Amusing!
House of Cards
August 18, 2006 4:57pm by Barry Ritholtz
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The homely Ponzi scheme.
Everyone knows the saying “if you owe the bank ten thousand dollars, you have a problem; if you owe the bank ten billion dollars, the bank has a problem.”
As long as credit card debt is viewed as individuals who owe tens of thousands of dollars, they have a problem. The moment that debt were to be viewed as one large debt, the credit card companies would have a problem.
The same is true for mortgages worth more than the houses they are written against.
If debt ever comes to be seen as a social problem, not just an individual one, the financial and political landscapes will both change.
If
Everything you post spells the end of the world. But the market keeps going up everyday this week. Somebody is wrong and I think it’s you. My cash position is 100% because I trust your opinion. I’m beginning to think I scewed up.
BR: Sam, that’s hardly the case — funny, back in May, I bought the Qs for a trade, and you said they were going lower (which they eventually did).
Two recent posts — one this week, one last week — discussed a likely Summer Rally: Wednesday’s post explained why the market could go for a few weeks. (Sometimes, they just want to take ’em higher)
And the week before, the Pregnant Pause stated if the markets can develop some momentum off of Cisco’s conf call, a summer rally is possible.
But none of these short term (2-8 weeks) calls have anything to do with the longer term macro environment . . .
Besides, if you want cheerleading, all of the Wall Street, the Federal Gov’t, and most of the MSM delivers that in spades.
This space is dedicated to looking through the usual bullshit.
It all depends on how you see it.
Once upon a time in a little jewish mellah in the north of Africa, Shlomo was having a hard time to sleep.
His wife asked him “what is going on Schlomi, my little baklava?”.
“I have a big debt with the neihgbor and I can’t pay him back” said Schlomo.
His wife gets out of bed, opens the window; knocks on the neighbor’s window and shouts out loud: “Mrs. Bokoubza, open please! – open!”.
It’s two o’clock in the morning.
Mrs. Bokoubza emerging from her first sleep crawls to the window and opens it.
“What is going on Mrs. Cohen?
“My husband ows money to your husband and he can’t pay him back” says Mrs Cohen and she shuts the window and goes back to her bed.
“You can sleep schlomi; he is the one who is not going to sleep now”.
I would not do that Sam.
Hold on a bit more.
Like one smart guy said lateley, if the market is bullish, you won’t miss it. The fundamentals are so bad that it will take a hell of a time to climb to interesting levels.
Barry might be a zany, but I think he is right on that one.
The market is just retracing before the big plunge. As usual! And, as usual it goes steady and steep just before it falls.
Wait!
Kevin, you always make your own decisions by viewing,listening and reading from 312 sources..so you did screw up if you are not wise enough to determine what you want to do. I think barry is right with his views but i may be the second source you listen to so think before you decide and do not put blame on anyone else..you are an adult now.
Sam, let me be the third on this thread to give you some advice. Give your broker call first thing Monday morning and tell him you want to cashout and close your account — forever…and take that money and go buy a house or something.
just curious, are you an evolution nonbeliever by any chance?
Oil’s still $70 + /bbl.
U. Mich # ‘s stunk
Home Sales #’s are collapsing
$ ‘s weakening
recession’s coming
this market will collapse !!!!!!!! …. Barry’s right
and you should follow the evolution thread on this site……. precious
Oh, so now all of us that think Mr. Market has a few surprises in store for us are fuzzy headed liberals?
Hank; Please save the invective. We will all know soon enough who’s “right” or “wrong”
For Sam; One week or even one month doesn’t make a market. There’s a lot of grownups as concerned as Barry. Hell, Schwab sent me a cautionary e-mail this week.
I love this site. Sam whines and he gets hammered. Love it.
Sam, more advice. Go up on your roof and repent. The world is ending tonight at 11:38.
Oh, Pacific Standard Time — adjust accordingly.
Sam: You are making 5% in cash. Sept and Oct are historically the worst time to be in the market. mid August often sees seasonal strength. Additionally, it’s ops exp week after a big downleg, we can’t have prices declining to a point that all those puts the big boys wrote go into the money. Finally, we are nearing a prominent cycle period.
Topping tends to be a process, not a discrete point. After the May swoon, we started seeing rotation into defensive sectors. The latest runup has been driven primarily by the sectors that got beaten down worst in the May-June swoon. Rallies in downtrends tend to be sharp and on deteriorating internals…exactly what we are seeing here IMO.
The “big picture” is of a slowing economy, tapped out consumer, deflating housing bubble, and high energy prices. Patience is the key…wait for the slow pitch down the middle. Being out of the market in cash is a valid position, especially in times of high uncertainy and/or transition such as we are in presently.
If the bearish view is wrong and a real bull market charges onward, you’ll have plenty of time to participate.
“I’m pissing in my pants”
Hank, I believe you.
Now f#&* off like a nice little boy.
From today’s L.A. Times…
Americans who refinance their mortgages this year are expected to draw $257 billion of wealth out of their homes, according to Freddie Mac.
That’s $13 billion more than the refinancing cash-out seen in 2005 — the hottest year of the recent housing boom.
“One of the big changes is that people look at their home as a financial asset,” he said. “In another generation, the notion was ‘Burn the mortgage.’ That phrase is not in fashion anymore.”
That new attitude has some benefits for the economy, he said, and cash-outs “are keeping a floor on consumer spending.”
I believe Hank too.
He obviously doesn’t like the analysis or advice Barry provides. He is free to do that and not follow the advice or agree with Barry’s opinions. He can even disagree with some style and manners.
