Lots of Great Video
By Barry Ritholtz - May 7th, 2009, 4:30PM
If you haven’t checked it out, there is a lot of great stuff buried in the Video ghetto of the site.
Over the past 24 hours, the following killer clips were posted:
• Timothy Geithner, Treasury Secy on Charlie Rose
• Federal Reserve chairman Ben Bernanke speaks at the Chicago Fed’s Conference on bank structure;
• Eliot Spitzer on Squawk Box on the grand theft of the bailouts;
• Elizabeth Warren: Americans’ Trust “Shattered”
• Roubini: Stress Tests Aren’t Stressful Enough
• And just for laughs, Zombie Banks
May 7th, 2009 at 4:35 pm
The recession made Roubini a wealthy celebrity. When the recession ends, he will be forgotten, so it’s wise to remember that he has an interest in hyping and perpetuating this crisis for as long as possible.
May 7th, 2009 at 4:37 pm
Well then Franklin…Thank God BHO came in and saved the day for us all…
May 7th, 2009 at 4:50 pm
@cvienne
You’re welcome.
May 7th, 2009 at 4:56 pm
@franklin411:
Roubini indeed has become famous and rich as a result of his banking deleveraging call. If he calls the other end correctly, then he will truly be a legend (and probably orders of magnitude richer). So his incentive is to be accurate more than to be bearish, per se.
Either way, no one should treat him like a rock star, although it does make sense to weight his opinion a little bit more than that of someone who was completely wrong over the last two years…
HCF
May 7th, 2009 at 5:12 pm
@HCF
I’m fine with treating Roubini like a rock star…just not as a prophet who speaks to God Himself.
May 7th, 2009 at 6:16 pm
I saw Geithner on Rose already. What struck me was not so much what he said but how cautious and evasive he seemed. It was written _all_ over his body language.
But then we’ve seen him doing the bowed and twisted head thing before Congress as well.
I don’t think this necessarily indicates that he’s a less capable public servant (maybe that expression is now archaic?).
May 7th, 2009 at 6:22 pm
Geithner may be a capable public servant but you wouldn’t want to buy a used car from him. Or bank stocks.
May 7th, 2009 at 6:23 pm
BR- check out Dennis Kneale’s response to Spitzer’s comments- Kneale is such complete F-tard- especially since Spitzer made some great observations-
http://www.cnbc.com/id/30627605
his comment that Spitzer was responsible for attacking the people who generate wealth in this country was especially egregious
May 7th, 2009 at 6:34 pm
Roubini will not be forgotten franklin- he was saying what many people were thinking- he stepped up to the plate and put it out there for everyone to make their own judgment- I am sure he took much heat from it before it came to fruition- more courage than most people-
anyone can be an idealogue franklin- its easy- easy to be certain of your truth- the harder thing is to analyze and question what you think
May 7th, 2009 at 7:07 pm
Franklin – my best advice is to always try to see both sides of an argument – or a trade.
w.r.t. Roubini it’s true that he took heat for a long time. He was right – but he was beyond the mainstream and he was early, so keep that in mind when one or two savvy commentators suggest that this thing isn’t over.
Several of us have studied the Japanese debt deflation. If these massive debt deflations could be worked out in twelve months we would all be speaking Japanese and cleaning houses in Osaka by now, while Japanese bankers travel the world in private jets buying up distressed assets with the all-powerful yen for mighty Nippon.
We have severe problems ahead, and it’s not political – and thank God we are not led by Bush, or McCain.
May 7th, 2009 at 7:16 pm
leftback:
That’s one hell of a comment. Kudos.
May 7th, 2009 at 7:27 pm
A few things happened today that could signal the end of the bear market rally. First, Nasadq was down almost 2.5 %…while this happened, II Bulls ticked up…QQQQ Bulls ticked up to an astounding 86%…and put/call moving averages ticked down. All this while QQQQ volume handily beat its 100 day MA. The jobs number could be the match that lights it.
May 7th, 2009 at 7:59 pm
Anybody looking to buy a Tag Heuer watch at Tourneau? To show how bad the economy is, they just sent me a coupon for $750 off…I have never shopped there, but own a Tag. If interested, post here and we can figure out how to get it to you…it looks tranferrable.
May 7th, 2009 at 8:10 pm
leftback> of course many feel (including me) that the Japanese made many mistakes and greatly prolonged their period of debt deflation. One could argue that they’re still not now out of what they entered in 1990. I was in Japan – and working in fiance – from 1989-1995. In the first 6 m I was there the Nikkei crashed from over 40,000 to below 20,000. (they seemed huge up until the last 2 yrs).
For debt deflation it should go without saying at this point that we should back (backwards in time) first to Minsky and then Fisher.
So what did they say? Well they had no formula. Fisher was doing very well – in the mid 1930s – to even identify the problem.
As best I can tell, no one yet has a good compass for debt deflation.
Contemporaneously there are more than a few. But Steve Keen in Australia has some good ideas (but again, not necessarily about what to do).
And time is only solution? I’m not sure. And how long? (not as long as Japan).
And besides, at this point in time, it’s unclear whether we’re going to have very bad deflation or inflation. Of course, the argument there is that you inflate your way out of the debt.
May 7th, 2009 at 8:10 pm
the Japanese are NOT out of …
May 7th, 2009 at 8:27 pm
Any coupons for water …… looks like we gonna water down momma on Sunday… high 90
STAY THIRSTY MY FRIEND.
