56 replies to this topic

[DJS]

Some highlights:

JS: I think the difference is not good call/bad call. The difference is real market and unreal market. Let me show you…This is…you ran a hedge fund.
JC: Yes I did.
--December 22, 2006 video of Jim Cramer--
JC: You know a lot of times when I was short at my hedge fund and I was position short, meaning I needed it down, I would create a level of activity beforehand that could drive the futures. It doesn’t take much money.
--End Video--
JS: What does that mean?
JC: Okay, this was a just a hyperbolic example of what people— You had a great piece about short selling earlier.
JS: Yes, I was—
JC: I have been trying to reign in short selling, trying to expose what really happens. This is what goes on, what I’m trying to say is, I didn’t do this but I’m trying to explain to people this is the shenanigans that—
JS: Well, it sounded as if you were talking about that you had done it.
JC: Then I was inarticulate because I did-- I barely traded the futures. Let me say this: I am trying to expose this stuff. Exactly what you guys do and I am trying to get the regulators to look at it.

JS: That’s very interesting because roll 2:10.
--210 video--
JC: I would encourage anyone who is in the hedge fund unit ‘do it’ because it is legal. It is a very quick way to make the money and very satisfying. By the way, no one else in the world would ever admit that but I do care.
Other guy: That’s right and you can say that here.
Unknown: Inaudible means I’m not going to say it on TV.
--End video—
JC: It’s on TV now.
JS: I want the Jim Cramer on CNBC to protect me from that Jim Cramer.
JC: I think that way you do that is to show—Okay, the regulators watch the tape, they realize the shenanigans that go on, they can go after this. Now, they did catch Madoff, that’s a shame.
JS: Now why when you talk about the regulators, why not the financial news network? That is the whole point of this? CNBC could be an incredibly powerful tool of illumination for people that believe that there are two markets: One that has been sold to us as long term. Put your money in 401ks. Put your money in pensions and just leave it there. Don’t worry about it. It’s all doing fine. Then, there’s this other market; this real market that is occurring in the back room. Where giant piles of money are going in and out and people are trading them and it’s transactional and it’s fast. But it’s dangerous, it’s ethically dubious and it hurts that long term market. So what it feels like to us—and I’m talking purely as a layman—it feels like we are capitalizing your adventure by our pension and our hard earned money. And that it is a game that you know. That you know is going on. But that you go on television as a financial network and pretend isn’t happening.
JC: Okay. First, my first reaction is absolutely we could do better. Absolutely. There’s shenanigans and we should call them out. Everyone should. I should do a better job at it. But my second thing is, I talk about the shorts every single night. I got people in Congress who I’ve been working with trying to get the uptick rule. It’s a technical thing but it would cut down a lot of the games that you are talking about. I’m trying. I’m trying. Am I succeeding? I’m trying.
JS: But the gentleman on that video is a sober rational individual. And the gentleman on Mad Money is throwing plastic cows through his legs and shouting “Sell! Sell! Sell!” and then coming on two days later and going, “I was wrong. You should have bought like--I can’t reconcile the brilliance and knowledge that you have of the intricacies of the market with the crazy bull--- you do every night. That’s English. That’s treating people like adults.
JC: How about if I try it?
JS: Try what?
JC: Try doing that. I’ll try that.
JS: That would be great, but it’s not just you. It’s larger forces at work. It is this idea that the financial news networks are not just guilty of a sin of omission but a sin of commission. That they are in bed with them.
JC: No, we’re not in bed with them. Come on. I don’t think that’s fair. Honestly. I think that we try to report the news and I think that people—
JS: A couple of guys do. This guy Faber.
JC: He’s fabulous, Faber.
JS: And maybe two other guys.
JC: He’s fabulous and he’s done some things that have really blown the cover off a lot of stuff.
JS: But this thing was ten years in the making.
JC: Right.
JS And it’s not going to be fixed tomorrow. But the idea that you could have on the guys from Bear Sterns and Merril Lynch, and guys that had leveraged 35 to 1…
JC: I know.
JS: And then blame mortgage holders. I mean, that’s insane.
JC: I never did that. --unintelligible—I’m sorry You’re absolutely right. I always wish that people would swear themselves in before they came on the show. I’ve had a lot of CEO’s lie to me on the show. It’s very painful. I don’t have subpoena power.
