday the broadcasters said:

    “The markets are lower because we’re unwinding the largest credit bubble of all time. Global markets are facing the the most powerful DEFLATIONARY forces ever experienced because of the popped credit bubble. The U.S. Fed is helpless to stop this deflationary spiral. Their are no safe haven investments except the U.S. Dollar. This will not be over until all bad debts are written off. Expect hope- based rallies every few weeks. Investors should use the rallies as ways to extricate themselves from the market.”

    Lather. Rinse. Repeat.

  9. leftback says:

    The political masturbation about the markets and the economy is ludicrous. Look at the UK, where a left-leaning government under Blair presided over the same issues as the US with a neocon Bush government. This is a repudiation of credit-based economies and unsound monetary policies, not political ideology.
    [BR: Nicely argued! You are my comment of the day]

    Speaking of true genius in punditry: (from MarketWatch today):

    S&P’s Sam Stovall puts market decline in historical context and says U.S. recession will be the longest and deepest since the 1930s.

    Well, golly gee, “Slammin’ Sam” just about nails that one. Way to go. Nice going, Sherlock.

  10. Fredex says:

    Jeff Saut got it right.

  11. Mike in Nola says:

    We’ll know the effects Obama has, if any, in six months or so. I personally think it makes little difference, except possibly shortening things by resolving the big, bad banks.

    Until then, the Republican true believers can go back to the porch and continue to practice Dueling Banjos for when the city slickers come by :)

  12. bdg123 says:

    Charlie is a pleasure eh? How CNBC puts someone with his personality on TV is beyond me. What I’m waiting for is for you and him to mix it up. Two New York boys from the ‘hood that obviously have some tension between them. Yes, maybe all of that tension is created by Charles but it’s still there.

    I’m nearly an avowed pacifist except when it comes to cretins like Hitler but I’d pay to watch you beat him to a pulp. lol. Maybe CNBC can line that up. Why would that be any different than Cramer’s show?

    This has nothing to do with Obama. It has to do with the mess that has been created over the last twenty years. It has to do with the ideology that Charlie fought and still fights to defend.

  13. Andy Tabbo says:

    Here’s another reason why markets keep going down….just checked on CNBC.com….Here’s there headline and clip:
    “Even Amid Gloom, Stocks May End Year With Gains”

    “Even as stocks blow past their November lows, analysts are beginning to gear up for a net gain in the markets this year.”

    You cannot have “bottoms” with stories like that…..

  14. wally says:

    I like your ‘off the top of my head’ list. That’s reality.

  15. batmando says:

    No PPT into the close today? hmmm

  16. mitchn says:

    Gasparino…Gasparino…Slowly I turned, step by step…

    What a maroon…

  17. MRegan says:

    BR this post crystallizes why I view your blog as a valuable source of info and insight. I quibble sotto voce with the phrase: “Now, I can make an even stronger rhetorical argument than these guys did.”

    IMHO your argument is less rhetorical and more descritpive than theirs. Based on those bullet points the argument IS stronger because it refers to an empirical antecedent not some dude’s opinion. Your first point brings data- verifiable data. The other points to a greater or less degree share that common denominator.

    WRT the last point, ‘inept’ management, it is clear that the pay directed at many in those echelons represents a massive and hugely prejudicial misallocation of capital and resources within the US economy. Nardelli comes to mind. My great-uncle was Clarence Samper, who was the president of 3Ms international division and on their board of directors. My mother commented to me the other day that she recalls hearing that in mid 50s he was earning 50,000 dollars a year. I wonder what that would be in 2009 USD. He grew up very poor in Western Wisconsin at the turn of the last century, fought in WWI, studied at UofM (my grandma paid his tuition), raised a family, worked hard and contributed in the creation of a major US company. He never received proportionally the kind of compensation that has been handed out to the current crop of executives. These guys were handed all this and decided that a fecal fiesta was the best idea.

  18. bonghiteric says:

    It doesn’t matter who the president is. Companies have extremely diminished earnings power. The markets have taken their sweet time digesting this fact. The government’s counter-intuitive responses (I’m being generous) with respect to the ad hoc bailouts have accelerated the downward trend.

    BTW I caught CNBC at lunch… recommending butterfly spread option strategies…WTF! That’s what it has come to? No retail investor has any idea what that means and anyone who does isn’t looking to Sue Herera for option trading advice.

  19. Marcus Aurelius says:


    While some may see images in the inkblot, I only see ink. I think it’s more important to ask who spilled the ink.

    Obama? Bush? Republican- or Democratic-led Congress?

    From Enron to Madoff, the greatest period of lawlessness (and I’m not arguing over good or bad legislation or policy – I’m talking about law enforcement – which resides squarely and solely within the purview of the executive branch) in our government happened under the Bush administration. Furthermore, this refusal to act upon their sworn duty to uphold the law of the land was accommodated primarily by the Republican-controlled Congresses (and to a lesser degree by the kumbaya nature of some Congressional Democrats). The largest failure of Congress during this period was to shirk their duty to impeach the POTUS at the point the “Unitary Executive” claim was put forth. It has been my experience that any claim to secrecy in the name of security or privilege is more than likely put forth to cover criminality.

