Portfolio Cover Story on Timothy Geithner
Gary Weiss of Portfolio has just published a profile of Treasury Secretary Tim Geithner:
http://www.portfolio.com/executives/2009/04/22/Treasury-Chief-Tim-Geithner-Profile
He recalls my first experience with Geithner at an NYU conference on risk management hosted by the Stern School several years ago. Even though Geithner admitted yesterday in his congressional testimony that he has no actual financial markets experience whatsoever, you would think that an economist and bureacrat focused on financial policy would have some passing acquiantance with Basel II, especially as the President of the FRBNY.
The more I see and hear Secretary Geithner speak on financial services policy, the more I am convinced that this man has not a clue what he is doing and must therefore be acting at the instruction of others — Bob Rubin, Larry Summers and the folks at GS — IMHO.
Best,
Chris
April 22nd, 2009 at 9:34 am
Honestly, I think there is sometimes no pleasing some people.
One of the criticisms I have heard about the bailout is that a lot of the people in the financial industry are crafting the decisions to fix the economy. What Geithner was trying to point out in the hearing is that he is not a banker or someone from the financial industry. He is a public servant and is not a Wall Street insider.
I think it was important for him to make that distinction. He probably felt it was unfair to lump him in as part of the “banking and finance industry”.
Sometimes I think people get off on being negative and focus so much on putting a negative spin on things that they miss what is actually being said.
April 22nd, 2009 at 9:35 am
Wow…and Chris Whalen doesn’t have any sort of agenda that would cause him to “invent” a fictional story about something nobody will be able to confirm or deny, right? It’s not like he makes his living through the continued dislocation of markets, right? It’s not like Chrissy was once a trained monkey at the Federal Reserve Bank of NY and might be a tad jealous that Geithner’s career at the FRBNY while Whalen was expelled like so much menstrual flow?
April 22nd, 2009 at 9:46 am
franklin,
did you finally figure out that your vauntaed Payroll tax ‘rollback’ was going to be fed, directly, to the State of California via higher State taxes?
you, my friend, are the one paying ‘their monthly bill’..
~~
Past that, Whalen is correct, Geithner is an automaton.
this: “The more I see and hear Secretary Geithner speak on financial services policy, the more I am convinced that this man has not a clue what he is doing …” to anyone that is, at least, half-way sentient, is beyond obvious.
to the Geithner fan-club, make with some actual points that dispute the observation.
April 22nd, 2009 at 9:50 am
“He is a public servant and is not a Wall Street insider.”
False dichotomy.
“might be a tad jealous that Geithner’s career at the FRBNY”
I guess Whalen has confided in you.
April 22nd, 2009 at 9:52 am
Mark,
I think the onus is on you to prove that he is stupid. I already showed in the first comment why what Chris Whalen took to be an admission of ’stupidity’ was actually an important disclaimer about where Tim Geithner is coming from.
April 22nd, 2009 at 9:57 am
@paul:
Look, regardless of what you think of Geithner, this article is tabloid journalism at it’s absolute worst. The author takes various unprovable anecdotes that are supposed to give us insight into the everlasting soul of Timothy Geithner. These events happened 7+ years ago, and we have no way of proving or disproving that they ever really occurred. Furthermore, the persons who are relating these tall tales have axes to grind: Whalen owes his fame to the banking crisis and he has no interest in seeing it resolved. Seidman was overlooked for any role in the administration and he needs to worry about maintaining the status he gets from being a commentator on CNBC (and the network has definitely made a bid to kill FBN by moving to the right of Rupert Murdoch).
But hey, if unprovable anecdotes are appealing:
Seven years ago I was in the graveyard at Trinity Church in NYC. I wasn’t there as a guest…I was interred there. One day a nice young man named Timothy Geithner walked by and discarded a half-eaten donut on my grave. Over time, stem cells from the Geithner donut seeped into my resting place, and I was reborn. The donut? Chocolate bar, of course!
One silly anecdote is as good as another, right?
April 22nd, 2009 at 10:00 am
False dichotomy?
So you are now just lumping regulators and investment bankers into one group? Maybe we should invite EPA regulators to regulate the banking system? I mean I can see your point to some extent. There was definitely a revolving door culture between Wall Street and regulators the past 1o years. But this is why Geithner felt it was so important to point out that he was not a part of this culture.
Obviously, Geithner has knowledge of the banking system, but what he was trying to point out is that he is NOT A BANKER! He has never worked on Wall Street and he objects to being classified as someone that comes from the financial industry.
April 22nd, 2009 at 10:03 am
@machi
What Whalen was trying to allege is quite clear. He says so himself:
[Geithner] must therefore be acting at the instruction of others — Bob Rubin, Larry Summers and the folks at GS — IMHO.
Best,
Chris
April 22nd, 2009 at 10:04 am
Machiavelli999,
I think Mr. Geithners inactions and actions speak for themselves… and are often the opposite of his words.
April 22nd, 2009 at 10:10 am
When someone who worked at the Int’l Monetary Fund and the Federal Reserve Bank of NY says that he’s not a banker–
Someone in my position doesn’t get very convinced.
Wiki:
Once at the New York Fed, he became Vice Chairman of the Federal Open Market Committee component. In 2006, he also became a member of the Washington-based financial advisory body, the Group of Thirty.[17]
————-
FOMC….. Let’s see how many that were on the FOMC can say “I wasn’t a banker”.
It is so entwined that I don’t think I need to waste the pixels to prove it.
April 22nd, 2009 at 10:11 am
Whalen predicted Geithner would not get approved and has recently predicted he would be gone by June.
I believe others such as Gartman and Kotok made similar predictions. It seems like they have an axe to grind. IMHO. Opinions are a dime a dozen just like all the predictions.
April 22nd, 2009 at 10:12 am
Correct on Geithner’s being honest re: Wall Street background, which I respect. My point is that this global financial technocrat still does not know his material. My dad started to quiz me about the first Basel accord before I was done with college. Now my situation is certainly unqiue, but what I am saying is that for somebody to rise to the level of head of the FRBNY or UST and not be conversant in the basics of risk management and finance, today, is unacceptable. But this is part and parcel with the entire Obama Admin. As I told our advisory clients today:
“Remember that the US electorate and much of the nation’s economic and political leadership believes and expects that an economic bounce will eventually occur this year. It is almost ingrained into our social DNA. President Obama, Secretary Geithner and Fed Chairman Bernanke have all promised such a result. When the expected rebound does not materialize, however, the already visible signs of growing discomfort among the US political class will turn to panic. In the event, President Obama and the Democratic leadership will become targets for increasingly angry and desperate American voters.”