JS: But don’t—You’re pretending that you are a dew-eyed innocent. Watch. Roll. I mean, if I may…
JC: It’s your show for Heaven’s sake.
JS: Roll 2:12.
JC: No! Not 2:12!
--2:12 Video--
JC: You can foment. That’s a violation of…
Other guy: Ferment?
JC You can’t FOE-ment. You can’t create yourself, an impression that a stock’s down, but you do it anyway because the STC doesn’t understand it. That’s the only sense that I would say this is illegal…
Other guy: Another stock that I love you for, focused on right now is Apple
JC: Yes, Apple is very important to spread the rumor that both Verizon and AT&T have decided that they don’t like the phone. That’s a very easy one to do. You also want to spread the rumor that it is not going to be ready for MacWorld and this is very easy because the people who write about Apple want that story and you can claim that it is credible because you spoke to someone at Apple because Apple is—doesn’t register.
Other guy: Doesn’t comment.
--End Video--
JC: You know.
JS: I gotta tell you. I understand that you want to make finance entertaining, but it’s not a f---ing game. When I watch that I get, I can’t tell you how angry it makes me because it says to me, “You all know.” You all know what’s going on. You can draw a straight line from those shenanigans to the stuff that was being pulled at Bear and at AIG and all this derivative market stuff that is this weird Wall Street side bet.
JC: But Jon, don’t you want guys like me that have been in it to show the shenanigans? What else can I do? I mean, last night’s show---
JS: No, no, no, no, no. I want desperately for that, but I feel like that’s not what we’re getting. What we’re getting is… Listen, you knew what the banks were doing and yet were touting it for months and months. The entire network was and so now to pretend that this was some sort of crazy, once-in-a-lifetime tsunami that nobody could have seen coming is disingenuous at best and criminal at worst.
JC: But Dick Fogle(sp?) who ran Lehman Brothers, called me in when the stock was at 40 because I thought that the stock was wrong, I thought that it was the wrong place for it to be. He brings me in, lies to me, lies to me, lies to me. I’ve known him for twenty years.
JS: The CEO of a company lied to you (inflection in voice)
JC: Shocker stock trading.
JS: But isn’t that financial reporting? What do you think is the role of CNBC?
JC: Look, I have called for star chambers—I want kangaroo courts for these guys. I have not seen any indictments. Where are the indictments? Where is the indictments for AIG? I told the Justice Department, “Here’s the way you get the indictment.”
JS: It’s very easy to get on this after the fact. The measure of the network, and the measure of mess. CNBC could act as—No one is asking them to be a regulatory agency, but can’t—but whose side are they on? It feels like they have to reconcile as their audience the Wall Street traders that are doing this for constant profit on a day-to-day for short term. These guys companies were on a Sherman’s March through their companies financed by our 401ks and all the incentives of their companies were for short term profit. And they burned the f---ing house down with our money and walked away rich as hell and you guys knew that that was going on.
JC: I have a wall of shame. Why do I have banana cream pies? Because I throw them at CEOs. Do you know how many times I have pants CEOs on my show?
JS: But this isn’t, as Carly Simon would say, this song ain’t about you.
JC: Okay. All right. You’re right. I don’t want to personalize it. I think we have reporters who try really hard. We’re not always told the truth. But most importantly, the market was going up for a long time and our real sin I think was to believe that it was going to continue to go up a lot in the face of what you just described. A lot of borrowing. A lot of shenanigans and I know I did, I’ll bring it up, I didn’t think Bear Sterns was going to evaporate overnight. I didn’t. I knew the people who ran it, I always thought they were honest. That was my mistake. I really did. I thought they were honest. Did I get taken in because I knew them from before? Maybe to some degree. The guy who came on from Wichovia(sp?) was an old friend of mine who helped hire me.
JS: But honest or not, in what world is a 35 to 1 leverage position sane?
JC: The world that made you 30% year after year after year beginning from 1999 to 2007 and it became—
JS: But isn’t that part of the problem? Selling this idea that you don’t have to do anything. Anytime you sell people the idea that sit back and you’ll get 10 to 20 percent on your money, don’t you always know that that’s going to be a lie? When are we going to realize in this country that our wealth is work. That we’re workers and by selling this idea that of “Hey man, I’ll teach you how to be rich.” How is that any different than an infomercial?

