Posts filed under “Really, really bad calls”

Yet Another Greenspan Housing Bottom Call

“We are finally beginning to see the seeds of a bottoming [in the housing industry. The U.S. is] at the edge of a major liquidation [in the stock of unsold properties, which may help to stabilize prices].
—Alan Greenspan, May 12 2009

“I don’t know, but I think the worst of this may well be over.”
—Alan Greenspan, October 2006

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Why does the public — and the Press — constantly seek out reassurances from the same people who misled them time and again in the past?

That was the question on my mind as I pondered yet another declaration from Alan Greenspan that the Housing Market has bottomed. That he has consistently made similar such statements before is cause for doubting him here. That these prior bottom calls were as far back as 2006 is cause for ridicule.

Few people have been worse than Greenspan in analyzing the Housing market. In fact, the only person / group I can think of with a consistently worse track record than Greenspan’s of analyzing the housing market was the group he spun his foolishness to yesterday: The National Association of Realtors.

Indeed, consider this golden oldie from David Lereah, the NAR’s chief economist, circa December 2005:

Home sales are coming down from the mountain peak, but they will level out at a high plateau, a plateau that is higher than previous peaks in the housing cycle.

That 2005 declaration, made 5 months after Hosuign prices had topped out, was typical of the reality denial we saw from the NAR over the entire housing cycle. They continuously got it wrong, spinning all data, good or bad, in a shamelessly self-promotional manner.

That this group of blind flacks paid Greenspan $100,000 plus to spin them lies is somewhere between ironic and pathetic. At least it wasn’t taxpayer monies . . .

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NOTE:  These older Greenspan/Lereah quotes were were pulled from Chapter 21, The Virtues of Foreclosure, Bailout Nation.

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Category: Real Estate, Really, really bad calls

McCain & Shelby: “Let Insolvent Banks Fail”

“Close them down, get them out of business. If they’re dead, they ought to be buried.” -Richard C. Shelby, the senior Republican on the Banking Committee, on ABC’s “This Week” > Thus, the strangely inverted world of bank bailouts continues. Republicans who started the entire lurch towards Socialism under George W. Bush at least understand…Read More

Category: Bailouts, Credit, Legal, Politics, Really, really bad calls

iBanks Grabbed $50 Billion in AIG Bailout Cash

Yesterday, in Backdoor Bailouts for Goldman Sachs?, we noted that GS, as well as Morgan Stanley, Merrill Lynch, and Deutsche Bank, were all made whole on their bad bets with AIG. That’s right, what was misleadingly described as systemic risk turned out to be in large part little more than a counter-party bailout — money…Read More

Category: Bailouts, Corporate Management, Finance, Legal, Markets, Politics, Really, really bad calls

Was the ’00-03 Crash Bush’s Fault? ’09 Obama’s?

The incessant parade of bad advice, partisan quackery and general ignorance about the way markets work is fascinating to watch. I used to find it annoying, but now I simply use it as a way to make money. Just find the dumbest of the group, and take the other side of their trades. The latest…Read More

Category: Bailouts, Economy, Financial Press, Markets, Psychology, Really, really bad calls

Good Money After Bad: U.S. to Up Citi Stake

Here we go again: It looks like you and me and that guy behind the tree are going to be on the hook for a few billion more dollars: “Citigroup Inc. is in talks with federal officials that could result in the U.S. government substantially expanding its ownership of the struggling bank, according to people…Read More

Category: Bailouts, Corporate Management, Credit, Politics, Really, really bad calls

Experts, Crashes, Media, Skepticism

There is a surprisingly interesting article at Money Magazine on why so many so-called experts utterly missed the market crash, credit crisis, and housing collapse. Its an interview with Philip Tetlock who is (with no small amount of irony), an expert on experts. He is a professor of organizational behavior at the University of California-Berkeley’s…Read More

Category: Economy, Financial Press, Markets, Psychology, Really, really bad calls

Synchronized Boom, Synchronized Bust

Mark Faber wants to do nothing and let the free market correct the excesses. I agree — but I know its only a pipedream. Given we have already had unprecedented interventions, the let-the-market-correct ship has already sailed. And, no US politician has the stomach for that. Excerpt: “As a consequence of this expansionary cycle, the…Read More

Category: Bailouts, Really, really bad calls

If Bankers Were Firemen . . .

Very amusing Pat Bagley cartoon, via The Salt Lake Tribune > > http://extras.sltrib.com/bagley/Archive.asp?Vol=content&Num=10

Category: Bailouts, Credit, Derivatives, Humor, Markets, Really, really bad calls

A Cyclical Look at P/E Ratios

Here’s another brutal look at where P/E rations might end up going before this is all over, via Bob Bronson: I am very skeptical of earnings forecasts, because they have been so terrible for most of my adult life. The conspiracy of optimists always seems to overestimate future earnings. Trailing earnings are real data, not…Read More

Category: Earnings, Markets, Really, really bad calls, Technical Analysis, Valuation

Failings in Structured Finance Agency Conflicts

As we begin to address regulatory reform in the financial services industry there is a clear consensus view that the credit rating agencies played a role in fomenting the crisis environment. In February 2007, Joe Mason and I presented a paper warning of the risks that CDO market problems would present in the capital markets…Read More

Category: Credit, Derivatives, Finance, Markets, Real Estate, Really, really bad calls, Research