Best,
Chris
April 22nd, 2009 at 10:28 am
One of the key assumptions in the Weiss article is that Geithner’s mentors/advisors represent a source of amazing “talent” that he will be able to tap into to develop and implement policy. That assumption is supported only by name-dropping. John Thain, for example, did not win over many fans by demanding a $10 mil bonus last fall.
The picture of Geithner the man is equivocal but comes down on the side that he will be successful — based on the assumption just noted. That conclusion is hedged a bit in the close by making the bold assessment that Geithner will need to expand his circle of friends to be successful. Whatever that means.
Some points of interest, like the reference to Chris’s 2006 interaction on Basel II, but IMO not a lot of beef here. The author clearly lacks technical understanding of the material enough to go beyond name dropping to actually discuss the schools of thought represented by the “talent” available to Geithner.
A comment or two in this thread were way out of line IMO.
April 22nd, 2009 at 10:28 am
“In the event, President Obama and the Democratic leadership will become targets for increasingly angry and desperate American voter”
Already there.
April 22nd, 2009 at 10:36 am
But the “best and brightest” needn’t concern themselves with such trifles as “Basel II”, Chris. That’s for the littlepeople, his underlings, to know. Geithner’s knowledge and talents (taking care of the oligarchy at all costs) are so much more “strategic”. Don’t you know anything?
April 22nd, 2009 at 10:38 am
And meanwhile, our Potemkin markets continue to go up day after day after day in the face of mostly more terrible news in the real world. Seems as if low volume (lack of liquidity) might be one culprit, according to Tyler Durden at Zero Hedge. Wonder of there’s anything to that?
April 22nd, 2009 at 10:40 am
TranzorZ
re: out of line
it was shocking, the contrast between pre-date and post-date ’sentiment’.
April 22nd, 2009 at 10:44 am
“But this is part and parcel with the entire Obama Admin.”
Nope. No axe to grind here.
This is an opinion unless you provide examples from “entire” administration.
No one “promised” anything. To derive a “promise” from what I’ve heard is quite a stretch. I recall, not long ago, the market pundon’ts and others chirping about Obama being to negative when referring to the most negative of economic environments.
The bias belies the concept of honestly advising anyone.
April 22nd, 2009 at 10:45 am
@Chris:
I strongly disagree with you on the administration and the overall situation, but perhaps you should add your explanation to the original thread. I’d delete my “menstrual” comment if I could. My main objection here is that the article and your brief response to it (including the “puppet” comment) seem to be more of a hit piece than anything else.
@Mannwich:
People expected the apocalypse, and we just got “really bad.”
April 22nd, 2009 at 10:46 am
@franklin411: But it ain’t over yet. You’re crazy if you think it is. We’ll be dealing with this mess for years.
April 22nd, 2009 at 10:50 am
Irrespective of abilities or “intelligence”, the key question is whom does Geithner and Summers view as their constituency.
As it was pointed out yesterday on another post referencing Chris’s letter about Citi and the FDIC, apparently there is a threat that the US better keep the banks whole, else bidding from foreign debt holders at the treasury auctions will quickly cease. In light of this, they cover-up their banking fraternity (with all the moral hazzard issues inherent) with eye on a greater objective. Geithner & Summers et al would then have all strategies aimed at preventing a failed treasury auction and if that means covering up blatant abuses and conflicts of interests, so be it. Don’t agree with getting in bed with a demon because you’re afraid of the devil mentality, but it seems to be at work here.
April 22nd, 2009 at 10:56 am
@Mannwich:
I regard the current crisis as a symptom of the 30 year long infection of Reaganism, which held that a great nation can prosper without producing anything and without investing in the future. It’s going to take 30 years to reverse our decline. We may not have the will to see it through, but this is our chance imo.
So I’m not expecting a V recovery, but “dealing with the mess” and “apocalypse” are two different things. It’s clear now that there will be no apocalypse.
April 22nd, 2009 at 11:01 am
All the so-called top guns at Fed, Treasury and Budget are doing the bidding of Blankfein.
Goldman Sachs is the shadow government. And therefore its minions, including Timothy, are marionettes.
April 22nd, 2009 at 11:01 am
Made the mistake of putting on CNBC to see the open and then Geithner came on. He was so moronic I had to turn off the tv.
In addressing toxic assets, he gave the only choices: his public private partnership; our buying them outright, and doing nothing and hoping things get better. No mention of resolving the big banks and not paying for them. I think we can see who their constituency is. And, it ain’t us.
April 22nd, 2009 at 11:07 am
stop it- Geithner’s a genius- and franklin’s right- whatever it is that he said
April 22nd, 2009 at 11:09 am
@franklin411: I think the causes are far more complicated than that. I also think that it’s not a fait accompli by any means that we’ve seen the worst here. I think you’re jumping the gun like many others in thinking that.
April 22nd, 2009 at 11:12 am
@cjcpa: Indeed. I don’t think $40 even gets you dinner for two at TGI Fridays…
April 22nd, 2009 at 11:13 am
Any guesses on how long and far they can pump up this bank bubble before it pops again? There is obviously a concerted effort to pump the stocks. No doubt the stress test results are designed to reinforce the notion that banks are fine. What will pull back the curtain?
April 22nd, 2009 at 11:16 am
Axe to grind? Umm, according to his own letter to TG, I’d say “yah.”
http://www.ritholtz.com/blog/2008/12/a-challenge-to-tim-geithner-debate-me-on-the-bailout-to-date-and-the-model-of-political-economy-that-should-apply-going-forward/
The comments make me chuckle.
April 22nd, 2009 at 11:18 am
Geithner would make me chuckle if it weren’t my money he wants to give away.
April 22nd, 2009 at 11:18 am
I’ve never been impressed with this guy at all. It was a shockingly bad pick from Obama. He never seems comfortable or at ease with his own words. He just doesn’t seem to carry any stature or gravitas at all. At least know-it-alls like Summers, while annoying and dangerous, carries some amount of confidence with him–he knows he’s smart. Little Timmy seems unsure of himself, often.