[DJS]

Oh, and JS's closing remark: I hope that was as uncomfortable to watch as it was to do.

[eternaltraveler]

i thought Jim Cramer was going to cry

Edited by eternaltraveler, 14 March 2009 - 12:04 AM.

[DJS]

Don, I am mostly upset about the Santelli riff (there are plenty of jokes to be made about all political persuasions including libertarians). All of the viewers of that clip think Santelli is an asshole, when in reality he opposed nearly every bailout effort. His compadres on CNBC mocked him as a Ayn Rand apostle for opposing the bailouts, and then Stewart makes it look like he is some billionaire trader asshole supporting bailouts. It is just plain wrong. Either Stewart's piece was hastily put together because Santelli cancelled on short notice, or it was an infantile move to "get even".

Or perhaps Stewart&Co just don't follow CNBC close enough to know that Santelli is the token libertarian? (I sure as hell didn't) Regardless, it seems to me that Santelli IS an asshole, not because of his position on corporate (or mortgage) bailouts, but because of his attitude. Quite frankly he deserves some flak for the "loser home owners" comment because it smacks of elitism and insensitivity to what "the man on the street" is going through right now.

As far as incestuous relationships with the people they cover. It goes around all media outlets. The MSM treats Obama with kid gloves in order to get access, just as CNBC cozies up to the biggest CEOs.

Umm, I agree, but how do two wrongs make a right?

Human history is replete with examples of unscrupulous leaders manipulating dependent populations. I just view material rights based on a government taking from one person and giving to another as very dangerous.

Sure there are dangers present when it comes to the (uhoh, here comes that unholy phrase...) redistribution of wealth. Yet it's something which already happens (massively) through out the western world. It's not even something that's really on the table. I dunno, I guess the vast majority of individuals, at least on some minimal level, intuitively "get" the principle of equal opportunity. Mind, in another thread you created a whole seperate category for those contemptuous Trust Fund Babies. What you didn't realize is that, to varying degrees, we're all Trust Fund Babies.

[eternaltraveler]

What you didn't realize is that, to varying degrees, we're all Trust Fund Babies.

You mean humans? Yes we have incredible unfair competitive advantage over fish and caribou. I've single handedly wiped out trillions of microorganisms for no other reason than it made it slightly easier to find the 1 or 2 of them that were useful to my purposes.

similarly some humans have a greater competitive advantage over other humans. The ideal of "equal opportunity" is unattainable, and horrible if you follow where it leads.

Of course we don't follow ideals all the way in the direction they point. We set arbitrary limits. Like "equal opportunity" should only apply to those in the genus homo, or they should only apply to those of European descent or similar absurdities.

Perhaps you are speaking of americans in general as trust fund babies because if we are going to tax the top 1% to hell to help pay for everyone else that includes even the very poor in america. Yes that must be it

Perhaps we should reexamine the idea of equal opportunity. Maybe replace it with something more reasonable. Maximum total opportunity perhaps? That would require finding a way to quantify opportunity, and calculate how different allocations of opportunity effect future opportunity.

Edited by eternaltraveler, 14 March 2009 - 01:15 AM.

[Zenob]

I'm sure Mind will be by any second to explain to us how everything Cramer said was taken out of context .

Anybody think Santeli will have the balls to go on The Daily Show now? Let me check, *holds hand to the floor*, nope, doesn't feel like it's frozen over yet.

[eternaltraveler]

That would require finding a way to quantify opportunity, and calculate how different allocations of opportunity effect future opportunity.

hmm, maybe if those that were best at generating past opportunity should be given more units of opportunity through a process directly tied to their opportunity generating process in a voluntary fashion. Of course it wouldn't be perfect. Some people might become good at not generating opportunity but just tricking others into giving up their units of opportunity. Then again parasitic relationships developed in nature, and organisms evolved defenses against them. Perhaps over time generators of opportunity would learn better defenses against parasites of opportunity.

[DJS]

What you didn't realize is that, to varying degrees, we're all Trust Fund Babies.

You mean humans? Yes we have incredible unfair competitive advantage over fish and caribou. I've single handedly wiped out trillions of microorganisms for no other reason than it made it slightly easier to find the 1 or 2 of them that were useful to my purposes.

similarly some humans have a greater competitive advantage over other humans. The ideal of "equal opportunity" is unattainable, and horrible if you follow where it leads.

Of course we don't follow ideals all the way in the direction they point. We set arbitrary limits. Like "equal opportunity" should only apply to those in the genus homo, or they should only apply to those of European descent or similar absurdities.

Heh, we sort of broached this subject the other week, but I think now I see more clearly where you're going with it.

I view the speciesism angle as a bit of a canard. No offense, but it almost seems like a segue to social darwinism.

That being said, it also neglects an obvious fact of modern ethics. Rights are necessarily in accordance with interests. So it follows that only higher order cognitions (those with self awareness, those with moral agency, etc) can have abstract interests such as a right to equal opportunity. This is the corner stone of secular humanism (and also transhumanism for that matter). If you are to deny such a widely accepted ethical premise, then the burden of proof is on you.

[DJS]

What you didn't realize is that, to varying degrees, we're all Trust Fund Babies.

The ideal of "equal opportunity" is unattainable

Almost by definition, most ideals are unattainable. This fact doesn't invalidate them, or make them any less valuable in guiding us ethically/volitionally.

Edited by DJS, 14 March 2009 - 01:47 AM.

[Prometheus]

That being said, it also neglects an obvious fact of modern ethics. Rights are necessarily in accordance with interests. So it follows that only higher order cognitions (those with self awareness, those with moral agency, etc) can have abstract interests such as a right to equal opportunity. This is the corner stone of secular humanism (and also transhumanism for that matter). If you are to deny such a widely accepted ethical premise, then the burden of proof is on you.

Huh..? Can you translate that, please. I've run out of galantamine.

[DJS]

Sure. Here it is plain and simple.

Propositions such as [a gerbil does or does not have a right to vote] are nonsensical.

capacities --> interests --> rights

[valkyrie_ice]

Sure. Here it is plain and simple.