    Our government allowed this crisis to happen. Our government enabled the thieves. Our government was complicit in, and a beneficiary of, the crimes committed under the color of political philosophy.

    To ignore this very evident fact is to deny reality.

    is Obama going to “get us out of this” with new policies? No. Neither would have McCain, Romney, Clinton, Paul, or Kucinich (although there would be indictments had Kucinch been elected). The crimes have been committed, the damage done. We will never be made whole, as victims never are. This fact does not relieve us of our responsibility to investigate, indict, try, and harshly punish those responsible for the criminal dereliction of duty and/or criminality under the color of law.

  20. Andy Tabbo says:

    Just some very basic technicals here.

    Down from 944, the 1=3 or a=c was 734 on the SP500…solidly taking out that level today with no rebound in sight, the market now targets 649 as 1.618*1=3…that’s the simple message Wave message….

    Gold taking out Friday’s lows after an attempt to rally was not a good development at all….

  21. mknowles says:

    It’s the wealthy screaming class warfare. Let them scream.

  22. Bruce N Tennessee says:


    Where are those damn toes when you need them? Have you been picking your feet in Poughkeepsie, or what? Get up off your duff, man…it is time to make some money…here, I’ll give you a little help from a sage who has been right the entire time….


    Bailing Yourself Out Ben Stein

    Here is the money quote for you, Barry:

    “Get to work.”…

    (I thought you might enjoy a little sarcasm….and I already wrote about Art Hogan’s bottom, and other goofy things in this recession/depression…)

  23. OkieLawyer says:


    I seem to remember you once writing that “crashes usually happen in oversold markets.”

    So, are we oversold yet?

  24. Ny Stock Guy says:

    Well, time to buy in for the bounce tomorrow.

  25. MRegan says:


    Lawlessness was the hallmark of those people.

    This article is somewhat heartening. Maybe some of the mess can be cleaned up.


    An excerpt

    Under Cox, “the guiding principle was slow it down, shut it down, find a way to bog it down,” says a lawyer in the division, who spoke on condition of anonymity because he still works there and did not have permission to speak to the media. “We are now being given the tools, the ability, and the discretion to use our good judgment.”

  26. AGG says:

    In a country where people think you are breaking an unbreakable taboo if you want to know how much they make, it’s logical to for people to be emotional rather than empirical about their investments. With all due respect, haven’t you yet accepted the ugly fact that most people love their money more than they love each other?
    And it gets worse when some track record of past performance leads to blind faith, hubris and king sized egos. There probablyaren’t as much “it don’t rain on ME” attitudes as there were before the crash but the “anchoring endowment” effect in real estate is even more pronounced in stubborn pride.
    I just read about a scientific drug trial that flipped empirical science on its’ head. Participants who took a drug while being told it was a placebo DIDN’T get the health benefits the drug was supposed to produce while the placebo recipients told they were getting the drug DID get the healing benefits along with those who got the drug and were told they were getting the drug.
    So, is it all about faith? I am. therefore I think? Things are getting a bit crazy. Perhaps the news story (UK Telegraph) is some kind of bullshit psyops but it makes you wonder. At any rate, the current zeitgeist in the market is lack of faith in anything and everything so the best investment strategy besides buying gold coins (the real ones, not the cointerfeit perfect looking copies the Chinese are making) is investing in your community. Good will accumulation IS a valid positive accounting activity. After all is said and done, all you have is your community.

  27. Marcus Aurelius says:


    Agreed. A strong point of proof can be found in Harry Markopolos’ entreaties to the SEC regarding Madoff.

  28. MRegan says:

    Yeah, the Markopolous interlude is the most befuddling thing I can recall hearing. His testimony before a Senate (?) committee a couple of weeks ago left me gobsmacked. What does Richard Shelby say to himself in the wee hours of morning when he is alone with himself and that empty place where others keep their conscience?

  29. leftback says:

    @ AT said: Gold taking out Friday’s lows after an attempt to rally was not a good development at all….

    I was short gold but covered today. Will stay flat until we see the action in gold around 900-910.
    GDX should find support around 30. Oil held support at $40 firmly today.

  30. tCA says:


    To add on:

    - raising taxes on those making over $250k + small biz
    -the Euro-zone breaking down (read: is Germany going to bail?)
    -protectionist rhetoric heating up
    -real money supply???

    Weren’t many of these things the root cause that plunged us into the Great Dep? The next question is who is this century’s Germany (China/Russia) and Poland (Taiwan/Ukraine)?

  31. CNBC Sucks says:

    Until we can rebuild a more honest economic system that actually produces as much as it consumes, and does not rely on blatant lies to an unknowing American public or companies like PIMCO getting government contracts to advise on financial matters (e.g., BofA) in which it would have a clear conflict of interest, the U.S. stock market is toast. Put some butter on it and find some other concern to take up your day for the next 15 – 20 years.

  32. No PPT into the close today? hmmm

    What ammo remains?

    (Dare I ask?)

  33. llandson says:

    tCA, I am a small business owner who makes far less than 250K. Can you explain to me how Obama proposes to raise my taxes? I have never understood the claims that he intends to “tax small business.”

