We are seeing belated glimmers of understanding of the credit crisis from the White House. Still nothing on the Ratings Agencies, and Glass Steagall, and too little on Derivatives and leverage, but at least there seems to be some recognition on TBTF (see The End of Too Big to Fail ?).

However, where there is real despair has been in the cult of the sacred cow appointments. The latest ugly data points: The number of Wall Street (versus business or academic) appointments. To wit: How Goldman Sachs and Citi Run the Show via Andrew Cockburn.

Cockburn details the following recent Wall Street transplants who are running things in the Adminstiration:

• Robert Hormats, Vice Chairman of Goldman Sachs, is to be installed as Under Secretary of Economics, Business, and Agricultural Affairs.

• Jacob Lew, Chief Financial Officer of Citigroup Alternative Investments Group, as Deputy Secretary of State
(Lew’s dept. lost $509 million in the Q1 2008)

• Michael Froman, Citigroup, Deputy National Security Adviser for International Economic Affairs. Froman was formerly Chief of Staff to Robert Rubin at Treasury, before following him to Citi.

• Froman’s deputy, David Lipton, ran Citi’s global country risk management effort.

• Lewis Alexander, Citigroup’s chief economist and now Counselor to Treasury Secretary Timothy Geithner

• Neal Wolin, President and COO, Hartford Insurance Company, Property and Casualty Group now Deputy Treasury Secretary (Hartford received $3.4 billion in TARP funds).

• Gary Gensler, Goldman Sachs partner, now Chairman of the Commodity Futures Trading Commission Note: It was Gensler who was a key proponent (as Clinton’s Assistant Secretary of Treasury) in pushing the Commodity Futures Modernization Act of 2000.

• Mark Patterson, Goldman Sach’s lobbyist, now Treasury Chief of Staff

• Linda Robertson, Enron lobbyist, Chief PR Federal Reserve

Defenders of the Status Quo!


The Wall Street White House
Counterpunch, July 2, 2009


Category: Credit, Derivatives, Politics, Regulation

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.

103 Responses to “Failing Upwards: The Wall Street White House”

  1. cvienne says:

    Let’s see…

    You run on a platform of “Change we can all believe in”…

    With this group of characters, the only change I’m assured of is the spare change that will be left in the pants of my pocket (where there used to be notes)…

  2. cvienne says:


    Applicant: “Mr. President…I am an official memeber of the “kleptocratic” party and here is my resume”

    President: “You seem eminently qualified, You’re hired! When can you start? Also, please notify my press secretary to put out word that we’re stemming the unemployment ranks…

  3. Status QuObama.

    44 should reimburse the Treasury for the cost of the new stationery, it’s the only thing that has “Change”-d

  4. cvienne says:

    It’s pretty bad when the LOBBYISTS themselves are complaining of having to fork over too much money to get invites to the Washington Post ‘parties’ so they can get access to high ranking Administration officials…

  5. call me ahab says:

    I’ll 2nd Hoffer’s comment-

    also- if Obama was not the Status Quo he would have surrounded himself with people with novel approaches and new ways of thinking- I wonder how long the left will give him a pass before they become highly critical of his policies

  6. Wes Schott says:

    @cv – now that’s a definition of a recession

  7. doughishere says:

    Your blaming Obama A) for something that happened long before he got into office and 2) for an issue that should have been controlled at the state level. Not the Federal…..really people? I know obama bashing is in season but really?

  8. call me ahab says:

    doughishere Says-

    Your “blaming Obama A) for something that happened long before he got into office and 2) for an issue that should have been controlled at the state level. Not the Federal”

    not to nitpick but shouldn’t it be A then B or 1 then 2? also please explain- post is about FEDERAL appointments coming from the same old sources-

    please elaborate on your comment so we understand what you mean- especially in that at face value it does not relate to the what BR is commenting on

  9. cvienne says:


    Please define how the above list of “recent Wall Street transplants who are running things in the Adminstiration” happened long before he [Obama] got into office…

    …and furthermore, please go on to explain how those transplants represent CHANGE in your opinion…

    Lastly, please learn to spell “your” [you're] in the proper context…

  10. Avl Dao says:

    C’mon cut the fella with the big ears some slack. He is “the best prepared” president we’ve inaugurated in decades….after all, he scripted his presidential worldview in advance in 3 tomes prior to announcing his run in 06.
    He truly is the best president for the pressing matters as understood by him and by the mainstream media and by the electorate in 2006!
    Is it really his fault that this isn’t 2006….that doing a gut rehab on global financial systems and global economic flows wasn’t on his or the electorates “To Do” list back in 2006?
    Imagine how he feels at night, knowing he had scripted every solution for America back in 06 save one…and that one oversight is the one now controlling the destiny of much of his presidential agenda and his prospects for re-election.
    So, bereft, of any depth (hands-on, legislative, academic or otherwise) in the subject, he follows his blue-chip instincts and pads his team with the bluest blue chips that orthodoxy peddles within his blue-chip circle.
    Who coulda knew they’d all have kleptomanic predilections?