SideNote
SP500: Tickled the 61.8% retrace at 857. This is the bounce from very short term oversold conditions we talked about Monday evening. Under my most bearish short term model, this is a “wave 2″ up that is supposed to scare shorts into covering “cause we’re going to set fresh highs”. My intraday analysis says we could see 861-865 but should rollover by 865. If we don’t see any good peaking action today by 865, then this very short term bearish case gets tossed. It wouldn’t make me bullish, but would have to allow for further pushes toward 900.
April 22nd, 2009 at 11:18 am
@Franklin: Your thesis advisor, a Professor Blankfein, just called. He needs you to teach a class.
He also mentioned that referring to one of the nation’s finest independent banking analysts as “menstrual flow” might be overdoing things just a tad, and that you might be a bit transparent with the cheerleading for Tiny Tim and all other GS employees, former employees and friends.
So… how did the date go? Blondes are over-rated., anyway.
April 22nd, 2009 at 11:21 am
“Seven years ago I was in the graveyard at Trinity Church in NYC. I wasn’t there as a guest…I was interred there. One day a nice young man named Timothy Geithner walked by and discarded a half-eaten donut on my grave. Over time, stem cells from the Geithner donut seeped into my resting place, and I was reborn. The donut? Chocolate bar, of course!”
Weird. Weird and funny.
April 22nd, 2009 at 11:28 am
mike-
it’s seems to be the administration’s plan is to fund the banks indefinitely, however, going back to congress for more $ is a no go- I do believe that would create a firestorm.
I think the administration is over a barrel and is unable to “put any of the banks down” because of the ripple effects worldwide- I do believe the USG is trying to keep the whole western world financial system from collapsing. When the squeeze is on and the administration is unable to get more $ out of Congress- that is when the “rubber hits the road”. It will be interesting to see how we sell USG bonds- possibly all to the Fed- QE squared- because I don’t think there will be much interest if foreign investors lose their collective asses on debt in the TBTF banks.
April 22nd, 2009 at 11:29 am
“False dichotomy?”
There are those who do not serve the public who also are not Wall Street insiders. TG is one of them (maybe — insider is a slippery term). Unless, of course, you consider the financial oligarchy the same as the public.
April 22nd, 2009 at 11:29 am
I personally think Geithner is a very smart guy, but no skills for the job and conflicts out the grand wazzoo. Department of State responsible for economic policy makes more sense to me, and I have said so. Chris
April 22nd, 2009 at 11:31 am
With all due respect:
You folks put too much emphasis on Geithner’s recent career path. If you read Confucius’ *Analects* you get a much better picture of Secretary Geithner. Look at his youth, his studies in college, and what his career expertise is. It’s not finance, it’s Asia.
As to bureaucratic behavior, that’s exactly what he is displaying. But he wants to be a “Man of Wisdom,” not an expert on technical items like VaR, Tangible Equity, etc. He knows Asia like Palin knows energy. And he’s out of his depth on other matters. But the Man of Wisdom need not be an expert in all things, so long has he possesses sound judgement.
I was disappointed that at his confirmation no one asked what his role was in the decision to let Lehman fail, rather than winding it down in an orderly manner. Kudlow said that Geithner was against it, but was overrruled. That would be consistent with the Man of Wisdom approach.
If we ever get to Asian issues, Geithner will shine. Buy I’m sympathetic to those who think he will be pushed out before June. Washington is a nasty place. I worked there (briefly) in the mid-’80s, for Hunter Chiles in Energy. It would be a shame, as he has some real experience and expertise there.
April 22nd, 2009 at 11:31 am
@franklin,
I completely agree with Mannwich on this one.
Here is an idea for you. Instead of blowing your extra $40 on the latest blackberry toy buy a subscription to EWT from Prechter, it’s like $30 a month so you can still have $10 left over to spend.
He’s still calling for a DOW below 1,000. He makes Steve Barry seem very bullish.
Now if you read his report, and you still insist that:
It’s clear now that there will be no apocalypse.
As you say,
Then you and I haven’t been in the same world the last 18 months. Making claims like yours are dishonest at this point, you are only guessing, nothing is that clear today and as Mannwich said above, how is it that you think this is all over?
April 22nd, 2009 at 11:31 am
Machiavelli999 Says:
“He is a public servant and is not a Wall Street insider.”
~~
as was noted, above, this is disingenuous in the extreme..
cjcpa Says: April 22nd, 2009 at 10:10 am
When someone who worked at the Int’l Monetary Fund and the Federal Reserve Bank of NY says that he’s not a banker–
Someone in my position doesn’t get very convinced.
Wiki:
Once at the New York Fed, he became Vice Chairman of the Federal Open Market Committee component. In 2006, he also became a member of the Washington-based financial advisory body, the Group of Thirty.[17]
————-
FOMC….. Let’s see how many that were on the FOMC can say “I wasn’t a banker”.
It is so entwined that I don’t think I need to waste the pixels to prove it.
April 22nd, 2009 at 11:39 am
A quick note that the 10-year is back at 2.95%. This level usually brings out buyers and presages a big sell-off in equities. We saw the same move in February – and on Friday before Monday’s high volume sell-off.
April 22nd, 2009 at 11:40 am
He knows Asia like Palin knows energy.
That’s enormously reassuring. But didn’t you also know, Palin can see Asia from her house?
But the Man of Wisdom need not be an expert in all things, so long has he possesses sound judgement.
Publius is sounding more like Confucius here. At least do us a favor and give us our daily lucky numbers when you share nuggets like that, will ya?
April 22nd, 2009 at 11:48 am
OT: Did anyone else hear about MS pulling the same “lost December – change in FY accounting” act that GS did?? How are regulators not crawling up their collective asses about this disclosure fraud?
April 22nd, 2009 at 11:50 am
The regulators probably proposed the idea
April 22nd, 2009 at 11:50 am
@Transor
Snarky comments will not help you understand the man, nor his policies. Geithner was hired because conventional wisdom was (and is) that Asia will be a major force in our economic future. Read the Analects, or at least the Spark Notes on it. But stop before you get to Chapter X. It might confuse you.
April 22nd, 2009 at 11:52 am
International Man of Mystery = Timothy Geithner.
You cannot stop him, you can only hope to contain him.
April 22nd, 2009 at 11:52 am
@Publius: By the way, not all “experts” think that Geithner did the bang up job that you suggest on the Asian crisis. Some think he made things worse.
April 22nd, 2009 at 11:57 am
@Publius: The Man of Wisdom who goes to bed with an itchy bum wakes up with a smelly finger.