May 7th, 2009 at 8:53 pm
What to “do” about debt deflation? I don’t understand that there is anything to “do” at all, except stop digging. Unfortunately for me, I didn’t understand this crisis until AFTER it happened. Lost plenty of $$ too.
However, i’ve learned alot from reading Steve Keen’s stuff and Mike Shedlock’s (Mish). And Antal Fekete has done some interesting work on what he calls the “marginal productivity of debt.” Mish isn’t a professional economist, but most of his interest has been in Austrian stuff which doesn’t readily provide mathematical models for “policy”. Fekete and Keen are also mainly theorists, rather than technicians, so patfla is right, they provide no clear prescription for what to “do.”
As far as I understand this issue, the only way out is to liquidate the debt through BK’s and writedowns. Right now we’re taking on more debt (ie. govt.), but what for? What productive activities is Nancy Pelosi going to invest in? If Fekete is right, then for every dollar of debt we take on at this moment in time, it actually costs more to service it than the increase in productivity it provides. According to Fekete, since the 1970’s the marginal productivity of debt has been less than one (i.e. for every dollar borrowed you get less than a dollar net in GDP gains) and since 2006 the marginal productivity of debt has been negative. If these guys are right, then it’s time to stop digging. Time to stop digging a public debt hole that will require massive taxes and interest rates down the road.
I don’t know. As I see it, it would be far better to get the liquidation/deleveraging over with quickly so we can start from a clean, sound foundation. The policy makers will NEVER let that happen until it’s far too late.
May 7th, 2009 at 8:59 pm
clawback-
you are correct- debt is the whole issue
May 7th, 2009 at 9:04 pm
If smart is sexy, Elizabeth Warren belongs on Pornhub.
May 7th, 2009 at 9:19 pm
Here’s one way to look at the debt problem. Charting total credit to GDP for 100 years, it looks like a healthy level should be about 150%…the only foray above that was during the Great Depression and it was unsustainable. Since GDP is now 14.2 Trillion, that means a healthy credit level would be 21 T. It currently stands at 53T. Somehow we have an excess of 32 Trillion and I doubt it accounts for unfunded entitlements such as Medicare and SS. This is in the US alone. If I am right, we haven’t even scratched the surface of the problem yet and there is no way the Fed can fill that big a hole.
May 7th, 2009 at 9:32 pm
Steve Barry,
The debt/GDP ratio is horrible on the face of it, just in absolute terms. Even worse is the rate at which debt has increased over the last 10 years or so vs. the rate at which GDP has increased. If I understand this right, they more or less have to keep together or there are hiccups along the way. This would be pretty big hiccup we’re having right now.
I imagine a super-productive, fast-growing economy could sustain, temporarily, the ratio we have now (country by country figures anyone?), but we’re not that economy right now. I wonder if our ratio ought not be even lower than your 21/14.2 — absent real changes in our capacity for growth.
Rally or no rally, I’m vey pessimistic about growth going forward. I think Grantham came out with something recently saying the economy and stocks could go sideways for 7 years or more. I wonder if he isn’t about right.
May 7th, 2009 at 10:23 pm
Steve,
I’ve spent all my time looking at that debt lately and I can’t draw any other conclusion than the one you have. There was a nice link posted today by Mannwich on another thread that showed further consumer credit contraction today. People are paying down debt but there is a major psychological shift happening right now due the loss of wealth over the last year. It’s all deflationary to me. I got a chart of consumer credit the other day going back to 1950, it just dipped down basically for the first time during that entire period, though there was some flatness in the 70’s.
I look at the 21T number you post there and think about how deflationary it will be to suck that out of the system, profits will have to also then contract and it doesn’t look good from there. We haven’t even really contracted there yet, it’s on very slightly pulled back. I made a comment as well the other day that the vast majority of people/economists/money managers are banking on inflation/reflation so there could be a powerful effect there when deflation really takes hold and slowly people change attitude. Grantham did say that about 7 years of very little growth to sideways. He’s not the kind of guy to just throw out stuff like that like the average CNBC pundit.
I don’t think this rally is over yet though.
ON the other note, is that any Tag? I have a cheap tag Formula 1, maybe I could upgrade.
May 7th, 2009 at 10:55 pm
@ben22:
It says any Tag, excluding Formula 1.
May 7th, 2009 at 11:08 pm
@markMchugh: Don’ try to change the subject. :>)
May 7th, 2009 at 11:36 pm
I’m just as concerned about the debt-to-GDP ratio as anyone else. But I don’t think that one can time the market based on it.
The day of reckoning may be postponed longer than the pessimists believe.
May 8th, 2009 at 12:45 am
Clawback what you describe as wasted resourses is just mis-spent resources. If you spend money on education or mas-transit you get a resultant improvement in productivity. If you spend it on maintaining a crumbling interstate freeway system, you will probably just get more sprawl and more crumbling freeways…
It is too late to worry about the cost of servicing the debt. That should have been debated years ago.
If we do not invest in the future, at some point the future will arrive on our doorstep and demand payment on it’s own terms. This isn’t long term talk, this is now.
May 8th, 2009 at 1:16 am
bman,
I don’t follow. Are you suggesting that Congress can invest (China’s) money profitably or that weatherstripping will help my son with long division?
Robert Barro has said that the Keynesian multiplier isn’t just less than one, it’s probably less than zero. LOL! (BTW, I’m not sure any economist would accept the claims about education and mass-transit without some serious qualifications as to the circumstances)