    And how the Obama-Enablers howl when we hold him accountable NOT for what Bush did, but for the appointees he has made and the economic and political consequences of those appointees.

  11. The Curmudgeon says:

    @doughishere…exactly which issue should have been controlled at the state level are you referring to in this post? Did I miss something here?

    Obama shouldn’t be blamed for his own appointments because they happened before he got into office? Even in the bizarro world in which we now live, that doesn’t make sense.

    But you are partially correct in that blaming Obama is fruitless. He’s just another bought and paid for lackey of Goldman Sachs. Blame them. Administrations change. Goldman endures.

  12. cvienne says:

    Who gets the pardon?

    The “fool” or the “theif”?

  13. franklin411 says:

    June ISM comes in better than expected at 47 vs expectations of 45.5, rising from 44 last month. Green shoots, kiddies! Green shoots!

  14. Avl Dao says:

    Franklin, dont track all that green dye on the white rug, kiddo.

  15. cvienne says:


    Under 50 represents contraction in the economy…

  16. If this was a recession driven by Manufacturing or inventory this would matter.

    But since it has been driven by a credit blow up, and the subsequent absence of ready credit, ISM becomes irrelevant to the recession story.

    It is a symptom, not a cause

  17. cvienne says:


    Why don’t we just EXPECT zero each month? That way we can ALWAYS beat the number and the S&P can go back to 1,500…

    Is that how it works?

  18. The Curmudgeon says:

    F411, we are about to enter the seventh level of hell, once California goes belly up, w/ no bail-out from Uncle Stupid forthcoming. Things are apt to get rather ugly. We’ll need all the green-shooter optimists just to balance things out.

    The question I have is why won’t the feds bail-out California, even though it wouldn’t cost as much as AIG? Perhaps the answer has something to do w/ federalism, i.e., the feds don’t want Cali to expand or even maintain its power at their expense. In other words, Cali and the feds are competitors in the same market–governance–and the feds don’t want help its direct competitor. Also, the feds perhaps know that they can’t bail out all the Cali’s so it better not start. No such considerations obtained with AIG.

  19. franklin411 says:

    Are my numbers ruining a good narrative?

  20. Avl Dao says:

    I love Calculated Risk’s graphic charting how Team O horrifically low-balled projections of job loss in the scenarios used to peddle their “job solution” of shovel-ready infrastructure and related stim spending.

    In 60-90 days, I’m expecting the Team O economic blue chips to gasp in utter bewilderment: “you mean all these jobless people aren’t experienced bridge-builders or asphalt pourers or geeks who wire schools? That these jobless are actually out-of-work, pot-bellied in many cases with bad knees, and need jobs involving sitting in cubicles or behind a cash register?”
    Hoocoodanode all that? What textbook was that in?”

  21. Avl Dao says:

    No Franklin, not at all……but sheeesh, the green dye is all over your hands and shoes and just making a real mess of things.
    Was there a sale on it and Sams Club?

  22. The Curmudgeon says:


    “shovel ready”–a project that is ready to be undertaken by the simple expedient of picking up a shovel. Example: Once the turd fell from the pampered pooch’s ass, its cleanup was “shovel ready”.

  23. cvienne says:


    Your “numbers” will make sense when they make sense…

    Right now (in the context of everything else), they DON’T make sense (with regards to forecasting a recovery)…

    I, or someone else, will let you know when that time comes…Then, we’ll all be “green shooters” like yourself…

    My forecast has that time happening sometime in late 2011…That will be about the time that YOU have given up all hope and we ar in our darkest moment…I’ll probably get out my magnifying glass and find some green shoots then, my friend…

  24. Avl Dao says:

    cvienne, thats not the American way. Try Franklin’s way…buy the green dye en masse at Sams Club and just spread and spray it all over every surface….kinda like how cats do it, no?…..and then call it a day and go online and boast about everthing’s commin up green.

  25. willid3 says:

    well one way to look at it is that GS is in charge. not much change there. but then again we would be griping if O hired some one who didn’t work in finance before as they had no experience. so if O had hired some one from say BOFA or CG or MS, wouldn’t we be griping about that too? so if we take away all of those choices, that leave who? of course we do have have those layoff workers that use to work for wall street, but then they are still alums of wall street and still polluted (if you will) by that point of view right?

  26. franklin411 says:

    The numbers are the numbers. I don’t make them up, and just because their not fitting your worldview does not automatically make them wrong. The numbers are quite impressive, and show broad improvement across the board:


  27. DeDude says:

    You have to look at every individual before you can conclude that they are going to continue to just work for the old company. There is clearly a need to hire people who knows what is happening inside these Wall street firms in order to be able to nail and/or change them. Whenever a large criminal enterprise is dismantled it starts with getting some insiders to convert to the government side.

  28. scm0330 says:

    …and so begins another daily dialogue. F411 mines a data point from the headlines, makes a smartass comment about an incipient recovery, and most of the other board folk who know a little something or three about the economy, and busiess, and recoveries, tell him he’s FOS. which he is. rinse, repeat…

    i’m all for Barry charging admission here. it ran F411 off like a roadrunner at the last board he haunted (realmoney) when his gratis edu-sub ran out.