  34. Weren’t many of these things the root cause that plunged us into the Great Dep? The next question is who is this century’s Germany (China/Russia) and Poland (Taiwan/Ukraine)?

    Well.. If we had to bomb _someone’s_ industrial capacity flat.. Russia’s would be easier, but China’s would make our unions happy… (actually, it wouldn’t matter most likely, with Germany, Japan, Korea still producing we’d STILL be behind..)

  35. rameshuwp says:

    Excellent post. I would like to add the following: The gas bags who keep talking everyday think that is all it takes to address it – talk about it and poof its done and the market should start going up.

    Think about it, we are talking about years and years of gains being erased in days here. Yet, day after day, there is expectation that all these things are going to be a bad memory and things are going to get okay immediately. You hear it from the gasbags and only gasbags because, the others are speechless – almost literally. Enuff said.

    – r

  36. CNBC Sucks says:

    @tCA – If I recall the Nuremberg-like rallies for McCain-Palin last October (http://cnbcsucks.wordpress.com/2008/10/09/nothing-makes-the-market-more-impotent-than-nazi-rallies-on-american-soil/), I think the U.S. is at least every bit as likely to be this century’s Germany as China or Russia.

    Why do you think I stay a registered Republican?

    Stop worrying about other countries’ problems and start fixing your own, America.

  37. Mike in Nola says:

    Dr. Kenneth:

    “…the U.S. government has a technology, called a printing press …..”

  38. Marcus Aurelius says:

    “Think about it, we are talking about years and years of gains being erased in days here.”

    They were not gains. They were a manifestation of fraud. What we’re witnessing is realization.

  39. Andy Tabbo says:

    Dr. Kenneth Noisewater…

    Several good economists suggest that U.S. in 1929 = China in 2008. The U.S., being a debtor nation with the ability to print its own currency, is more similar to Euro nations in the Great Depression. Euro nations made it through that time period a little easier than the U.S. because of that characteristic. Given their huge reliance on exports (similar to U.S. in 1929), I’d say that China will fare FAR worse in this downturn than the U.S. or Europe.

    To those who would say, “But China has a lot of reserves and they can spend money”….the U.S. had the largest Gold Reserves of any country in the world during the G.D.

    To those would say, “But we did some dumb things like Smoot-Hawley”….I would say I’m hearing some dumb things talked about right now that are reminiscent.

  40. tCA says:


    It’s the fast growing small biz owners reporting biz taxes on personal tax forms. Income caps, limiting deductions, etc. will drive up effective tax rates.

    While many small biz owners may not get hit, the most productive ones who are creating jobs will. These are companies that are well on their way to becoming C-corps or similar that will get slowed down. “Joe the Plumber” likely has little to worry about from that standpoint. In these economic times, I would think we would want to encourage small biz growth to pull us out of this crap rather than reward “Joe the Plumber” through a redistribution of wealth.

    PS- “Joe the Plumber” is a euphemism for those small biz owners who make a comfortable living at whatever income and may not necessarily be looking to grow their biz into one that little O is targeting.

  41. JustinTheSkeptic says:

    In other words: the market is like the stiff dick that has no conscious…and nor does the profit motive, and that is what got us into this mess and that is what will get us out!

  42. Bruce N Tennessee says:

    We do need to liven things up a little…how about a “Call the bottom of the DOW ” contest…or a “How long ’til Bernanke says ‘We’re not making this up as we go along’ ” again contest…or a Steve Leisman “I see positive trends in these new numbers” contest or How long ’til we own all of AIG contest..

    …the possibilities are endless..

  43. leftback says:

    There is a BS story on Bloomberg about the VIX “predicting two more years of a bear market”. Since the VIX is a measure of options trading and hence reflects short-term implied volatility, this is the biggest load of bollocks I have heard today.

    @Mike said: “…the U.S. government has a technology, called a printing press …..”

    Thanks for the reminder, Mike. Ben will be extra busy on tonight’s shift as the US$ puts in a double top.

    @Marcus Aurelius: “Think about it, we are talking about years and years of gains being erased in days here.”
    “They were not gains. They were a manifestation of fraud. What we’re witnessing is realization.”

    Absolutely. But bear in mind that the real economy is being sold off along with the fraudsters. Panic and opportunity almost always go hand in hand.

  44. 1001 says:

    I would bet that most of your comments have political balance !!!

  45. tCA says:

    CNBC Sucks,

    Do you really think the US will be Germany? No country in the history of humankind has done so much good with all of the power it’s earned. So, is it possible that we’ll invade someone? I suppose. Is it likely? Slim (…and none under this Prez).

    It looks like you’re not a Yank. Funny, in 2007, the stock market downturn was only an American problem. We see how that worked out for the rest of the world. Though our economy/markets are subject to manipulation, certainly not to the extent of the rest of the world.

    “Except for U.S. Treasuries what else can you hold?” said Luo Ping, director general of the China Banking Regulatory Commission. U.S. government debt “is the safe haven for investment,” he said, according to the report. (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZDAka05MV.U)

    What, suddenly the Euro is going to become the safe haven of choice? Is that before or after Germany bails?