April 22nd, 2009 at 11:59 am
mannwich-
more like Mini-Me (sorry franklin- I kid, I kid)
April 22nd, 2009 at 11:59 am
@Mannwich
I agree, that the handling of the Asian Contagion left a lot to be desired. I’m not a fan of Secretary Geithner. But the comments focussing on recent experience leave so much out that is critical and include so much that is peripheral. Read Geithner through an Asian filter and the man looks very, very different.
April 22nd, 2009 at 12:08 pm
“I regard the current crisis as a symptom of the 30 year long infection of Reaganism”
I suppose that’s much easier than actually thinking about what got us here…
April 22nd, 2009 at 12:27 pm
Franklin, I’m a big Obama supporter, but the man is human. Your “shoot the messenger” approach on all criticisms of the current administration very much reminds me of Bush supporters who were all about dismissing Richard Clarke’s comments after 9/11.
I have no patience for the hard core rightards that we can count on to complain about everything Obama does, but you don’t defend your case well when you assign motives to people you don’t know (like Stiglitz, for example) and dismiss their criticisms due to those motives.
April 22nd, 2009 at 12:31 pm
here is a weird one- my two favorite presidents were Reagan and Clinton- probably because they were incredible optimists- loved hearing them speak- and there is something about Clinton- you just have to like that guy . . .
April 22nd, 2009 at 12:32 pm
@Whammer
Couldn’t have said it better myself
April 22nd, 2009 at 12:46 pm
@Whammer
Yeah, I think you summed it up well for me, too. I voted for Obama and am glad he won, but fair criticisms have to be on the table (not the right wing talking head kind). I’m concerned not so much that Geitner is not intellectually up to the job, perhaps he is. But I’m concerned with the signular focus on banks and the too -big-too-fail bias. That concerns me and from what I read concerns many economists and analysts on the right and left.
April 22nd, 2009 at 12:47 pm
There’s alot to hate about the “30 year long infection of Reaganism”.
More jobs were created during that 30 year period than during the entire previous 204 years of the republic…combined. Tens of millions of people were lifted from poverty. The unemployment rate never reached double digits. Inflation was tame and mostly falling as productivity soared contributing to an improved standard of living for everyone. 10s of trilliions of wealth were created in a booming stock market and small business creation.
The bitterness is completely understandable.
April 22nd, 2009 at 12:52 pm
Chris Whalen @ 10:12
“…the US electorate …. believes and expects that an economic bounce will eventually occur this year. ….Obama [has] promised such a result”.
I think that Obama should be careful about peaking too soon. If he throws too much fiscal and monetary stimulus at the economy too soon, there could well be an inflation problem in 2012, and pressures on the Fed to tighten at the same time that Obama is running for re-election.
April 22nd, 2009 at 12:54 pm
A Groty-
pretty sure you’re wrong on your unemployment figures for Reagan- definitely went over 10% in 1982- pretty sure he was around then
April 22nd, 2009 at 12:57 pm
Talking about indicators,
the fact that the acting chief financial officer of Freddie Mac shot himself could be indicative of something like bad news at the company.
Assuming that he did commit suicide.
Who knows exactly what the reasons were, but I don’t get the sense that it would be caused by good news. Perhaps it is not related to his experiences at work, as of late, but often…. it is.
April 22nd, 2009 at 12:59 pm
Deficits also exploded under Reagan, so let’s not canonize him or any other president in the last 30 years. Kicking the can forward has been the de facto policy of this country everywhere.
April 22nd, 2009 at 12:59 pm
maybe his wife shot him and assumed everyone would think it was a suicide- I’d shoot myself if I worked there
April 22nd, 2009 at 1:02 pm
But he just pocketed a nice little $800K bonus. Life ain’t just about money, for sure, but I’m sure there are many who wouldn’t mind working at a failing “company” and pocketing that kind of dough.
April 22nd, 2009 at 1:03 pm
last I checked mannwich- Clinton had a balanced budget and we weren’t in any foreign wars- I count that as a win/win
April 22nd, 2009 at 1:04 pm
Barry posted a long time ago that when one analyst presents a very divergent view. I.e. one breaks from the pack– it is often, not always followed by a surprise in earnings/announcement as the analyst proves to be correct.
I think, but do not know, that this could be one of those times where someone thinks the numbers are going badly.
Speculation, I know.
April 22nd, 2009 at 1:06 pm
Does anyone know where to get a chart of annual GDP growth (historically) that’s up to date?
April 22nd, 2009 at 1:08 pm
there is no “fair test” of human nature. shall we judge ted kennedy on chappaquiddick, or on his senate career?
all that matters to each of us individually is what geithner may do or not do that materially affects us and ours. we define the frame.
geithner is a deeply embedded actor. the “conspiracy” spin that geithner is getting guidance from rubin or GS is stupid, for two reasons: geithner has greater centrality than any of those actors (meaning more information, more influence, and more resources) and he is also getting information from “opposing” actors — the fed, international bankers, etc. he paradoxically has more power, but is also more heavily constrained.
he’s in a social role of enormous responsibility and complex definition. the idea that we can make character judgments about him, or assign him moral attributes independent of his role … there fools rush in.
April 22nd, 2009 at 1:08 pm
cjc-
please explain? a particular stock?
April 22nd, 2009 at 1:09 pm
cjcpa: Just making sure you noted my call at 11.39am. BTW, I was slightly irritated by your criticism on Monday. On Friday, as I have often done (e.g. yesterday), I went short right at the close, in anticipation of selling post-options expiration. Forgive me for not leaving detailed notes on a nanosecond time scale.
I had pointed out the 875 level several times, as had AT and DL, among others. I sold the rally more or less at SPX 845. I said after that I would be short until and unless there was a take out of SPX 875, at which point I would stand aside until we reached significant resistance. I am still short -and the above still applies.
On another note, the GM debt repayment miss is a HUGE story, much more important than it is playing. The reason is that a series of missed payments like this by corporate borrowers will lead to another widening of credit spreads and a flight to safety trade – we could easily see a rerun of January and February or worse.
April 22nd, 2009 at 1:11 pm
groty: “More jobs were created during that 30 year period than during the entire previous 204 years of the republic…combined. Tens of millions of people were lifted from poverty. The unemployment rate never reached double digits. Inflation was tame and mostly falling as productivity soared contributing to an improved standard of living for everyone. 10s of trilliions of wealth were created in a booming stock market and small business creation.”
dude: it’s called a BUBBLE OF EPIC PROPORTIONS.