  29. Avl Dao says:

    willid3, John Snow was Bush II’s 1st Treasury Secretary and he and Wall Street butted heads the whole 3 years. His appointment, by a Republican, is evidence that there are many people out there who could pass Senate review and be a key part of Obama’s team without being part of the WS cabal.
    Your logic seems based on gut feelings that “everyone qualified has to be from Wall Street if not also for Wall Street”. Presidential appointemnt Histories says otherwise.
    Back to Snow, when Paulson pushed Congress to approve TARP 1, John Snow started a campaign to defeat TARP. More proof that there are people out there who are not bought and paid for by WS yet qualified to be appointed.

  30. Avl Dao says:

    …not to say that Snow was “perfect”…just that the universe of qualified candidates are not limited to the “Pro WS” group.

  31. cvienne says:

    @avl dao

    I think “The American Way” you refer to is something that this country lost a few generations ago when things got a little too cushy…

    The Cold War (appears) to come to an end, and we, as a country auto-declare our superiority and start writing checks off our assets ever since…

    It’s pretty damn easy to be optimistic when you feel like you have a checkbook with unlimited funds in it…

    You know? I DON’T DISAGREE with the notion that Franklin espouses sometimes here on this site that the new Administration needs to make an INVESTMENT in the future, to help guide our country back on the path of being a “producer” of things that would help ourselves (and the ROW)…

    My problem is the “approach” to that notion…

    Obama is like the guy who decides he wants a new patio deck in the back of his house…So what does he do? He goes to Home Depot and gets a credit card and charges up thousands (2×4′s, wood screws, circular table saw, hammers, sanders, planers, cement, poles, sinks, levels, re-bar, stair cut-outs, wheelbarrow, waterproofing)…

    Then he realizes he has no TRUCK to get the stuff to his house…NOR even the “faintest” carpentry skills to construct the thing…Maybe he even manages to get the stuff trucked to his house eventually, but while he’s figuring out how to work the circular saw, a big rainstorm comes and warps all his wood, and rusts his tools…

    So much for carpentry (2009 style)

  32. Mannwich says:

    “Better than expected” no longer good enough for the “market”. Time to roll over little doggie.

  33. larster says:

    You can sure tell when everyone’s trades go sour. Look at all of the biting comments that scream- loser.

    Vent steam somewhere else, please.

  34. willid3 says:

    avl dao, i wasn’t saying that. i was really saying that every one would complain if we got some one from out side too. but i do admit that we seem to have to much from GS. makes one wonder. is it they push their people to be more public spirited or what?

  35. Thor says:

    Here’s a question for you guys, a serious one. Who should O have chosen for these positions? Academics? Seems they got a lot of things wrong as well, Economist? They, for the most part, missed this crisis entirely. Former CEO’s? Which one’s? Roubini for Secretary of the Treasury? Barry Ritholtz as Fed Chairman? Carly Fiorina as Secretary of Commerce? I’m not defending O’s picks, I’m just curious about alternatives from the group along with picking apart his his appointments thus far. . .

  36. scm0330 says:

    F411 – if you knew a little something more, you’d understand there’s a three-legged stool out there supporting the economy, and it’s NOT getting better. understand context, my friend, and understand all data points aren’t created equal. the three legs are employment, real estate prices, and their combined effects on banks – both in the ability of banks to absorb losses, and the willingness of banks to extend credit. the leverage-based consumer economy remains in the oxygen tent. as a metaphor, consider a bad car crash. we’ve suffered serious injuries. but we’ve survived the acute phase. we’re now in long-term rehab. are we getting better? yes. we’re learning again how to walk. that doesn’t mean we are the person before the accident. the fact that ISM is perking up is of little consequence in the big picture. hardly anyone here is arguing for armageddon – that’s your straw man, F411, just yours – and in point of fact you’ve dumbed down your economic prognostications (high unemployment, punk, multi-year growth) to comport with the views of lots of the other readers you are presumably debating. what exactly are you debating again??

  37. franklin411 says:

    I am unaware of anyone dismantling, diminishing or casting aspersions on the numbers I cited. I did notice quite a bit of grumbling because the facts don’t fit the narrative so often embraced on this board. I’m quite willing to listen to any poster who has anything legitimate to say about the ISM numbers–good or bad, based on the facts.

    However, crying about the fact that we’re starting to see a recovery won’t prevent it from happening.

  38. Avl Dao says:

    cvienne, surely you saw the sarcasm in the ‘American Way of just buying lotsa green dye to sell the green shoots story’. Sadly, that behavior has not been lost, it remains in full force.

    But I see your larger point regarding lost ways.

  39. Mannwich says:

    @larster: I don’t think all of us here at TBP are “traders” by a long shot. Many of us are “sour” and “bitter” about the direction of the country though.