    Let me guess, Mr. Sucks, are you a non-Yank living in America?

  46. deanscamaro says:

    In reflecting off what The Curmudgeon says, they may have been looking for a Messiah and thought Obama might have been Him, but they were DAMNED SURE it wasn’t George “Dubya”, who flew the airplane into the mountain. For sure this country and the rest of the world is stumbling around in the dark, not knowing what to do; but as the old saying goes, Opinions Are Like A**holes; Everyone Has One!

  47. 1001 says:

    Obama will fix it all

    only 1,000,000 jobs lost so far this year

  48. franklin411 says:

    tCA…Any small business owner pulling in $250k> in profit AND who hasn’t set up the appropriate capital structure deserves to get taxed. Also, their accountant should be dragged out into the street and shot.

  49. tz says:

    Don’t buy until the Rorschach inkbot tests are visible in the street from the fall of traders and investors from a sufficient height.

  50. ThatsNotAll says:

    Are you suggesting Barry that politics have no bearing on investor confidence? Because there is a pretty good record suggesting politics play a huge role in how the capital markets perform. When HillaryCare was being bandied about the Pharmaceutical Sector flatlined. Investors were concerned the heavy hand of government was going to destroy value in those companies.

    In the past month we have observed President Obama disparage CEOs, advocate higher tax rates, propose an energy tax and suggest private contracts should be rewritten by judges. He has also submitted a budget promising the greatest deficit spending in the history of America. How, in as tough of an environment as it is, are investors supposed to react to these policies?

    Is it not likely that a more business friendly commander and chief would invite investment cash into the market, and not out of it? It is likely the economic decline would be similar no matter the politics of the President. But the expected investor return would be far different and that makes a real difference that you seem unwilling to accept.

  51. Marcus Aurelius says:

    I don’t think we’ll be Germany. We’re too well armed (privately), and we have some very tough, very cautious minorities that have witnessed and experienced bigotry and disenfranchisement firsthand.

  52. @Bruce N Tennessee:

    I call the bottom of the DOW at 1500. That’ll be your 90% retreat that we saw in the GD. At an average decline of about 100 points, with the requisite bounces back, I figure we’ll get there late this year.


    Yes, it’s just an opinion, or really, a theory. But my theory of the mood only explains little retail midgets and why they are bailing. Of course, AT, MA, etc, had it correct–the whole thing is just an adjustment to reality. Deleveraging after uber-leverage. The retail midgets are driving the deleveraging train, as they are tapped out, but the big guys just made a bunch of bad bets based on faulty assumptions about the retail midgets. They didn’t know how to manage risk, even though managing risk was what they were paid to do.

    Incidentally, George Bush wasn’t on the ballot. He couldn’t have been their messiah had they wanted him.

  53. BrianSJ says:

    From ‘The Butterfly that Stamped’ in Kipling’s ‘Just So’ Stories:
    “And yet Suleiman-bin-Daoud was not proud. He very seldom showed
    off, and when he did he was sorry for it. Once he tried to feed
    all the animals in all the world in one day, but when the food
    was ready an Animal came out of the deep sea and ate it up in
    three mouthfuls. Suleiman-bin-Daoud was very surprised and said,
    ‘O Animal, who are you?’ And the Animal said, ‘O King, live for
    ever! I am the smallest of thirty thousand brothers, and our home
    is at the bottom of the sea. We heard that you were going to feed
    all the animals in all the world, and my brothers sent me to ask
    when dinner would be ready.’ Suleiman-bin-Daoud was more
    surprised than ever and said, ‘O Animal, you have eaten all the
    dinner that I made ready for all the animals in the world.’ And
    the Animal said, ‘O King, live for ever, but do you really call
    that a dinner? Where I come from we each eat twice as much as
    that between meals.’ Then Suleiman-bin-Daoud fell flat on his
    face and said, ‘O Animal! I gave that dinner to show what a great
    and rich king I was, and not because I really wanted to be kind
    to the animals. Now I am ashamed, and it serves me right.”

  54. Steve Barry says:

    Still, I see no capitulation…volume was not large, especially if you look at dollar volume. Remember the Dow has stocks now, due to their penny stock status, trade over half a billion shares a day. I’m looking at QQQQ volume…it’s about the 70th straight day without greatly breaking 100 day ma…and put/call printed only 1.08…they are not hedging like at market bottoms. Press the shorts here.

  55. 1001 says:

    Can we blame Bush for all of the world’s woes ???

  56. AGG says:

    Marcus Aurelius Says:
    “Think about it, we are talking about years and years of gains being erased in days here.”
    __They were not gains. They were a manifestation of fraud. What we’re witnessing is realization.
    Damned right! I’ve said this for years. Keep giving em’ hell. I support your repeated reminder that the crooks are still there, still stealing and since they are destroying our countr, they require incarceration. I’d throw in castration but some of them are women.

    tz Says:Don’t buy until the Rorschach inkbot tests are visible in the street from the fall of traders and investors from a sufficient height
    I wish. The sad fact is that those 1939-1932 suicides had some conscience. I don’t think that applies now. We’ve got to hunt them down and give them rat poison. It’s the only way.