Propositions such as [a gerbil does or does not have a right to vote] are nonsensical.

capacities --> interests --> rights

I would phrase that as sentience --> interests --> rights.

non sentient entities cannot think and thus cannot have an interest in rights. However, they are entitled to mercy from sentient entities. Use for food or experimentation should not be needlessly cruel.

However, if a non-sentient becomes sentient, via experimentation, deliberate action, or design, i.e. if an animal is genetically altered to sentience, or a AI is created with sentience, then it has rights as a sentient entity.

Eventually, maybe Cramer will achieve sentience, and evolve beyond being a mouthpiece for wall street *giggle*

[tunt01]

In Stewarts popular "F*** You CNBC" segment he carefully takes many quotes and clips out of context (except Cramer, who spouts many semi-coherent things every day). He skewers Rick Santelli for opposing the Obama housing bailout (I oppose it too), without letting anyone know that Santelli has opposed nearly every government bailout since the downturn began. Santelli is not some big time trader. He only reports on bonds/commodities from the Chicago Board of Trade. People should know that John Stewart is a very partisan Democrat (a fact he admits). His show is comedy for Democrats with token jokes for everyone else. That's ok, its entertainment, just don't think you are getting anything close to the truth or actual reporting (which unfortunately a whole young generation does).

Nearly every financial reporter and nearly every trader got it wrong in 2008. We wouldn't have had a housing bubble and a recession if everyone saw it coming.

Rubbish.
First, Cramer is a moron. I actually use him as a counter indicator in my trading. Second, if Stewart was taking things out of context, what did he take out of context? Third, Santelli is full of shit. He thinks investment bankers are the "real" americans who are getting hurt and need help but if Obama tries to help out home owners then that's some kind of socialist plot. Fourth, people DID see it coming and they were literally LAUGHED at by morons like Cramer(financials are a STEAL at these prices). Hell, I saw it coming and I'm not exactly a billion dollar hedge fund manager. I still managed to gauge the top and get the hell out of the way before it fell.

Update: Cramer being the less then bright guy that he is decided he would go on the Daily Show and defend his reputation. Stewart got ahold of the video of Cramer talking about all the underhanded shit he used to do as a hedge fund manager. He roasted his ASS.
Daily Show

- i worked in the hedge fund industry for 8 years now.
- i've met cramer a couple times, actually interviewed @ his firm once.

my thoughts:

- Mind's comments are spot on.
- Rick Santelli is against EVERY bailout, he is not some quasi-banker, and just wants those who made bad decisions (whoever took bad loans or gave bad loans) to own up to their poor decisions w/o government aid. He'd rather see AIG fail than bail it out.
- The original JS piece on Santelli really was taken out of context and unfair to the guy.
- Cramer is a bit of a maniac. One time I saw him when he still was running his hedge fund and the guy was covered in sweat like someone had just thrown him into a pool, the guy trades like crazy... literally 100+ a day and he doesn't punch keys into a keyboard like daytraders, he's shouting them to a couple traders who are all sitting around him in a circle. He is like a moment by moment temperature of the emotional side of the market, not a barometer of long-term investing opportunity that the avg. joe needs.


I think the fallacy of JS's argument is that there is only so much an investigative news organization can do to uncover fraud and inappropriate behavior. You can accuse CNBC of not seeing the top of the market and all this mortgage fraud, but why not accuse Fox News of being morons about their coverage over the failures of the Bush presidency/the Iraq war or CNN's inability to acknowledge how successful the Iraq surge was in the early weeks/months and all the serious attempts Bush made to reign in Fannie/Freddie and stop the out of control mortgage market before it blew up?

Why didn't any news organization show that there were no WMDs in Iraq before the US gov't invaded the country and then admitted they weren't there? It would have saved us all a lot of time. If it's CNN's job to cover the war/geopolitical events like no one else, why didn't they have the smoking gun to really show how the gov't was wrong in the early innings of the Iraq situation instead of showing up after the game is basically over and saying, "ah ha! you guys were wrong!"

Whenever CNN and other news organizations can correctly forecast or drive serious investigative journalism to that level, I'm sure CNBC will correctly show all watchers when stock markets are overvalued and mortgage markets are run amok.

Edited by prophets, 14 March 2009 - 11:45 PM.

[DJS]

I would phrase that as sentience --> interests --> rights.

non sentient entities cannot think and thus cannot have an interest in rights. However, they are entitled to mercy from sentient entities. Use for food or experimentation should not be needlessly cruel.

However, if a non-sentient becomes sentient, via experimentation, deliberate action, or design, i.e. if an animal is genetically altered to sentience, or a AI is created with sentience, then it has rights as a sentient entity.

Hey, Val. In general, I define sentience as "having consciousness", but it is a fairly ambiguous term, which is why I tend to avoid it (wiki it and you'll see what I mean).