  40. the bohemian says:

    based on the facts the ISM # is a contraction-

    as mannwich says- the “better than expected” game is played out

  41. Mannwich says:

    Funny, but sites like CR not spinning the ISM numbers like the MSM “news” sites. Hhhmm, let’s see, who got it right from the start? Sites like CR or the “experts” in our MSM “news” (and I use that term loosely) media?

    Anyone have an answer? f411?

  42. Avl Dao says:

    In December in Chicago, when the average daily temperature declines finally slows, our residents and meteorologists do not then commence dancing in the street proclaiming that “Spring Is Imminent because the temp decline has slowed.”

    Well some may…but they perish in the cold.
    They say it’s nature’s way of culling the stupid and naive.

    We know that we’re still in for January-March and all they they have to throw at us.
    But the “Green Shoots” enablers’ way is to dance in the streets in December in Chicago.

  43. cvienne says:


    “However, crying about the fact that we’re starting to see a recovery won’t prevent it from happening”

    A few basis points on a MOM “expectation” of an ISM number don’t constitute a recovery…It doesn’t even suggest things are getting better…

    Where were you last Thursday? Did you read the jobs number? Where were you to cherry pick that data point?
    How would you compare the two?

    And I’ll give you one final point…

    Even during the next 12+ months, it is highly likely that ALL numbers will have some back and forth MOM volatility…There was more than 3/4 of a trillion in “stimulus” approved (most of which has not been spent yet)…So some of that may have a way of massaging numbers until the last check is written…

    But a RECOVERY will happen when the economy can stand on it’s own…There is NOTHING (besides a few tiny things like your paltry ISM number which is showing contraction yet was BTE), that is even remotely suggestive that our economy can even exist without life support…And that problem will persist (probably long enough even for O’s supporters to start getting restless & jumping ship)…

  44. scm0330 says:


    i can’t speak for others, but if i may, i believe there’s broad agreement that a recovery (and yes, one will happen. recessions die of old age. and a return to growth in percentage terms is a certainty) will be remarked by a very challenged job market and very sluggish growth. you have explicitly said as much. do you believe that your view is not one shared my others here?

    i’m just seeking to understand what intellectual ground you’re attempting to stake out that’s variant to the sense of most folks here. i don’t think there is any — only you enjoy, in your economic naivete, being a wise guy.

  45. cvienne says:


    I second Manny…

    I’m not bitter about the stock market…(on the contrary – I’ve had my best days in over two months last Thursday & today)…

    I’m not even bitter about the direction of this country…”Incredulous” would be a better word…

  46. Mannwich says:

    @cvienne: But new “jobs” are being created every day in our Predator economy. Green shoots, my friend. Green shoots….


  47. Mannwich says:

    @cvienne: I alternate from being “incredulous” to “bitter” to “sour” to “entertained”, and finally, to “stupified & mortified”…….

  48. cvienne says:


    Thanks for sharing all that :-)…

    Now I feel better than ever about “The American Way”!

  49. franklin411 says:

    You can review my record if you like. I won’t joust with your mischaracterization of it.

  50. call me ahab says:

    Thor Says-

    “Here’s a question for you guys, a serious one. Who should O have chosen for these positions? ”

    let’s take Geithner for example- the general consensus was that he was a bad pick- especially after his “failure to pay back taxes” revelation- but putting that aside- let’s assume that he came in with some novel approaches- took the banks to task as well as the folks in charge- let everyone know that business as usual was over- that there were no sacred cows- that corruption and greed were unacceptable- that the banks would be held accountable- and criminal investigations would be forthcoming-

    I think he would have earned much respect- and that is how appointments should be evaluated – because the appointment may be suspect- but by their actions- prove their worth

  51. scm0330 says:


    i had the very same thought re thursday’s jobs number. and in fact, didn’t f411 cherry pick something like the manufacturing sub-category, that ticked up? i think he offered that up as the latest green shoot.

    it was a lousy report with very little that was encouraging. the leading indicators within it were grim. its importantance trumps that of a “less bad” ISM by a mile.

    but with franklin there’s only point data, no context, no information. (i think because he doesn’t know.)

  52. Transor Z says:

    Re: “Green shoots”

    BB’s “green shoots” comment was made on or about March 15, 2009, clearly referring to the imminent springtime. Sucks to be him, but the fact is BB tied his “analysis” to the seasons.

    Today is July 6, blueberry season. Roses before long. Leaves have been out for some time.

    Harping on green shoots in July is just plain silly.

    Calling BB: Every hack poet in the English language wants their trope back.

  53. pmorrisonfl says:

    @Mannwich I alternate from being “incredulous” to “bitter” to “sour” to “entertained”, and finally, to “stupified & mortified”…….

    “You know I used to be disgusted
    But now I try to be amused” – Elvis Costello

    AT on Friday and leftback today both thought there might be bounces today… any updates?

  54. leftback says:

    We are not heading south in a big way here. More likely we are going to be stuck in a trading range, see Kevin Lane’s post today. Keep an eye on the $ and be ready to fade big moves either way for a while.