  57. daveNYC says:

    The accumulated filth of all their mortgages and CDOs will foam up about their waists and all the bankers and traders will look up and shout “Save us!”…

    … and I’ll look down and whisper “no.”

  58. Ethel-to-Tilly says:

    Interesting – not one word about the fall of Lehman Bros and the seizing up of the global financial system last fall. Amazing how many can overlook (or argue away) the obvious.

  59. DL says:

    Andy Tabbo @ 3:38

    Notwithstanding the prospect of a “boring telecast”, if CNBC put you in charge of programming, it would result in an improvement over what they have now.

    (What do we have now? Every day, it’s “the next bull market is right around the corner”).

  60. AGG says:

    Hey TBP readers, do you want to make an easy extra 57 to 100 bucks a month guaranteed?
    Drop cable. Watch only PBS and don’t miss Moyers Journal. He keeps you informed without the hype.
    Just think, you can use all that money to buy KEY or C at the current bargain rates and get rich with the Bernake backstop!

  61. CNBC Sucks says:

    @tCA: Not only am I a “Yank” (lol…your odd reference reminds me of http://cnbcsucks.wordpress.com/2008/10/08/manual-override-and-cnbc-hotties-sarah-palin-and-fox-news/), I’m a registered Republican!

    I don’t know if you’ve been keeping up with current events, pal, but we have invaded at least two countries in the last decade (that I know of). As for your reserve currency argument, I would say we owe a lot to a bunch of guys named Hamilton and Jefferson and Madison and Washington. I hope Obama stays in power so that the rest of the world will continue to regard us as the beacon of not only democracy but – more importantly – political stability and the rule of law, but it will be all downhill if my political party, the GOP, ever takes over again.

    By the way, as a registered Republican, I don’t blame George W. Bush for all of our problems, but I do blame Larry Kudlow.

  62. tranchefoot says:


    One significant difference between China now and the US in 1930′s is that the US experienced both a banking crisis and an econonic contraction whereas the Chinese banking system now is in relatively good shape (if you believe Brad Setser). This should allow China to come out of their economic contraction more easily than the US in the 1930′s or 2010′s. Not to say that China doesn’t have big problems, just not nearly as big as ours (and Europe’s).

  63. Marcus Aurelius says:

    1001 Says:
    March 2nd, 2009 at 5:14 pm

    Can we blame Bush for all of the world’s woes ???

    Of course not. Only for those in which he had a hand. For those in which he had a hand, and which were illegal, we should prosecute him and any other person so situated to the full extent of the law. Same goes for any person – citizen or not.

  64. moonmullins says:

    Not so fast
    , Barry.

    For years you’ve been dumping on Bush as the PRIMARY source of our economic and financial ills. Now, when faced with those on the right who go after your guy, you say that market forces dominate?? Rather than issue the mea culpa over the failed timing on your market call – which to your credit did turn out correctly – why not issue a mea culpa for all of the disproportionate blame placed on Bush? We might then believe your conversion to someone who claims they simply follow the facts.

  65. Marcus Aurelius Says:

    March 2nd, 2009 at 5:53 pm
    1001 Says:
    March 2nd, 2009 at 5:14 pm

    Can we blame Bush for all of the world’s woes ???

    “Of course not. Only for those in which he had a hand. For those in which he had a hand, and which were illegal, we should prosecute him and any other person so situated to the full extent of the law. Same goes for any person – citizen or not.”

    And remember, he hardly acted alone.

  66. Given their huge reliance on exports (similar to U.S. in 1929), I’d say that China will fare FAR worse in this downturn than the U.S. or Europe.

    Could very well be, and don’t forget a repressive system that makes the Pinkertons look like wet nurses..

    Still though, there’s a strain of populist protectionism out there which sees the postwar industrial boom as some mythic golden age of labor gains, while they conveniently forget the massive destruction of competitive industrial capacity which made quite a lot of that possible. This time around, when populist protectionism returns, we won’t have that advantage anymore.

    And alongside the earlier Detroit post.. What do you think would happen to Detroit if it were, deus ex machina, to be subject to the same laws and policies that exist in, say, Alabama or Mississippi? Same skilled people, minus the taxes and restrictions, plus right-to-work?

  67. tCA says:

    Mr. Sucks,

    “it will be all downhill if my political party, the GOP, ever takes over again.”

    Hilariousl! I know Republicans and you’re no Republican. Though I know many R’s that cringe at Bush’s performance, I know of almost no one who thinks the next R will fuck things up like W did in his 2nd term to the point they’d prefer the party of O, Pelosi, and Reid to rule. You must be a Specter Republican…which isn’t really a Republican.

    “I don’t know if you’ve been keeping up with current events, pal, but we have invaded at least two countries in the last decade (that I know of). ”

    Last time I checked, everyone is in agreement about Afghanistan. Everyone…including Obama and other liberal douchebags. On Iraq, though more divided, Bush’s view of Saddam and the Iraqi government was the same Clinton’s and many of our western allies. Let’s not forget about Saddam’s calling the UN’s bluff by ignoring multiple resolutions that would have avoided any war. So, if you’re suggesting we went in unprovoked, you’re foolish…and not a real Republican.