[niner]

- i worked in the hedge fund industry for 8 years now.
- i've met cramer a couple times, actually interviewed @ his firm once.

my thoughts:

- Mind's comments are spot on.
- Rick Santelli is against EVERY bailout, he is not some quasi-banker, and just wants those who made bad decisions (whoever took bad loans or gave bad loans) to own up to their poor decisions w/o government aid. He'd rather see AIG fail than bail it out.

So Santelli is cool with the US or maybe the world being plunged into a depression? That's the problem with the "too big to fail" institutions, like AIG. The people who took bad loans are in some trouble. Some deserve it, and some don't. Almost NO ONE who made bad loans is in trouble, because they flipped them, probably the same day they made them. The people and institutions that bought them later, in the form of derivative instruments, now they are in trouble. This stuff is a bit more complicated that Santelli lets on.

- Cramer is a bit of a maniac. One time I saw him when he still was running his hedge fund and the guy was covered in sweat like someone had just thrown him into a pool, the guy trades like crazy... literally 100+ a day and he doesn't punch keys into a keyboard like daytraders, he's shouting them to a couple traders who are all sitting around him in a circle. He is like a moment by moment temperature of the emotional side of the market, not a barometer of long-term investing opportunity that the avg. joe needs.

jesus, that is scary.

and all the serious attempts Bush made to reign in Fannie/Freddie and stop the out of control mortgage market before it blew up?

You don't seriously believe that anything Bush might have done at the GSEs would have stopped the blow up, do you? I guess you do.

Why didn't any news organization show that there were no WMDs in Iraq before the US gov't invaded the country and then admitted they weren't there? It would have saved us all a lot of time. If it's CNN's job to cover the war/geopolitical events like no one else, why didn't they have the smoking gun to really show how the gov't was wrong in the early innings of the Iraq situation instead of showing up after the game is basically over and saying, "ah ha! you guys were wrong!"

This is a reasonable question. There were a few news organizations, like Knight Ridder and McClatchy, that did get it right early on, but they didn't get enough attention. Should CNN have NOT pointed out that Bush was wrong, once they came to their senses?

Whenever CNN and other news organizations can correctly forecast or drive serious investigative journalism to that level, I'm sure CNBC will correctly show all watchers when stock markets are overvalued and mortgage markets are run amok.

Is this a joke? Two wrongs make a right? Incompetence at CNN is morally equivalent to fraud at CNBC? Or do you think that everyone at CNBC just "didn't have any idea"?

[tunt01]

k, i guess i will take these one at a time

So Santelli is cool with the US or maybe the world being plunged into a depression? That's the problem with the "too big to fail" institutions, like AIG. The people who took bad loans are in some trouble. Some deserve it, and some don't. Almost NO ONE who made bad loans is in trouble, because they flipped them, probably the same day they made them. The people and institutions that bought them later, in the form of derivative instruments, now they are in trouble. This stuff is a bit more complicated that Santelli lets on.

Yes it is more complicated than that, and I don't endorse Santelli's position. The world would literally collapse into the abyss if we didn't have bailouts of AIG, Citibank, etc. But my point is that he is consistent and the original piece by Steward implied that Santelli/CNBC was in favor of bailing out fat cat banks and letting the little man go bankrupt. He's in favor of EVERYONE going bankrupt if they made bad decisions... it's too draconian for my own personal views, however.

You don't seriously believe that anything Bush might have done at the GSEs would have stopped the blow up, do you? I guess you do.

I absolutely do and if you follow Gregory Mankiw who was the CEA during part of the Bush years, he's blogged about it repeatedly. He/Bush administration tried to reign in freddie and fannie, even former Secretary John Snow has made comments about how they tried but never got anywhere on it. The GSEs were a democratic piggy bank for campaign contributions for years. Chris Dodd, Barney Frank, and Barack Obama are among the largest receivers of campaign contributions from people affiliated with those institutions.

This is a reasonable question. There were a few news organizations, like Knight Ridder and McClatchy, that did get it right early on, but they didn't get enough attention. Should CNN have NOT pointed out that Bush was wrong, once they came to their senses?

As a person who does investment research and gets paid for it, it's not always easy to get it right. I think the job of a news organization is to REPORT news and they have a limited role in MAKING news through investigative means. I would rather see a very dry, colorless reporting of the facts by every news organization but many are biased CNN (liberals) and Fox (conservatives).

In CNBC's case they constantly have had segments of Bull vs. Bear or long vs. short arguments and it's not always rose colored glasses. If you were around during the .com era like I was, you would realize that CNBC has come a long way. It used to be total cheerleading insanity during the go-go internet days. Yes, they try to cater to the average joe and dumb down finance to a level that less than my liking. I don't care to hear about Bernie Madoff as much as they talk about it, but they've done a pretty good job overall, IMO.

Is this a joke? Two wrongs make a right? Incompetence at CNN is morally equivalent to fraud at CNBC? Or do you think that everyone at CNBC just "didn't have any idea"?