  55. scm0330 says:

    @ F411 -

    This is from Thursday’s NFP discussion, aka your “record.” It’s from two separate posts from you. I’m dying to learn how i have mischaracterized your record by stating you agreed with an outlook for a tough jobs market and sluggish growth. are you disavowing your own words?? there’s not too much to joust about here franklin…

    I realize it hurts many posters to hear this, but the American economy is not, in fact, dead. The United States will, in fact, recover. I’m sorry.
    I have said that unemployment will remain elevated for the next 3-5 years. I have said that unemployment would hit or top 10%. There is growth out there, and after a long (and I expect, very painful) summer, growth will ripple out from the industrial to the service sectors.

    I completely agree. We’ve been disinvesting in our economy for 30 years now–education, infrastructure, research and development have all played second fiddle to tax cuts, tax cuts, tax cuts. It’s going to take decades to reverse that, and in the near term–3-5 years–the best we can hope for is tepid growth in the 0-2% range.

  56. cvienne says:

    @leftback, I-Man, Andy T (posted in other thread)

    On the “high side” now I see the 910 area on the S&P…

    Look back to 12/18/08, 12/31/08, 1/9/09, 1/12/09, 5/4/09, 5/26-28/09, 7/2/09…

    The chart CLEARLY has been avoiding filling in those areas…I say they need to be filled before we break down and move lower (eventually take out 880)…The S&P will have a week or so to do this with crude bouncing off a technical low, and $$ accumulates in the short end of the YC…

    There is also YEN buying (vs. dollar & Euro)…Repaid carry trades?

    …IMO, about 2 weeks of dicking around between 883 & 910, then we make the big break down…

  57. cvienne says:


    “Here’s a question for you guys, a serious one. Who should O have chosen for these positions? ”

    How about Paul Volcker? (then let Volcker choose his staff)…

  58. leftback says:

    “…IMO, about 2 weeks of dicking around between 883 & 910, then we make the big break down…”

    Or a replay of last year with all kinds of sunny optimistic summer trading – remember Labor Day weekend last year? It could be 4 weeks, or 8 weeks, or 12 weeks – and then we get another red october™. Agree with the thesis, but if the Q2 earnings are spun expertly, and CA doesn’t default immediately, the breakdown may be postponed.

  59. Thor says:

    Ahab – Interesting you should mention the tax issues. I’ve often wondered if O secretly wishes he would have sacrificed Geitner over the tax issues rather than Daschle.

    Cvienne – I agree with you on Volker – smart guy, and he certainly helped to get us out of a bad scrap in the 80′s. I wonder though, if he wasn’t chosen because of either his age, or his”outdated” views.

  60. willid3 says:

    i wonder if he really didn’t want that job?

  61. cvienne says:


    The “difference” between this year and last year, IMO, is as follows…In ’08, the idiots playing the indices started the year at 1476 and closed mid-year at 1280…

    They “had” to play for a summer rally…Then got creamed when it never materialized, and instead went hard the other way…

    In ’09, you had a lot STARTING with elevated cash positions…Maybe they made a little extra yayoe on the side since March, but if you were simply a complete cluck, you made from 903 – 919 for the first half…

    I’m thinking that many may view the landscape right now and want a pullback before they committ for the rest of the year…There’s going to have to be MORE than “green shoots” crap when earnings come out to convince anyone that the rally can be sustained…

    So I think the party [selloff] gets started early this year…We’ve got until OPEX where the S&P can stay technically above 880 (while a few weak ‘short crude’ players go in and cover)…But I see a challenge of 840 by mid-August, and probably a breakdown of that and a visit to the 760-780 range shortly thereafter…

    Your Red October sees 666 getting taken out down to 576…

  62. “You know I used to be disgusted
    But now I try to be amused” – Elvis Costello


    nice reminder~ you know, after a little practice, it works..

    better for the spirits, too~

  63. pmorrisonfl says:

    @MEH … wish I was as good at it in practice as in theory.

  64. constantnormal says:

    OK, F411 (10:52 am) — let’s look at the numbers … (sorry for the formatting, or lack thereof)

    June May April March Feb Jan Dec
    NMI/PMI 47.0 44.0 43.7 40.8 41.6 42.9 40.1
    Bus Activity 49.8 42.4 45.2 44.1 40.2 44.2 38.9
    New Orders 48.6 44.4 47.0 38.8 40.7 41.6 38.9
    Backlog Orders 46.0 40.0 44.0 41.0 36.5 37.5 42.5
    New Export Ords 54.5 47.0 48.5 39.0 40.0 39.0 39.5
    Inventory Sent 67.0 62.5 62.5 60.0 66.5 62.5 65.5
    Imports 47.0 46.0 48.5 37.0 39.0 40.5 32.5
    Prices Index 53.7 46.9 40.0 39.1 48.1 42.5 36.1
    Employment 43.4 39.0 37.0 32.3 37.3 34.4 34.5
    Supplier Delivs 46.0 50.0 45.5 48.0 48.0 51.5 48.0

    Remember that numbers below 50 represent contraction, not expansion.