    Lastly, Mr. Sucks, rather than having the idiots in government regulate CNBC, why don’t you just change the channel? http://www.despair.com/tradition.html
    After today’s market action as a long, I hope you don’t take your negativity and jump off a tall building.


  68. jwc says:

    Could not agree more with what Barry said. There is a ton of bad stuff happening, and the stock market “continues” to go down. Surpirse? Hardly.

    Wish he would go ahead and nationalize the banks, but then I really don’t know enough to really criticize.

  69. CNBC Sucks says:

    tCA – If you think I am depending on the stock market for my long-term prosperity, you got another thing coming. Also, I am very much a Republican, just like Abraham Lincoln, Teddy Roosevelt, Robert La Follette, and Nelson Rockefeller were Republicans. The GOP was not always the party of thieving and lying Fascist rascals, and I am not about to give up on MY PARTY. I will let you use your Wikipedia to learn about the true progressive roots of the GOP.

    Boy oh boy, is Cramer on a HUGE ANTI-OBAMA RANT today. Idiot Democrat. I think this is more of an infantile, Baby Boomer impatient-for-stock-price-inflation BS than anything.

    Ritholtz, you run a damn addictive blog. From now on, I call you the Lenin-McCarthy of economic bloggers. Out!

  70. frizzione says:

    tCA -

    “It’s the fast growing small biz owners reporting biz taxes on personal tax forms. Income caps, limiting deductions, etc. will drive up effective tax rates.”

    Geez, I thought the readers of this blog were smarter than this. Do you fill out tax forms? I do. No one reports “biz taxes” on the 1040. If the small biz is a pass-through entity, Schedule C eliminates _all_ expenses of the company _before_ a personal income is taxed. “…income caps, limiting deductions” applies to personal, 1040 income, what the guy (gal) actually takes home at the end of the day after paying everything related to the company (and, cough, then some, I’ve heard). If they don’t want to claim everything that’s left over as personal income they should form a non-pass-thru entity, let the company keep profits and pay-themselves/report-as-income/pay taxes-on a salary. Of course, the biz will then have to file its own return, and it may not like those rates. That’s a different topic, but it has nothing to do with ‘income caps’ and personal deductions.

    I’m sick of people arguing like tCA who don’t even display the most basic knowledge about how ‘small biz owners’ pay tax.

  71. jmay says:

    As a Democrat and an Obama supporter, it was 100% predictable to me that this is what we would be the GOP line of attack come Spring of ’09. It’s all Obama’s fault! He’s been in office six weeks!

    Was the Tech Bubble crashing Bush’s fault? LOL.

    It’s kind of fun to watch the GOP stage campaign events, like they can turn a depression into talking points. Again, I’m not surprised — they staged PR events in the 9/11 rubble and in the New Orleans town square, so why not now.

    Mark my words — by the time Obama’s second term is over there will be talk about repealing term limits again so that he can break FDR’s record.

  72. rpickard says:

    We are stuck in a vicious cycle of wealth destruction. Individuals have lost years of gains on their homes and portfolios. Consumers reduce spending. Tighter credit. More layoffs. More bankruptcies. More bank failures. Repeat the cycle. It’s hard to see where the downward cycle stops. Heck, even gold was down today, with some analysts claiming it was due to margin calls on other types of securities/commodities being covered by the sale of gold. Although I think the rise in the dollar probably had more to do with the action in gold today, forced liquidation is a huge threat to the markets as prices of everything continue to tumble, except for the bubble in Treasuries (hat tip to Mr. Buffett).

  73. sfharris81 says:

    The market is just further confirming that “Wall Street” is a group of fools. Those so called investors are nothing more than speculators. Now everyone has jumped on the bear band wagon, and I’m sure if by some chance the S&P 500 could fall to 0 or near about, somehow another they would rationalize the pricing action as sound. Somehow I don’t think that it will make it there, but then again that may be what is required to flush the system of all the so called investor vermin.

  74. matt says:

    tranchefoot: “…the Chinese banking system now is in relatively good shape”

    Of course, if you believe someone who actually lives in China and studies the Chinese economy (http://mpettis.com/), you are left with the opposite impression.

    Brad Setser is good at one thing: analyzing international flows (TICS and balance of payments). I’ll turn to Professor Pettis if I want to know something about Chinese banks and SOEs.

  75. Having blogged about the Obama Bear Market several times since last summer, it’s time to explain why this is Obama’s Bear Market.

    Yes, fundamentals and anticipation of worsening fundamentals have tanked the markets.

    But ever since it became clear that Obama had a chance to become president and since September when it became clear that he would be, anticipation of his anti-business and anti-speculator intentions have contributed a lot to the bear market. Since his election, the bearish Obama factor has intensified daily, if not hourly.

    Look at what the guy is doing to destroy wealth and jobs in this country and to create market chilling uncertainty:

    1. Never during the transition did he disown his plans to raise taxes regardless of the recession. Now he promises to raise taxes both honestly and with slight of hand.

    2. Dems refused to enact the fiscal 2009 budget under Bush correctly figuring they’d get more pork under Obama. The markets agreed and didn’t like it.