I fundamentally disagree that CNBC is morally bankrupt and what they did was tantamount to fraud. If you go back and look over specific segments they had over the last 2 years you would see numerous occasions where individuals like Larry Lindsey (former economic policy guy for Bush) said flat out "I'm short the market, we're going lower," or David Einhorn walking through his 5 minute explanation of why he's short Lehman Brothers and thinks they have no value. Those segments are there, I watched them.

Remember this is TV we are talking about. Sometimes it's harder to pick up on the more critical remarks if you aren't financially savvy. Every CEO who comes on TV is very positive and always selling the good story of their business. That's their job. That's reality and you can only expect so much out of CNBC to hammer through that fascade and get to the dirty details that hang along the edges of a person's statement.

I've been in the room w/ a CEO where he says 1 thing in a very serious and concerning way that would make you think grey clouds are on the horizon, and then gets on TV and says he sees nothing but blue skies and a shining sun. It's the job of people at mutual funds to figure out these things and make good investment decisions, not CNBC's news reporters. CNBC can report the views of people who are positive/negative on a company or stock, but to expect them to do the deep analysis -- analysis that MANY MANY people got wrong about the housing market, is foolish.


IMO tho... post the .com blow, CNBC has done a much better job than when they were pumping every internet CEO on planet earth... they've gotten a lot more critical and thoughtful.

Edited by prophets, 15 March 2009 - 04:59 AM.

[tunt01]

3-4 months before Lehman blew up, they gave this guy plenty of time to walk thru his concerns:

David Einhorn Lays Out his Case Against Lehman
http://www.cnbc.com/...54102779&play=1

David Einhorn - Evaluating Lehman - Further Negative Analysis
http://www.cnbc.com/...62094306&play=1

Other skeptics like James Chanos and David Tice (short sellers) are on regularly too.


And what blew up lehman?? oh yea... the real estate market and real estate investments...

[niner]

You don't seriously believe that anything Bush might have done at the GSEs would have stopped the blow up, do you? I guess you do.

I absolutely do and if you follow Gregory Mankiw who was the CEA during part of the Bush years, he's blogged about it repeatedly. He/Bush administration tried to reign in freddie and fannie, even former Secretary John Snow has made comments about how they tried but never got anywhere on it. The GSEs were a democratic piggy bank for campaign contributions for years. Chris Dodd, Barney Frank, and Barack Obama are among the largest receivers of campaign contributions from people affiliated with those institutions.

Mankiw isn't a reliable source on this; he's a Bush true believer. I know there were problems at the GSEs, but they simply were not causative of our present mess. This has been hashed out on this forum before, and I could dredge up links, but it's late, so I won't. This argument that the GSEs caused the whole problem was cooked up during the election, and has mostly died. If you research it and stick to sources that are not partisan, the truth is out there.

[tunt01]

Mankiw isn't a reliable source on this; he's a Bush true believer. I know there were problems at the GSEs, but they simply were not causative of our present mess. This has been hashed out on this forum before, and I could dredge up links, but it's late, so I won't. This argument that the GSEs caused the whole problem was cooked up during the election, and has mostly died. If you research it and stick to sources that are not partisan, the truth is out there.

1. While it's true that Mankiw is slightly right of center, he is hardly comparable to someone like Robert Barrow who is insanely conservative. I find to Mankiw to be fairly middle of the road and that is typically how most people view him.

2. It's hard to say what would have been accomplished if GSE reform had occurred. In the end, it may have just been a band aid solution for a major condition that needed regulatory oversight by the federal reserve in the form of serious surgery. But my main point is that I do not accept the "8 years of Bush caused this economic crisis," argument. A lot of liberals like to scream and yell that deregulation caused this mess... well Bush tried to increase regulation in this area and all the democrats lined up against him. It's prima facie and cannot be dismissed by any rational person.

3. I also don't think the GSEs are the genesis of every problem in this economic crisis. If you look at the credit default swap problem created at AIG, that has less to do w/ the GSEs and more to do with run away speculation in an unregulated entity.


Keep in mind -- regardless of who is at fault -- Obama's answer to this crisis is basically to trash our country's currency, spend like a madman, and print $$$$ to pay for it. It's a sad state of affairs for the US, regardless of who is the cause (I think Washington, in general). When we allocate $8 B out of a $787 B stimulus package for high speed rail (a good thing in general) but 25% of it is going to Senator Harry Reid's pet project of a magnetic levitating train between Disneyland in Anaheim, CA and Las Vegas, NV, I can only shake my head and wonder if how this country does business will ever change. It's disgraceful what the democrats are doing in Washington today... and I am not a Bush fan by any means. I voted for Obama.

I've actually considered leaving the country because of it. Lower living standards are on the way here and you will see $4-5 gallon gasoline sooner rather than later. It's terribly unfortunate.

Edited by prophets, 15 March 2009 - 02:52 PM.