April 22nd, 2009 at 1:12 pm
@Ahab 1107AM:
Absolute genius!
@Leftback:
It was strictly G rated but still fantastic…I agree that blondes are overrated, but when a girl pulls off that 1940’s pin-up look…! I already suggested they delete my menstrual post.
@Whammer:
My suggestion to the likes of Krugman, Stiglitz, and the rest of the nationalization crowd is simply this: Devise a proposal that has a snowball’s chance in hell of getting through the Senate, and we can talk. Drop the pie in the sky stuff.
April 22nd, 2009 at 1:17 pm
@ahab: I agree with you about Clinton. I think he actually did a pretty decent job overall. Of course, the little dot.com bubbled helped him immensely on the economy. And it was a different time back then geo-politically. I think he did OK overall but sometimes ’tis better to be lucky than good. Timing and circumstances beyond our own control dictate far more than any of us want to believe.
April 22nd, 2009 at 1:18 pm
@Groty:
Check your facts. Reagan put 2 million Americans into poverty after 8 years in office:
Poverty Rate (US Census):
Year
1988…… 13.0
1987 7/… 13.4
1986…… 13.6
1985 ….. 14.0
1984…… 14.4
1983 6/… 15.2
1982…… 15.0
1981 5/… 14.0
1980…… 13.0
1979 4/… 11.7
http://www.census.gov/hhes/www/poverty/histpov/hstpov2.html
April 22nd, 2009 at 1:19 pm
@leftback: I agree with you about GM, yet the stock has barely budged today. Was actually up a bit for a while. What gives? Are we in never-never land at this point? Bizarre.
April 22nd, 2009 at 1:20 pm
I listened to most of his testimony to Congress on Bloomberg Radio. You never heard someone say so much to convey as little useful information as possible. To hear him talk the banks get no special consideration on their capital showers versus the automakers. Apparently transparency isn’t a concern of Congress’ either, its all good. Regardless of whether his background is legit or not, he comes across as much of a snake as Paulson was. He’s selling out the taxpayers interests and money to keep the foreign bond holders whole so they don’t boycott T-bill auctions. Just my $.02
April 22nd, 2009 at 1:21 pm
leftback.
sorry if it came off that way. I thought saying “i didn’t grok that” was a mea culpa.
I just didn’t ‘get’ what you were saying.
I also said that I realize that you don’t owe me anything…. so I have no reason to expect anything.
anyway, no hard feelings, I hope.
I get it more now… when you use words like ‘resistance held” you mean index will fall from there, and that might be a really good time to get short.
With your experience, you would not have to telegraph that A means B and C. I have made a note of what it means when resistance holds….
conversations in bits and pieces are not the best. If I was complaining, it was just about the gap, not you.
April 22nd, 2009 at 1:30 pm
Mannwich @ 1:02
Fire me tomorrow. Just give me that golden parachute.
April 22nd, 2009 at 1:35 pm
@DL: Will do. If I or my wife were making that kind of dough for working at failing gov’t-subsidized companies, we’d be in Costa Rica or somewhere else by now, outside of this declining empire. Why these people stay in their miserable lives is beyond me, especially if you more than have the means to do something about it.
April 22nd, 2009 at 1:38 pm
AT,
When do you decide to adjust the starting point of the wave pattern you are trying to follow?
In your scenario above, if I’m reading it correct, after 865 in your bearish model then Wave 3 or C? which is down, what is your down target from there?
I know earlier this year you were looking for 600 at some time in 09, which of course we were only about 10% from, and 10%, as we all know, aint much lately.
I’ve been wondering during this rally as I see what stocks have moved up the most if we just ended up staying flat the whole rest of this year and if there are more problems in the economy we don’t see a new low until next year.
April 22nd, 2009 at 1:40 pm
@cj: Noddaprabblem. Fuhgeddaboudit.
@Manny: The equity markets are often divorced from reality. The credit markets, much less so. If you look carefully you can see that quite a few investors are dumping high yield debt, even as retail investors are being lured in….
I have spent a fair amount of time lately thinking what might happen if investors find out that actually everything is not OK, there are no green shoots, the consumer is broke and we are in a massive global recession. This feels a bit like September as I have said before. Remember the week before Labor Day weekend? Happy clappy talk on TV. Low volume, low volatility and then the first sell-off and the cracks started to appear…
April 22nd, 2009 at 1:44 pm
Good point, leftback. I have to remember that the credit markets usually tell the real story. How long can we live in this alternative bizarro universe though? It seems were able to do that for quite a while from ‘03/’04 – ‘07/’08. Perhaps the feds are hoping for more of this kind of thing to get us through the ‘10 and ‘12 elections? Is that even possible? I’m starting to think it might be, as joe/jane retail only seem to care about the amounts going up in their 401k statements, not how we get there, or whether or not it’s justified or even a healthy thing. Just a strange, bizarre time period right now.
April 22nd, 2009 at 1:47 pm
franklin411 Says:
April 22nd, 2009 at 1:18 pm
@Groty:
Check your facts. Reagan put 2 million Americans into poverty after 8 years in office.
Franklin:
I liked this post. Looked up your statistics. Thought about it for awhile. Thanks.
You made much more sense than your menstrual flow comment, so good for you.
I think, though, if you looked at it for awhile, the Arthur Burns/Carter malaise/ inflation crisis had something to do with that…after all, until today, that was the most serious downturn we’d had since the GD…but I do like your point…and it is obvious that something went right after Kennedy with 22% poverty (whoa, not his fault)..that LBJ’s war on poverty might have had some long term good consequences….
As I told you before, I am a fiscal conservative..most of our presidents including Reagan, Bush I, Bush II, Clinton, and Obama have continued deficit spending far too long….even supposing this massive increase in spending and size of government works…high tax rates won’t work…
Kennedy cut taxes too…
April 22nd, 2009 at 1:50 pm
@cpj13
“Accounting rules governing holding companies required the banks to change their reporting periods to the calendar year from a Nov. 30 year-end, leaving December as an orphan month.
Morgan Stanley reported a net loss of $1.3 billion for December.”
http://www.nytimes.com/2009/04/23/business/23bank.html
April 22nd, 2009 at 1:50 pm
ben22 @ 1:38
“…if we just ended up staying flat the whole rest of this year…”
Not likely.