    3. Appointees to his cabinet and staff ranged from the mediocre to the radical, shaking confidence.

    4. The stimulus bill quickly became the Pelosi Scheme, which is 100 times as expensive as Madoff’s Ponzi scheme and just as dishonest. The anticipated deficits and tax increases accepted by Obama shook investors.

    5. Obama promised changes in the health insurance and health care delivery markets that ensured soaring costs and higher taxes. Since the outlines of the plan were disclosed in the preliminary budget, stocks of pharmas, medical devices makers, insurers and providers have tanked, destroying more wealth and jobs and promising more job losses in the health sectors.

    6. Obama’s Gorean energy and climate change plans are enough to put us in recession for years, and they have spooked the markets.

    7. Because he has huge majorities in Congress and the ambition to match, Obama is now our car czar, health czar, financial czar, housing czar and energy czar, to mention a few areas. He’s trying to become the most powerful president in history, and he’s making decisions that he’s not equipped to make. Even if he were a genius or a God, he’d be lucky if he made good decisions more than 40% of the time. Human nature. And because he’s making huge decisions, he’ll make huge mistakes that will be politically difficult to correct. Investors know this and are trading accordingly.

    8. And then there are the banks and AIG. No plan. No clarity. Lots of uncertainty about not only the plan but also the guys in charge. That enough is to shake the markets.

    What those who deny we’re in Obama’s Bear Market are refusing to acknowledge is that the market’s fundamentals are pretty well known and have been anticipated for months. At the same time, our Saul Alinsky-trained president wants to redistribute wealth and restructure the economy and country so that he and his party will be in power for generations. This is scaring investors into a buyer’s strike as well as scaring them into selling. Note: There will be no wealth to redistribute.

    Markets are all about anticipation, and Obama’s given us numerous reasons to expect the worse not just from the economy, but also from him.

    Scary and Bearish!

  76. willid3 says:

    not sure why any body thinks the market tanking was because Obama or Bush or Clinton. I suspect its more of a they won’t give me more free money my way than any thing (otherwise known as a tantrum). Or if we want to try the theory that the market is really smart (yea right!), maybe its that investors have come to the realization that the easy money honey moon is over for a while. the coming problems that are here will not be glossed over any more. the falling wages of consumers have put a big crimp in their spending (or just stopped it all together!). and then there is the impending retirement (or not) of the baby boomers. which was the group that really were the consumers (no other group comes close to thier spending). but now they are fixated on retiring (if they can) and are cutting back on every thing. and there is no replacement group available to take up where they left off. used to be business’s were worried about where they were going to get the employees when they retired (solved that by going else where). the new and much more pressing problem is they don’t have any body to by their products and services any more. and thats a much bigger and more immediate problem than any thing else.

  77. Paul S says:

    businessword.com is proof you should have at least a high school diploma to post on here.

  78. ThatsNotAll says:

    Hey Barry, Jim Cramer says President Obama is a Leninist. And on the Lightning Round tonight he didn’t recommend a single stock . He said something to the effect that all were going lower as long as the Administration was focused on destroying wealth. This is Obama’s stock market crash. He had a chance to set a new course and instead laid a Socialist egg.


  79. fp says:

    I support Obama but I see no reason to deny that he might be bad for the market in the short term. Wall Street wants free money and giveaways and doesn’t care about people’s health care, the environment, etc. Of course if he bends over for corporate America like Bush did, that’s not necessarily good for Wall Street either in the long term, as we have seen.

    “He has also submitted a budget promising the greatest deficit spending in the history of America. How, in as tough of an environment as it is, are investors supposed to react to these policies?”

    I guess deficits are only bad for the market when a democrat is in charge. Reagan’s deficits were no problem.

  80. ThatsNotAll says:

    Except government has no money save what it taxes its constituents for. Tell the capitalists to take their ball and go home and they’ll do exactly that. And then who will the government tax?

    BTW, I’m astounded by the anti-capitalists who frequent Barry’s blog. Where will you all go when things turn around and Barry’s making money betting for America and not against it?

  81. trackerman says:

    Typical Bottom Call:

    “Midweek Marketmail Update”
    “This is Louis Navellier. It is Friday, February 27th.”
    “The stock market officially broke through the November 20th lows on Friday morning, but that was good news because it rallied right back. So, we’ve now retested the lows three times: first on October 10th, where we had a big intraday reversal; then on November 20th, which we had a huge rally off that low – in fact, it was the biggest rally for the Dow since 1932; and then of course, today’s new low. If you drew a line across all these lows, it’s just a further confirmation that the market is bouncing along the bottom. You know, back in 2002 to 2003, we bounced along the bottom for 7 months and retested the lows three times. We’ve essentially done that already. You know, we might continue to retest the lows, but I’m remaining very, very encouraged that the market is bouncing along the bottom on a valuation basis.”

    Note: 10-10-08 closing interday low Dow: 7882, SP500: 839.8
    11-20-08 closing interday low Dow: 7506, SP500: 747.8
    02-27-09 closing interday low Dow: 7033, SP500: 734.5

    Even though on 2-27-09, the Dow is 850 points lower and the SP500 is 105 points lower than the 10-10-08 low, THIS IS A SUCCESSFUL RETEST?