[valkyrie_ice]

*sigh* I just spent the entire night being forced to watch a video called "The Money Masters" so I could respond to a zealot who once upon a time was my friend, but who now has become a firm believer in the total domination of the world by bankers, and who claims the financial crisis is totally engineered by the Federal Reserve, in order to force a war which will result in a single world government with America as a nation of slaves.

And because I refuse to believe in a 2000 year old society of money lenders who have secretly been behind the fall of the Roman Empire, and every single war since then, solely to take over the world by controlling all money, I'm the Lunatic.

Simple belief in a idea doesn't make it truth. Whether Cramer is a crook or not make little difference, whether Fannie and Freddie could have headed this off is debatable.

What is fact is that the crisis happened because insufficient oversight was made to ensure the con artists and scammers (Like all the Get Rich Quick Buying Real Estate Gurus) and the bankers (who were too eager to lend because they got bonuses for each loan) and the speculators (who were buying off loans in order to leverage them at obscene levels) didn't get a chance to take those steps out on the high wire to nowhere.

A crash like this was inevitable. Companies today are floundering because the way business has always been done is no longer the way business will be done, and no-one knows how to adapt to the new realities. New business models are being tried daily. Sadly, this one (leveraging) was carried out by people too interested in a fast buck to see the edge of the cliff. Better regulations might have been able to prevent it from being so bad. Regardless, now that the crash has occurred, regulation will occur to ensure it will not happen again.

[niner]

2. It's hard to say what would have been accomplished if GSE reform had occurred. In the end, it may have just been a band aid solution for a major condition that needed regulatory oversight by the federal reserve in the form of serious surgery. But my main point is that I do not accept the "8 years of Bush caused this economic crisis," argument. A lot of liberals like to scream and yell that deregulation caused this mess... well Bush tried to increase regulation in this area and all the democrats lined up against him. It's prima facie and cannot be dismissed by any rational person.

While it was wrong for Democrats to oppose steps to make the GSEs more prudent, Bush's attempts to clamp down on them don't excuse his actions in the other direction. When States Attorneys General got together and tried to clamp down on the worst forms of lending, the Bush Administration actively opposed those actions through the Office of the Comptroller of the Currency. It was, after all, bad loans that were at the root of this. The GSEs, on the other hand, don't originate loans.

3. I also don't think the GSEs are the genesis of every problem in this economic crisis. If you look at the credit default swap problem created at AIG, that has less to do w/ the GSEs and more to do with run away speculation in an unregulated entity.

OK, we're on the same page on this.

Keep in mind -- regardless of who is at fault -- Obama's answer to this crisis is basically to trash our country's currency, spend like a madman, and print $$$$ to pay for it. It's a sad state of affairs for the US, regardless of who is the cause (I think Washington, in general). When we allocate $8 B out of a $787 B stimulus package for high speed rail (a good thing in general) but 25% of it is going to Senator Harry Reid's pet project of a magnetic levitating train between Disneyland in Anaheim, CA and Las Vegas, NV, I can only shake my head and wonder if how this country does business will ever change. It's disgraceful what the democrats are doing in Washington today... and I am not a Bush fan by any means. I voted for Obama.

I've actually considered leaving the country because of it. Lower living standards are on the way here and you will see $4-5 gallon gasoline sooner rather than later. It's terribly unfortunate.

Our currency has been getting trashed for a number of years. There was a surplus, once upon a time, but Bush blew it. The options now appear to be deficit-spend like crazy or have a depression. You're right, it IS a sad state of affairs, but I don't think Obama has a lot of options. Is some of that spending going to be wasteful? You bet it is. Is that bad? Sure, but considered in the grand scheme of things, the part of it that is truly wasteful is a pretty small fraction of the total. Not all the pork in Washington is Democrat pork. The Republicans have their share of it as well. Not all earmarks are bad, but some are. As a fraction of the total budget, they are insignificant. We should try to keep our outrage directed at the big things.

[tunt01]

I think there are more problems to be had around the world, particularly in Eastern Europe and in parts of Asia (China, etc.). But I think the light at the end of the tunnel is clearly in sight with the US.

I also think as tough as it may be in the US, everyone should realize that the Chinese and oil states (Saudi Arabia, Venezuela, OPEC states, etc.) are on the verge of losing a colossal fortune.

Part of the genesis of this crisis was foreign nations with healthy economies just dumping their savings into the US Economy because it was perceived to be the safest place to put one's money. But the reality is that the rise of the Indian, Chinese and Brazilian middle class was a far better bet. So you had these saver nations who literally bet the wrong way by the trillions and that is what greatly juiced the American economy over a number of years. They made the wrong decisions even more than Wall St. Banks or the US Gov't.

Now Obama/Summers/Bernanke are going to try to make them eat it by killing the US Dollar and trashing their investment in our paper. It's an unfortunate byproduct of this disaster, but the losses you see with AIG will be nothing compared to what China's central bank is going to have on their own investment in US dollars.