April 22nd, 2009 at 1:55 pm
leftback @ 1:40
Crude oil appears to be faltering, along with AUD/USD. Doesn’t mean much by itself, but could be a clue nonetheless.
April 22nd, 2009 at 1:58 pm
@ben: If there is one thing we have learned about Bear markets, it’s that they are not flat.
@Manny: I think the D-train™ is here again. All aboard!
@DL: Crude, the EUR:JPY cross, JNK and Baltic Dry are all weakening. The IYR is carving out a lovely H&S….
April 22nd, 2009 at 1:58 pm
Lefty,
Nice comment on the HY selling, I was seeing some of the same.
To further what I have been saying for a couple weeks about retail investors,
MF wholesalers are pushing the following very hard to retail reps:
Floating Rate funds: “the yield has priced in the risk”
HY Funds: “the yield has priced in the risk”
Muni funds and HY muni funds (check ORNAX to see what I mean) same rationale as above and also this
“muni’s don’t default”
On the equity side, they are pushing infrastructure hard.
It is the following that I’m seeing doing so the most:
Oppenheimer, Janus, Fidelity, AIM, RiverSource, Columbia
When it comes to retail stock owners, what little are left, as I have been saying for two weeks now it is:
C, F, BAC, WFC, JPM, GS, AAPL, GOOG, and RIMM and anything Oil.
Those are the most common.
April 22nd, 2009 at 1:59 pm
I give Obama an A, a B and an F
By Robert Reich
http://bit.ly/yDurJ
An A on the budget, B on the stimulus, and F on the bailout ( Summers and Geithner clowns ) On the whole (given how I weigh grades) that gives Obamanomics a C-plus. Not bad given the magnitude of the problems Obama inherited. But by the same token, not nearly good enough.
I agree !
April 22nd, 2009 at 2:00 pm
DL, Lefty,
You guys are right, I should have said “range bound” instead of flat. That wasn’t really what I meant.
April 22nd, 2009 at 2:01 pm
@Bruce:
Thanks! Here’s an interesting graph from the Hoover Institution charting the poverty rate, the number of people living below the poverty line, and periods of economic recession. I don’t see a strong correlation between the poverty rate and macro conditions, except in the 1980s.
One thing I do notice: the 1970s were supposed to be this horrible period of economic turmoil due to inflation, but you wouldn’t know that from the poverty chart. It seems like poor people do about the same in periods of inflation as they always do.
http://media.hoover.org/images/Poverty_1959-2005.gif
April 22nd, 2009 at 2:02 pm
@lb: Of course the D Train is here again. I bought TIPS (small amount) last week! Typical.
Still pretty short though and getting shorter by the day.
April 22nd, 2009 at 2:03 pm
I’m interested to see if the PPT shows up again today in the final 30-60 minutes with the usual frenetic last hour/minute buying. Set your watches by it. Only one day in the past rally (Monday) has this not happened, I believe.
April 22nd, 2009 at 2:09 pm
jeff, just remember that the market can stay irrational longer than you can stay solvent. : )
an item of interest from marty chenard today on institutional accumulation:
http://www.stocktiming.com/Wednesday-DailyMarketUpdate.htm
meanwhile, i continue to watch the $wlsh and $tran… currencies, too.
April 22nd, 2009 at 2:12 pm
Great chart, karen. Thanks for sharing. Agree with your comment as well. It appears we are in one of those time periods right now.
April 22nd, 2009 at 2:19 pm
the continuing bond bubble:
California sells $6.85 bln in infrastructure bonds 2:12 PM ET 4/22/09 | Marketwatch
SAN FRANCISCO (MarketWatch) — California sold $6.85 billion in general obligation bonds Wednesday, including $5.23 billion in federally subsidized Build America Bonds, its state treasurer’s office said Wednesday. The bond sale was expanded from original plans of about $3 billion, and the Build America portion is the largest under that federal program to date. All of the bonds in the deal were taxable, a change from most municipal issues. The U.S. is subsidizing interest payments on the Build America Bonds to help states sell taxable infrastructure bonds to a different group of investors without paying more interest. With the subsidy, the Build America Bonds carry a rate of 4.83%. All are in 25-year and 30-year maturities.
April 22nd, 2009 at 2:20 pm
Economists in general, and Wall Streeters specifically need to be careful looking down their noses at anybody. Geintner is trying to make the case he is an outsider, and not a part of this trainwreck. You could argue that this is or is not true, but probably a wise move on his part. Our last two Fed Chairmen were/are bookwise academics and you could argue that neither saw this coming.
April 22nd, 2009 at 2:21 pm
PPT making an early appearance today. I tell you, can almost set your watch by it. Institutional buying? Mutual funds piling in?
April 22nd, 2009 at 2:25 pm
Jeff, there are some excellent values to be had in infrastructure stocks : )
April 22nd, 2009 at 2:28 pm
@karen: Agreed. Trying to figure out which ones though. I do agree with your premise that eventually we’ll get inflation (or possibly worse) over the longer term, so I might jump on some of these for to hold them a bit.
April 22nd, 2009 at 2:28 pm
@franklin — I understand your general point about Stiglitz, Krugman, and practicality. I just wish you would not add the hypothetical stuff about them having axes to grind with the current administration because they are not insiders. That doesn’t help your argument. The comment you made about Chris W. was in the same vein, only cruder — don’t regret it just because of its crudeness, is what I’m getting at.
April 22nd, 2009 at 2:29 pm
I keep trying to save you guys from getting on the wrong train; but i’m gonna give up now. My train is much more fun, money for nothing and the chicks are free. lol.
April 22nd, 2009 at 2:32 pm
Empty suit. I haven’t heard that term lately but it sure seems to fit the little guy.
Some people just have the ability to ass-kiss there way to a position where they can do real harm and I think he scaled that mountain.
April 22nd, 2009 at 2:33 pm
@karen: Well, since you put it that way……
I’m very confused these days and not too proud to admit it.
April 22nd, 2009 at 2:34 pm
Jeff, is your brother still living in kauai? every day places are coming on the market.. i’ve been following the market there for months… rents are dropping and prices as well. some complexes in princeville can be described as ghost towns.
April 22nd, 2009 at 2:34 pm
karen,
There you go again.
I’m not going to bite this time.
April 22nd, 2009 at 2:37 pm
@ben22: Fascinating stuff on the adventures of retail investors. Please keep it coming.