  82. Whammer says:


    I assumed that your great uncle was making $50K in 1955 — that translates into approximately $400K today. So, definitely good money, but well short of what people in similar positions would demand today.

    Oh, I don’t know for a fact, but I suspect he was probably paying a higher marginal tax rate than Jeff Skilling or Angelo Mozilo or whoever…..

    The highest marginal tax rate in 1955 was about 90% — that applied to incomes of $400K or more, which is about $3.2 Million today.

    There were a lot of tax scams available at that time, so it’s a little hard to compare apple/apple, but somehow the US economy didn’t fall apart in a haze of socialism/Communism due to high taxes.

    So when I see people on this thread say things like higher taxes led to the Great Depression and Hitler, I blame the liberal MSM ;-).

  83. Paul S Says:

    March 2nd, 2009 at 9:24 pm
    businessword.com is proof you should have at least a high school diploma to post on here.

    Paul S,

    would you be meaning — so that one may have sufficient background and maturity to grasp, and reflect upon, some of the larger themes that he is describing?

  84. David S says:

    No, the markets are not tanking “due to lack of nationalization.”

    They’re tanking due to lack of RESOLUTION of the situation, and one way of reaching resolution is nationalization. There are other ways.

    You know better than most that markets hate uncertainty, and while the Obama administration has said “no, we’re not going to nationalize” their ultimate failing that that they have not proffered any alternative plan with the resolution that nationalization has. They’re just going to keep flinging cash into black holes on balance sheets on an ad-hoc basis.

    Sure, the best plan might be nationalization, but it isn’t the only solution out there that would resolve the situation.

    Look at how military guys lead – they don’t always have the perfect plan. Sometimes people get hurt or killed. But they observe, they analyze, they decide and then they act — all very quickly. Their troops have to know that “the old man has a plan” – else they lose confidence in him.

    The Obama administration is showing an increasing lack of leadership on this – and for the same reasons as the Clinton administration did: they’re lawyers. They like to talk about how many angels can dance on the point of a pin.

    I’m not a market pro like you, but I’ve been trading and investing long enough to see that the market just hasn’t a friggin’ clue what to do. They’re becoming crazier than shithouse rats from the indecision, the data, the lack of clear, unequivocal financial leadership. We get trial balloons, then they get shot down. We get promises of plans with details, we get hand-waves. We get told that they’re going to “stress test” the banks when everyone already knows the outcomes for several of these banks a priori – we want to know what are they doing to DO with the insolvent banks.

    FDR didn’t do any of that. He came into office with a bold move: he declared a bank holiday.

    Did it solve the insolvency in the banks? Hell no. But it was a BIG move – it showed a clear, unequivocal decision and action – big, bold action that the WHOLE country could see – regardless of whether your bank was in trouble or not.

    Again, using the military analogy – sometimes, a CO of a naval ship will sound GQ (general quarters) when something happens, but yet he doesn’t know exactly what is going on. Why? He wants the crew DOING something rather than asking questions, and he wants the whole crew knowing that the “old man is engaged in the situation.” The “old man” doesn’t have to tell the crew that he hasn’t a ‘firm’ clue what is really going on. He just shows that he can decide and will lead.

    By comparison to this, FDR’s bank holiday was a stroke of PR genius.

    Obama might not want to nationalize, but he must come up with some other plan that has resolution.

  85. MSimon says:

    The problem I see is that way too many banks are involved in financing consumption and very few are involved in financing production. Production is harder. And fewer still deal with startups. That is way harder than production.

    Nationalization will not help. Nationalized economies perform badly all the time. Capitalist economies (such as they are) perform badly from time to time. Consider: what caused the tulip bubble?

    What to do? There is money. There is real capital (power plants, robotic machine tools, etc.). When lower prices cause supply and demand to begin to equalize things will start moving again. Everything government does to maintain prices impedes recovery. What will that do to help the economy besides getting it moving? It will weed out the high cost producers. i.e. there will ultimately be less waste in the economy. The last thing we want to do is carry the wasters. It is not ecological. Nor is it economic.

  86. I’m wondering whether the assumption that toxic assets should be taken off banks’ balance sheets is correct?

    Why not continue to make them mark to market so that investors have a better idea of what’s going on and the banks have incentives to fix the problems themselves one way or another over the years?

    Why not assume that if the toxic banks won’t be able to lend or grow as much as they would like, others will grow to take their places?

    Why not assume that if investors see opportunities for sound banks to take share from the toxic banks, they’ll capitalize the sound banks and help them grow?

    Is it correct to assume that if the toxic banks can’t lend, the economy won’t recover as quickly as it would if they could?

  87. batmando says:

    @ tCA
    March 2nd, 2009 at 4:50 pm

    “So, is it possible that we’ll invade someone? I suppose. Is it likely? Slim (…and none under this Prez).”

    However, what if things fell apart so bad south of the border, like when production at Cantarell has fallen by 50%- 70% and the drug cartels take over the gov’t, such that we had to ‘temporarily’ occupy…, oops, I mean station troops to ‘stabilize’ the situation?