Wednesday, September 16, 2009

Noteworthy Quotes of the Day

In a clear echo back to the salad days of the Great Asset Mania, the Wall Street Journal reports that day trading made a big comeback in August. Trading volume surged 14 percent or more last month from July at online brokerage firms Schwab, TD Ameritrade and E*Trade, according to the article. It also cites a Michigan money manager who is responding to requests from his high-net-worth clients to re-enter the market “because many are frustrated watching the rally pass them by.” If wave 2 (circle) is not ending now, the pressure to “get back in” will only intensify as the final subdivisions of the bear market advance trace out. People see the market close higher and naturally become more excited with each up day. Many cannot believe that prices can top amidst such growing optimism and good news. EWI subscribers know better. It is exactly these conditions that create market tops. Succumbing to this temptation, on the cusp of the start of the next Primary-degree decline, could ruin one’s financial life.
Short term yields were plunging last fall, even briefly turning negative last December, as investors clamored for “safety” in the wake of the vortex of selling pressure throughout the stock market. But that’s not what is occurring now in stocks, as prices persistently rise in Primary wave 2 (circle), the big bear-market bounce. We are not exactly sure why short-term government paper is plunging (yields), but it does bear watching since a slew of investors (or an investor with “big money”), for whatever reason, want to be safe and liquid.
--Steve Hochberg, Elliottwave International 
[My comment: Regarding the bid for treasuries, meaning the persistent bid for them. The money market guarantee is set to expire in the next few days. This may be people exiting money markets trying to get into "safety"... Notwithstanding that, it seems like this could become another problem for the financial system...that much cash departing money markets can not be good. P3 anyone?]

Central bankers have no clue. In the first place, the financial crisis was not a black swan. It was perfectly predictable. They ignored the phenomenal buildup in leverage since 1980. They acted like airline pilots who'd never heard of hurricanes.  
Today we still have the same amount of debt, but it belongs to governments. Normally debt would get destroyed and turn to air. Debt is a mistake between lender and borrower, and both should suffer. But the government is socializing all these losses by transforming them into liabilities for your children and grandchildren and great-grandchildren. What is the effect? The doctor has shown up and relieved the patient's symptoms – and transformed the tumour into a metastatic tumour. We still have the same disease. We still have too much debt, too many big banks, too much state sponsorship of risk-taking. And now we have six million more Americans who are unemployed – a lot more than that if you count hidden unemployment.  
Ben Bernanke saved nothing! He shouldn't be allowed in Washington. He's like a doctor who misses the metastatic tumour and says the patient is doing very well. The first thing I would tell Chinese officials is, how can you buy U.S. bonds as long as Larry Summers is there? He's a textbook case of overconfidence. Look what happened to Harvard's finances. They took a lot of risk they didn't understand, and it was a disaster. That's the Larry Summers mentality.  
It's good to have more than one profession, in case your own profession goes out of style. A Wall Street trader who's also a belly dancer will do a lot better than a trader who winds up driving a taxi.  
--Nassim Taleb
"Both the United States and China are members of the [Group of 20 nations], and the G20 has taken this stance that they shouldn't have recourse to trade restrictive measures during the crisis" 
--Pascal Lamy, World Trade Organization 
We are going to see harsh reality in September. U.S. industry results are a disaster.”  
--Sergio Marchionne, the chief executive officer of Fiat and Chrysler
H.R. 1207 is one of the simplest bills imaginable. Unlike the healthcare bill which is over 1000 pages, H.R. 1207 is a page and a half. The bill lists the existing exclusion of the Federal Reserve from oversight by the Government Accountability Office (GAO) and allows the GAO — an independent body — to audit the Federal Reserve Bank. I am very sure the bill will pass — possibly by the end of September, but more likely by the end of October.
They are performing a truly remarkable, surreptitious transfer of wealth from public to private hands. They are taking their ability to print money and shore up failed banks. They are simply stuffing money into the pockets of private interests.
In the case of the half a trillion dollars, they stuffed the money into foreign private pockets. In the case of another $230 billion, it has been tracked as a secret bailout to Citicorp in the US. The fact is the Federal Reserve continuously puts all of us on the hook for decisions they make to play favorites with private interests to the tune of trillions of dollars.
These are not conspiracies. The Federal Reserve’s own website has some incredibly interesting information about the general state of the US economy and the distribution of wealth in our country. I was recently reading our national wealth capped out at $62 trillion two-years ago has crashed to $50 trillion since. Those are Federal Reserve statistics on their website.
--Congressman Alan Grayson
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