The comment: “munis don’t default” reminds me of Mish: “What Can’t Happen, Is About To”.
@Mannwich: This is noise. The PPT is just day traders selling FAZ. Just watch the charts.
@Karen: There are times that I regret not being on the R train, especially when it’s raining on my D train and yours is heading to the beach. But as we have discussed here, this is a zig-zag descent to the bottom.
April 22nd, 2009 at 2:37 pm
@karen: Yes, he is. In fact, he and his wife’s new house up on a gorgeous vista near Kileaua point (sp?) (full views of the ocean and mountains down by Hanalei Bay) was recently completed. They’re both visiting right now for three weeks (they live full-time in Folsom, CA and South Lake Tahoe, not bad) after tax season ended. I gotta try to make another visit next winter. My wife and I honeymooned there in ‘03. Loved it. Maybe we’ll look into buying there at some point?
April 22nd, 2009 at 2:37 pm
For more views on inflation and the usd, read what some of these analysts have to say… martin murenbeeld is a favorite of mine… extremely conservative. (i posted this under the gold topic as well.)
http://www.lbma.org.uk/pubs/forecasts
April 22nd, 2009 at 2:40 pm
Jeff, yes, that’s the spot to be… husband was just there for a month on a scouting mission and is headed back for 6 months as soon as we find the right place to lease… maybe they even surfed together : )
April 22nd, 2009 at 2:42 pm
@karen: Let me know if you need any contacts out there. I think my brother and his wife are fairly active in the community (for part-time residents) and trying to get more involved. I think their goal is to eventually live there full-time. Their friends also just moved there to live full-time.
April 22nd, 2009 at 2:50 pm
i do wonder what aapl is gonna do to us after the close… likewise CMG, dbl volume on some short covering perhaps… 24% ratio… it’s up nearly 50 pts from the nov low, and 40 pts from the march low… and i never bot any… : (
April 22nd, 2009 at 3:02 pm
sooner or later (i think sooner) aapl is going to drop the bomb..here is a consumer discretionary company with pricey products. if aapl somehow reports it had a blowout quarter i would think it is well priced in the stock. this stock looks like it has 30-40% downside from here. maybe i’m wrong maybe not
April 22nd, 2009 at 3:04 pm
apropos a zombie Treasury Secretary
April 22nd, 2009 at 3:04 pm
I want to pick up some QID but AAPL is scaring me off. Can’t believe people are still paying top dollar for their products. If the announce strong earnings again in this climate, I really gotta hand it to them for getting folks to pay up for their products.
April 22nd, 2009 at 3:08 pm
Mannwich,
If you are looking at infrastructure, it might be worth checking out MTW. I never really looked it over in detail but I know it’s gotten killed and it could be a pretty aggressive grower if things do get better.
April 22nd, 2009 at 3:10 pm
i know we bot an iphone and a macbook this quarter… money spent at itunes, of course. unsure how much of my at&t bill goes to apple.. plan to buy 2 more macbooks and a printer by year end.
April 22nd, 2009 at 3:10 pm
On another note, ESPN looks gives us a look into Lenny Dykstra’s life and our friend Jim Cramer, who seems awestruck by one his Philly sports heroes. Seems to me like ‘ol Lenny is symbol of this era of excess…..
http://sports.espn.go.com/mlb/news/story?id=4084962
April 22nd, 2009 at 3:11 pm
harold – way to commit with your “maybe i’m wrong “maybe not” comment- but I have to agree, I don’t understand the fascination w/ AAPL-
same with Chipotle as mentioned by Karen- basically rice and tortilla shell, some beans and a bit of meat- eaten there a couple times and haven’t been back- been a couple years- so who knows- maybe there doing something different now
April 22nd, 2009 at 3:17 pm
@ahab: We have Chipotle’s here in the TC and I think I’ve maybe eaten there once in my entire time here. Actually, I think it was in CO, so maybe I’ve never eaten at one here! I don’t get it either, it’s a chain burrito place and not all that great when compared to authentic places out west but then again I don’t eat out much. Much healthier to eat at home. Those with high BP like me need to stay cognizant of that!
April 22nd, 2009 at 3:20 pm
the cmgs in the college towns are packed..
April 22nd, 2009 at 3:27 pm
Mannwich:
Yeah, Apple is good at cooking the books. And it’s all about beating expectations. I bought QID too early at the end of last week. If Apple has great earnings, I will buy more tomorrow and be patient.
April 22nd, 2009 at 3:27 pm
karen- I know- my oldest son loves the place- but it is in my mind a pretty bland rice stuffed burrito- big though- so maybe that’s what counts to the younger crowd- I have to agree w/ mannwich- I am always on the lookout for a local place fo just about any kind of food.
April 22nd, 2009 at 3:28 pm
CMG rocks. It’s a great place to meet chicks.
Manny, you should stay away, bad for your BP.
April 22nd, 2009 at 3:31 pm
@karen: Why though? For a mediocre $7 burrito? I don’t get it. I’d rather eat at McD’s for less and I don’t eat there either unless desperate and/or on a road trip.
April 22nd, 2009 at 3:32 pm
@leftback: BP, among other things (the other being a clinically bad “system”, I’ll just leave it at that)…..
April 22nd, 2009 at 3:33 pm
@Mike in Nola: Yes, Apple great at the books cooking and sandbagging (beating low hurdles). It seems to work for them, so I expect the same today.
April 22nd, 2009 at 3:40 pm
meet chicks??? HAHAHAHAHHA
mannwich- thanks for not filling the details
April 22nd, 2009 at 3:41 pm
Can’t know where we’ll end but another great call AT
April 22nd, 2009 at 3:43 pm
@leftback: Honestly, are you really Ted Bundy? Do they allow blogging behind bars? Meeting college chicks at the local CMG? C’mon, man……..
April 22nd, 2009 at 3:48 pm
market is fading fast
April 22nd, 2009 at 3:49 pm
Looks like a perfect round trip to no where today.