    Contracting more slowly does not equal expanding.

    We could just as easily see everything turning lower in coming months as higher — in fact, it’s more likely, due to the deepening problems with defaults and unemployment. These things do not stimulate demand or confidence. The best series of numbers in the above set seems to be “Inventory sent”, and an increasing amount of inventory depletion might be bullish for future prospects, but only if demand does not slacken further. The most bullish item that I see is the Export numbers, which is weakly bullish at best, but in contrast with our past export performance, are rather good. But given the difficulties that our foreign customers are in, the one-month above-50 performance in Exports is likely to be an aberration rather than the beginnings of a trend.

    But pretty much everything else really sucks. No green shoots apparent.

    There. I looked at, and commented on, the data. Happy? (posted in the correct item this time)

  65. Bruce N Tennessee says:

    I think Putin talks Obama into allowing a Russian submarine base in San Diego for the rent we get from it…sort of an economic Guantanamo…the “new” Stalin and the “new” FDR…

    And Dr. Krugman wants another stimulus ASAP…you give all these children play money, and pretty soon they think they own Boardwalk….

  66. [...] people who are going to “fix” things for America Jump to Comments Fantastic: • Robert Hormats, Vice Chairman of Goldman Sachs, is to be installed as Under Secretary of [...]

  67. Bruce N Tennessee says:


    California’s Nightmare Will Kill Obamanomics: Kevin Hassett

    …I think Obamanomics was a suicide in the first place, but the article is worth reading..

  68. nemo says:

    “The numbers are quite impressive, and show broad improvement across the board”

    The warm, sunny weather of Indian summer shows broad improvement over the general temperature trend of late fall, but that doesn’t mean January is going to be as warm as August.

  69. cvienne says:

    @Bruce N Tenn

    “I think Obamanomics was a suicide in the first place, but the article is worth reading..”

    & on our deathbeds we’ll receive TOTAL ENLIGHTENMENT…So we have that going for us :-)

  70. Thor says:

    Bruce – As I’ve said before, I don’t think the state is going to default, if we do, it’s going to set the stage for other states in similar situations to do the same and that’s not going to work out well for the economy (sorry Franklin). The main issue here is not that the budget problem in CA is beyond resolution, it’s that the idiots we have in office refuse to work together to resolve it.

    Of course, I was wrong on the issuing of IOU’s, so I could be wrong here too. Let’s hope not!

  71. Alan says:

    Wasn’t Robert Hormats chummy with the Clinton Administration during the bailout of GS’s Mexican peso crisis during the mid 90s?

  72. cvienne says:

    @Bruce in Tn

    Re: “And Dr. Krugman wants another stimulus ASAP…you give all these children play money, and pretty soon they think they own Boardwalk….”

    That notion had me scratching my head this wekend…I’ll recap…

    - So Biden comes on TV and pretty much says that “WE UNDERESTIMATED HOW BAD THE ECONOMY WAS” (basically telling everyone that they don’t know shit)…

    - A stimulus package was already passed 780+ billion on TOP of the 250+ billion that the Congress passed in early ’08 (that didn’t do shit)…
    - Plus you got an omnibus bill passed…
    - Now you want healthcare (so far the pricetag looks to be between 1.2 trillion down to 800 billion)
    - Cap & Trade will cost at least that much (in nominal terms)

    But “cap & trade” & “HC” aren’t even through Congress yet, and the Administration is already planting seeds of a 2nd stimulus?

    Um – WHICH trillion would like first Mr. President?

    a) the trillion that didn’t work?
    b) the trillion and a half allocated but not spent?
    c) Part 1 of the next 2 trillion you’re asking for?
    d) part 2 of that trillion?
    3) this next trillion that we may or may not need?


  73. Mannwich says:

    @Bruce: I think Kevin Hassett co-wrote the book “DOW 36,000″ back in the dot.com era, did he not? Not saying his article isn’t valid, but I have to take it with a big grain of salt based on that fact alone.

  74. I-Man says:

    @ MEH, pmorrisonFL:

    Detachment from the outcomes… the truest happiness.

    Embracing the certainty of the now… and asserting that things are exactly where they should be… always.

    Hard to put into practice, but worth the struggle. Daily.

  75. pmorrisonfl says:

    @I-Man: ‘Detachment from the outcomes’ is a great way to think about it, and to think. Thanks for that.

  76. cvienne says:


    I want to see you when you’re “detached from the outcome” of the result of your sides soccer match…:-)

    Hee hee…

  77. leftback says:

    @I-Man: ‘Detachment from the outcomes’.

    … is to be an island of sanity in an ocean of madness.

  78. cvienne says:

    That’s why they call them “zombie banks”…

    Because they are DETACHED FROM THE OUTCOME of the need to report any REAL growth or earnings because they are backstopped by the US taxpayer…

  79. patient renter says:

    “Your blaming Obama for an issue that should have been controlled at the state level.”