The businesses of the future will be focused on exporting US quality products to these growth nations. Just take a look at our top export businesses and get ready to watch them take off. It will be real industry from American Beef/Poultry to American made semiconductors. No more shitty paper from wall street exported overseas... that part of the game is over.

[Mind]

Mind: Nearly every financial reporter and nearly every trader got it wrong in 2008. We wouldn't have had a housing bubble and a recession if everyone saw it coming.

Val: Umm. Mind...

I think they did.

http://www.salon.com...nomy/index.html

Predicting bad things to happen almost 2 years after the inflation adjusted peak of U.S. home values, is more like reporting after the fact. However, most people yet in early 2008 were unaware of the depth of the problem (as much as Reich).

[Mind]

Or perhaps Stewart&Co just don't follow CNBC close enough to know that Santelli is the token libertarian? (I sure as hell didn't) Regardless, it seems to me that Santelli IS an asshole, not because of his position on corporate (or mortgage) bailouts, but because of his attitude. Quite frankly he deserves some flak for the "loser home owners" comment because it smacks of elitism and insensitivity to what "the man on the street" is going through right now.

The "loser" comment is taken out of context as well. It certainly was not politically correct, I'll give you that, but it was in reference to those who gambled and "lost" in the housing market. In the specific quote used by Stewart, Santelli was asking people on the board of trade if they wanted to bailout people who took out a second mortgage to expand their house (McMansions). He wasn't calling them "losers" as in idiots/morons/waste-of-skin but gamblers who had lost.

[Mind]

Valkyrie Ice,

I am certainly not rich now, and I have been poor for most of my life. I didn't rise above the government's official poverty line until 1997 (age 26), then spent/lost all of what I had owned/saved in 2000-01, before slowly working and saving over the last 7 years.

I grew up on a dairy farm. I put in more hours of hard unpaid labor from age 5 to 18 than most people do in a lifetime. From 18 to 26 I had a car, sometimes. Everything I owned could be packed into the car and I moved several times that way. No TV, no computer, no cell phone. All the time I was "poor" I never once thought about all the rich people around the world and how they "owed" me things. Never once did dwell on the "unfairness" of it all. I just kept plugging away. I was probably lucky that I didn't suffer a major injury or illness, but I did suffer set-backs and I had to ask friends and family for help a couple times - but I never thought about voting for some politician to forcibly coerce other people to give me stuff. It just never occurred to me. It is a foreign thought.

[Mind]

I mentioned this previously, we have greater tools now to freely collaborate and provide for the needs of human society. We see this in online medical/patient collaboration, in food cooperatives, in open source software, collaborative voluntary research (folding@home). We can choose to work together freely, or we can choose to use the force of government to dictate who gets what. I cherish freedom, so the choice is clear to me.

[valkyrie_ice]

Valkyrie Ice,

but I never thought about voting for some politician to forcibly coerce other people to give me stuff. It just never occurred to me. It is a foreign thought.

Nor am I advocating coercing people to give me stuff. I am advocating that the Government supply the basic human rights granted by the constitution, in the form of disaster relief of the sort that has been standard from FEMA for natural disasters. Homelessness is homelessness regardless of cause. Why help out New Orleans because of a storm, but not the millions more who lost homes due to financial ruin? Most of these lost Jobs WILL NOT RETURN, and the sole solution is education in new job skills. Homeless people with no income can't pay for the schools they must attend to gain new skills. Homeless people without shelter are also going to be far more likely to become ill, and thus require medical attention, but again, without money, they will become an even bigger drain on the medical industry.

The only solution to all this is shelter, food, medical care, and primarily EDUCATION, without which the person receiving such aid is trapped and remains a drag on the entire economy. Which is better in the LONG RUN? Creating people who can rebuild an economy, or creating people who will forever be a drain on it?

As an American, I want to see the economy improve, but the only way that will occur is if we can get people back to work as quickly as possible, and that will require not only making jobs, but training in new jobs. And no-one who has to live in a car and pick through dumpsters for food is going to be able to devote the time needed to training without help. The simple scale of the needed assistance is FAR beyond what can be supplied by charities, and the sole system which has any chance of moderate success is the government. I acknowledge that corruption and waste are going to occur, but the quicker the people can be trained and returned to the work force the sooner such cases will come to light, and the more obvious it will be. This is not a permanent solution, simply the one I see as having the quickest results.

Perhaps it is simply I am far more cynical about humanity collectively working for the common good without a restraint on their personal self interest. I've seen too many well meaning collaborations derailed by the few who will always choose their own personal wants and desires over the good of the group. Medicine itself was once filled with doctors who sincerely wanted to heal their patients, where now it is primarily about money. For all the doctors who are devoted to caring, there is the boardroom where the almighty dollar means more than saving lives.

Regardless, you and I both know that ANY solution is merely stop gap. ALL the solutions will be out the window the moment a significant breakthrough in any major field occurs.