April 22nd, 2009 at 3:55 pm
rww. thanks. indeed, this looks like buyers have been rejected into critical resistance levels. the daily candlestick has now turned into an ominous doji star. Will need a down day tomorrow to confirm this, but today was a victory for the bears….we’ll see how the next battle goes tomorrow.
where’s dead hobo? wonder if he sold into the 861-865 zone cited by witchcraft ‘technical analysis’ this morning or if he needed me there to hit the Sell button for him. (market peak 861.78)
April 22nd, 2009 at 4:02 pm
ahab @ 3:11
“Chipotle – rice and tortilla shell, some beans and a bit of meat-
All prepared fresh from quality ingredients at fair price = good value, esp. for a chain
best you can get in most of the mid-west except for the Mexican owned places in small towns serving the migrant farm workers, but of course nothing like I used to eat in the San Joaquin Valley when on the road in a former life
April 22nd, 2009 at 4:03 pm
HAHAHAHAHAHA- I was so upside down on QID today- market Gods took pity upon me- now it is up to AAPL and what tomorrow brings
April 22nd, 2009 at 4:04 pm
Andy,
If you could hit the buy *and* sell buttons for me, that would be great.
(:
April 22nd, 2009 at 4:06 pm
Couldn’t pull the trigger on more more QID in low 39’s today. Just couldn’t do it. Kind of wish I had now but things could change dramatically after AAPL reports today. Better safe than sorry at this point. I’m already pretty short at this point.
April 22nd, 2009 at 4:07 pm
batmando- I guess my biggest problem with Chopotle is that it’s bland- at a cost of $6 or $7- the appearance is that you are getting more than you are- becuase rice is about as free as food gets- but if it had some flavor then on might be on board.
April 22nd, 2009 at 4:12 pm
ahab… you must not be using their salsas! that said, i prefer my own cooking… but for kids at university, it’s wholesome, quick, food and 2 can split one $8 item. my son has dragged me in twice on my visits to berkeley… haven’t been recently but he assures me it’s still very busy.
anyone that’s trading without real time charts is not playing with a full deck imo. : )
April 22nd, 2009 at 4:19 pm
Mike and Mannwich
Apple cooking the books? Do you mean cause they never give Wall Street proper guidance? If you were Steve Jobs would you give Wall Street any help, especially now after it is evident how completely devoid of any intelligence, they are? Ever notice no matter what guidance Apple does give, the STREET always gets it wrong, always.
You know how you yourself probably speak differently to a small child than you do to an adult, well that’s how Apple, I think, feels they have to deal with Wall Street, you know, so they at least have a small glimmer of hope in understanding how an actually well run company executes.
April 22nd, 2009 at 4:21 pm
@greg: I have no problem with them not offering guidance. It’s their prerogative but I do think this allows them to sandbag a bit.
April 22nd, 2009 at 4:24 pm
@AT
Your advice has been downright masterful. You have made a convert out of me, and I now subscribe fully to your TA witchcraft.
Thanks again for sharing.
April 22nd, 2009 at 4:38 pm
Mannwich: Sometimes it’s good to be chickern
There will be a much better opportunity tomorrow or later after CNBC talks about how Steve Jobs and Ebay will lead us out of the recession.
April 22nd, 2009 at 4:44 pm
Mannwich
I’m not so sure it’s so much sandbagging as it is a deliberate attempt to treat Wall Street with the contempt they so richly deserve.
Their earnings just hit, and once again Wall Street wasn’t even close. In case this doesn’t sink in for the analysts, I will say what I’ve always said about Apple…the recession will not affect them, period. If anyone doesn’t get that, they don’t get Apple. Go cover someone else, like Dell or something.
April 22nd, 2009 at 4:47 pm
OT: Stand By Me compilation from various street artists!
http://vimeo.com/moogaloop.swf?clip_id=2539741
April 22nd, 2009 at 5:19 pm
AT: Top witchcraft, mate. Again.
AAPL is a superior company with superior products. It has only taken Middle America about 20 years to see that Windows is a piece of crap and if you buy a Dell that runs Windows it’s cheap – but still a piece of crap.
April 22nd, 2009 at 5:31 pm
greg: disagree with you on Apple. They sell consumer electronics and will take a hit. They sell to the more affluent, who will take longer to feel the heat, but eventually will as we are seeing here in Houston. Also, much of what we saw this past quarter was tax refunds. My son got $800 back and immediately went out an bought a 22″ lcd monitor.
Sales of Macs dropped a bit. Win7, even though it’s really only Vista 2.0, is generating a lot of buzz without the moniker and the price advantage of pc’s may make that worse in an ailing economy.
Apple was propped up by iPhones and iPods, both of which markets are being flooded with competitors. At some point theywill have to compete on price and lower margins.
April 22nd, 2009 at 5:35 pm
Just saw leftback’s comment. Seems we have several fanboys here
I think the electronics market will follow the general consumer market. Look who’s doing well there: MacDonalds, Walmart and storebrands in groceries. If it’s a matter of getting something may not be quite as good (or perceived as not as good
), or of getting nothing, the lesser wins.
April 22nd, 2009 at 5:40 pm
Agreed, Mike in Nola. We’ve heard the same thing about the rich and their home prices “never going down”. Denial is STILL strong in many parts of this country and especially strong with this over-c0nfident bunch. Once they start getting clobbered, higher end products like Apple’s will take a hit. They won’t get clobbered as much, perhaps, but they’ll feel it, just like other so-called recession resistant sectors/companies like health care, pharm, etc.
April 22nd, 2009 at 5:43 pm
a person would think so Mike- not saying AAPL doesn’t make a decent product- but at twice the price- that’s what I don’t understand- bit of hype I think and the added advantage of having smaller market share- so less saturation with viruses and malware designed to attack that system- time wll tell how long thay can keep the “hip” image
April 23rd, 2009 at 12:58 am
When Geithner states that the vast majority of US Banks have ample capital, he is blatantly deceiving the public by implying that the banking system is solvent. He is using statistics to trick the public.
There are thousands of FDIC insured banks, and the financial crisis has hit mostly the few LARGEST banks only.
Out of the thousands of FDIC insured banks, the vast majority may be well capitalized, but unfortunately the LARGEST 25 banks are likely insolvent due to toxic assets. The vast majority of banks never got caught up in the fraudulent lending practices “innovated” by the LARGEST banks.
Too bad Tim that the vast majority of bank assets are held by the LARGEST 25 banks!
April 23rd, 2009 at 1:20 am
I think what the author is trying to state in more cogent terms – without putting words in his mouth – is that bureaucrats don’t have a systemic process for analyzing complex systems. It matters not whether it is a Republican or Democrat, the reality is that bureaucrats are not prepared to make the most informed and intelligent decisions on behalf of the American economy. And that their policy is often fraught with risk for this very reason.
This emotional yapping that somehow implies political ideology behind these observations are foolhardy.