    Actually, we’re blaming Obama for his worthless appointments. And I’d love to know how the Fed could be controlled “at the state level”.

  80. Thor says:

    Many – re: Hassett. I thought that name sounded familiar. I actually bought that book when it came out. I remember one of his rationals for DOW 36000 was the boomers entering their peak earnings years. I’ve never understood how some economics can get something so completely wrong and have even an ounce of credibility left.

  81. ben22 says:

    of course Krugman wants a second stimulus. He knows if they don’t do another one it will make all of his recent comments on an economic turnaround wrong.

  82. cvienne says:


    Vix popped to 30 today…

    Who’s taking the “yea” or “nay” as to whether we see a 60 handle on that by the end of October?

  83. cvienne says:

    Is there a 2x VIX ETF? Anybody know?

  84. franklin411 says:

    The main mischaracterization I was referring to was implying that I have ever been a rabid optimist calling for an immediate return to prosperity. As you note, I have not. I’m calling for stabilization while the country retools from being a net consumer to being a net producer in the world economy. Over the past 4 months, that position has been characterized as wild optimism. And it is optimistic when compared with the doom and gloom; the “see you at S+P 350″ posts.

    I don’t think it’s going to be summer for quite a while, but the bearish case has been that there will never be another spring. That has been proven wrong.

    Where you see horrible, I see a progression from nightmarish to neutral. We’re nearing 50 on the index, which means we’re on the cusp of growth if this trend continues. And the trend is up, not down.

  85. Thor says:

    Franklin – “I’m calling for stabilization while the country retools from being a net consumer to being a net producer in the world economy.”

    Where do you get this from? Are you basing this statement on anything other than wishful thinking?

    “We’re nearing 50 on the index, which means we’re on the cusp of growth if this trend continues. And the trend is up, not down.”

    Your grasp of economics, more specifically recessions, and how they’ve tended to play out throughout history around the world is staggering. There is NO guarantee that what we’re seeing right now is not either a dead cat bounce or a rebuilding of inventory.

  86. Mannwich says:

    @f411: Who on this blog has said “there will never be another spring”? Please do name names. Many here have criticized your boy’s policies but I’m not sure that most have said there would never be another spring. One can be bearish without thinking the end of the world is upon us. Sounds like an “otto-ism” to me. Are you sure you and he aren’t really the same person?

  87. I-Man says:

    The VIX waves (not in the Elliott sense) do have a way of crescendo-ing dont they?

    Now, to bring in a little JV Elliott Wave analysis, I’d say that if that mega bearish case takes shape, VIX could pop way past 80… which could be the classic vol spike that wipes the slate clean… ie: THE Bottom.

    But thats just pure predictory nonsense on my part.

    Some OTM Vix Nov 80 calls could be a nice Black Swan trade though.

  88. Wes Schott says:

    …some russian guy stole G-S proprietary trading code…..


    Putin fleeces O, while….

    Russian Immigrant fleeces the USG Treasuries personnel recruiting talent pool


  89. constantnormal says:

    OK, grasshoppers, back to Reality. Get out of the moment, already.

  90. cvienne says:


    “As you note, I have not. I’m calling for stabilization while the country retools from being a net consumer to being a net producer in the world economy”

    You are aware Franklin, that what money has been spent from the stimulus so far has mostly gone the way of extending unemployment benefits and keeping the payrolls of firefighters, teachers, and police saturated)…I’m NOT saying that those were not worthwhile expenditures, yet I’d argue that that money gets classified under the category of moving us fron the NET CONSUMER & on into the NET PRODUCER category…

    Also (you said)

    “Where you see horrible, I see a progression from nightmarish to neutral. We’re nearing 50 on the index, which means we’re on the cusp of growth if this trend continues. And the trend is up, not down.”

    I’m sorry, but the LARGER trend is still down…(that’s why they call it a BEAR MARKET CORRECTION)…The S&P itself would need to be up at 1,183 for us to be “technically” in an up pattern…The slope of the pattern suggests that even if we tread water all the way through 11/2010 and hold firm, we would STILL be in a down pattern (with the ‘bulls’ having something to prove)…

    So perhaps the microscopic COUNTERtrend is up…but the pattern is still down…Moreover, both the Fed (and probably the Administration) have run out of bullets…They’re going to have to come up with a lot more rabbits to pull out of hats if they expect the suspension of disbelief to continue…

  91. ben22 says:

    re: VIX

    There has been a sixteen week pattern that is evident in the VIX since the October 2007 period. We brought this up over a month ago on here. We are getting close to trend change point. We’ll see if it continues to be an indicator of a major shift in the VIX.

    Trying to explain what bearish means to Franklin is a complete waste of time. His complete lack of market understanding was on full display this weekend in the Ban the Shorts thread.

  92. leftback says:

    Vix OCT 50 calls should make a profit, without a Black Swan. Ever wonder what would happen if we really did have an unexpected Black Swan? Not pretty. I don’t count these as Black Swans because they are predictable, but a nation defaulting on its debt in E Europe would have more secondary effects than people realize.. and then there is California – which is bigger than most E European economies.

  93. cvienne says:


    One interesting trade that went down today was somebody COVERING the March ’10 68 PUTS they had on the SPY (3,500 contracts covered at a $2.40 premium)…

    That’s another reason why I say that we dick around here between 883 and 910 (while crude pops on short covering by the weakies)…During that same time, the VIX traces back a point or two to 28-29…but I see a VIX channel forming…(lower channel starting with the June 8th low/upper end of channel the 1/2/09 low)…

    The high end of that channel takes you to between 61-64 by the end of RED OCTOBER…

  94. nemo says:

    “I don’t think it’s going to be summer for quite a while, but the bearish case has been that there will never be another spring. That has been proven wrong.”

    Nobody here as ever said anything remotely like that. You consistently mis-characterize the bearish case, I guess because it’s easier to fight a straw man.

  95. scm0330 says:


    Actually, @ 11:16 you said it was I, not others, mischaracterizing your record. (I’ll save everyone the tedium of pasting your text, but invite you to scroll up, to look at what you said; you stated it was I who was mischaracterizing your record.) Now, you’re saying it wasn’t me, but apparently unnamed Others, or perhaps Some (two of the most popular straw men specie extant).

    So, to recap, you’re calling for a tough jobs market and tepid growth – lasting up to several years. I submit to you that that is the main sense of TBP posters, too. Like any (free) internet forum, though, there will be a diversity of opinions and some extreme views no matter what the subject.

    Again, I’m asking to demonstrate your variant view, and you’ve not. You’re safely in the mainstream of thought here with your economic calls.

    Do you think it otherwise?

  96. constantnormal says:

    @F411 1:02 pm

    “We’re nearing 50 on the index, which means we’re on the cusp of growth if this trend continues. And the trend is up, not down.”

    Being on the “cusp of growth” is not the same thing as growing. Degrading at a slower rate is not the same as improving. Repeat, DEGRADING AT A SLOWER RATE IS NOT THE SAME AS IMPROVING.

    When you approach an inflection point, things can either continue along the path that would be indicative of a constant (or at least positive) second derivative, or the second derivative can diminish and reverse polarity. It is not knowable from the past which course the future will take. It is just as possible for things to continue degrading at a slower rate, until the rate of degradation flattens at zero, and then rolls over, sending the trend back down.

    Chartology, especially in a realm where the data is always noisy, is rarely a place to anchor your hopes and dreams, and never a fulcrum to base your projections on. At best, it’s an indicator of the future — but on an indicator, and a fickle one at best. One always has to be prepared for things to go the other way.

    But I suppose if you don’t have any skin in the game, this is all just debating how many angels can dance on the head of a pin.

    I gotta get back into the moment — or is it that I gotta get the moment back into me?

  97. nemo says:

    “I’m sorry, but the LARGER trend is still down…(that’s why they call it a BEAR MARKET CORRECTION)… So perhaps the microscopic COUNTERtrend is up…but the pattern is still down…Moreover, both the Fed (and probably the Administration) have run out of bullets…”

    All that looks right. My company is seriously hunkered down expecting seriously bad times through at least the end of 2010, if not further out. And we depend on sales in Asia, Latin American, and Europe as much as North America. If we were as cheerfully optimistic as f411 going into the 2001 and early 1990s recessions (or even during the late 1990s boom), we would have been dead a long time ago.

    “But I suppose if you don’t have any skin in the game …”

    You know the old saying that it’s a recession when you lose your job, and it’s a depression when I lose my job. F411 hasn’t lost his job yet.

  98. leftback says:

    “Trying to explain what bearish means to Franklin is a complete waste of time. His complete lack of market understanding was on full display this weekend in the Ban the Shorts thread.”

    Franky thought this was related to on-campus dress codes.

    Speaking of codes I guess Government Sachs lost their market manipulation playbook the other day….

  99. willid3 says:

    allegory of the stock market (or how it really works)
    Once upon a time a man appeared in a village and announced to the villagers that he would buy monkeys for $10 each.

    The villagers, seeing that there were many monkeys around, went out to the forest, and started catching them. The man bought thousands at $10 and as supply started to diminish, the villagers stopped their effort. He further announced that he would now buy at $20. This renewed the efforts of the villagers and they started catching monkeys again.

    Soon the supply diminished even further and people started going back to their farms. The offer increased to $25 each and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it!

    The man now announced that he would buy monkeys at $50! However, since he had to go to the city on some business, his assistant would now buy on behalf of him.

    In the absence of the man, the assistant told the villagers. “Look at all these monkeys in the big cage that the man has collected. I will sell them to you at $35 and when the man returns from the city, you can sell them to him for $50 each.”

    The villagers rounded up with all their savings and bought all the monkeys.

    Then they never saw the man nor his assistant, only monkeys everywhere!

    Now you have a better understanding of how the stock market works.

  100. Thor says:

    OT – Things aren’t as rosy for China as many people might think – this is a more realistic future, not global economic dominance.