He is NOT however, allowed to stand in Barry’s living room, paid for by Barry, provided by Barry, and be disrespectful of Barry’s hospitality.
For that he should humbly apologize or leave.
I wouldn’t mind Hank at all if a) there were comments-thread killfiles or b) he answered my questions about his substantive assertions. The last time he broke out the E/P-vs-treasuries hosannah, I asked whether he wasn’t just datamining. He didn’t answer.
Hank, best of luck to you when you’re not on the other side of my trades (heck, I was long expiring OEX 600 calls today, and that worked nicely). The rest of the time, put up in data or analysis or, pardon my french, shut your mouth.
Couldn’t agree more (with the cartoon). The only debt my hubs and I have is our mortgage (5.35%) on our primary residence and the mortgage (5.78%) on our rental property. I do use a Citi Dividend Rewards credit card for groceries and gas that I pay off every month and that I get 5% back on in the form of a check sent to me.
Everyone I know that is in debt (including car payments and home equity) hates it and sees it as an obstacle to goals they have.
Oh, and cash? Hey, I’ll gladly take 5%+ right now. No risk, immediate reward, it has given me the luxury to really think through what my next moves will be.
AP:
Kudlow has been attemptng to discredit the “Cult of the Bear” thesis the past two or three nights. I find Kudlow’s actions disgusting. Inviting Barry on the show to provide “balance” and then use the words “Cult of the Bear” to talk the thesis down behind Barry’s back doesn’t seem kosher. (Barry shoulda trademarked “Cult of the Bear” to at least get some coin from Kudlow).
Barry put his balls on the line with “Cult”. He’s a smart guy, so I’m sure he knew that before publishing it. And he always said the housing meltdown would be a slow drawn out process, so he may ultimately prove to be correct. Time will tell.
Love the blog, but I got long in a major way on Tuesday so I hope the Cult thesis doesn’t work out! No offense.
what’s the deal with Hank? The market has one good week in the last three months and he thinks he’s god!?
Anyways, the fundamental picture is deteriorating daily, and option expiry week theatrics will not save the day. The US is now one big debt machine at the mercy of? Chinese? Arabs? Japs? Europeans?
The market is very myopic at the moment, focusing on the fed too much, while the economy slowly sinks. It’s gonna be a rough awakening. The highest risk for this market to get derailed will be the SEP-OCT period. Fasten your seatbelts, and cash is so far performing on par with many of the major indexes.
The Market has their hands over the ears, saying no!no!no!no! I ain’t gonna hear that bad news.
That is the REAL reason for this bogus rally besides why they are hanging onto the FED who is no longer in the picture. Yet, as the previous poster said, September/October loom large as the bears roar those hands right off their ears and right into reality.
I’m sticking with Barry. He makes me money. Why should I listen to anyone else?
Pete said it all, there’s nothing to see here.
Stochs, and RSI’s show the SPX is near or at overbought levels, while approaching resistance.
QID is looking like a buy right now.
I decided to ban some trolls — and I deleted a few of the ruder comments also.
I encourage a variety of viewpoints, and enjoy a vigorous debate. But I do not tolerate juvenile behavior or name calling. Misquoting me is another surefire way to get yourself banned. Showing up one day and making 10 posts — after a year’s absence — is too troll like for me, and may get you banned. Add multiple posting under different names, and there’s your recipe for buh-bye.
In addition to making a dozen posts in a day, posting under multiple names (same IP address) will also get you banned.
Hank
Oilhappy
Henry Jasen
Any feedback on this is appreciated
Anecdotal economy information…..wife of good friend sells boats for her family’s dealership (one of the largest). Boat sales are slowing down, considerably.
stay short BC , best way to play boats
Barry, I’m grateful that you’ve banned some trolls and/or deleted certain comments.
I felt some comments were astonishingly out-of-place here (a private e-mail to you would have been the appropriate way for one of the commentators to complain). Several have been needlessly rude.
As Craig aptly noted, “standing in your living room”, in a venue paid for and provided by you, and THEN showing you incredible disrespect….honestly, it’s beyond-the-pale behavior.
I appreciate a host who thinks enough of about everyone else “at the party” to ask the rude, juvenile, misbehaving guests to leave and, if necessary, to show them the door. Thank you for your brash willingness to say “ENOUGH!” and “OUT”.
I think all the bitching at Barry may be a good contrary indicator. I come to his blog every day to get his opinions but I get opinions from other sources to then decide what I am going to do and what is best for me. Anyone that blindly wants to follow someone else even Barry is a fool and we all know what happens to a fool and their money.
“Hank
Oilhappy
Henry Jasen
Any feedback on this is appreciated….”
Wow! You top ticked the trolls too! (instead of being early, a bit late on that call;)
Hank got yanked? Too good! Property values just went up ’round here!
per jab:
“I think all the bitching at Barry may be a good contrary indicator.”
Funny, I was thinking the same thing yesterday. But I find it remarkable that anyone would complain who was 100% cash in any case. That sounds like inexperience talking.
As a reminder that nothing has changed over the past week, have a look at the July letter from MICA to the various regulatory gnomes regarding “nontraditional mortgage guidance” that is reproduced at Calculated Risk and read thru the comments that go with it. Soft landing? Erm, kind of doubt that.
Barry;
Good for you. Let then lurk somewhere else.
If you had time to prune threads, then rather than banning, delete abusive comments when they occur in early comments. A good conversation tends to be self-policing after. Also, closing comments after a couple days is a good idea, and stops spambots, too.
Since I doubt you have time to prune, unless you have an intern who does. I might lean towards timeouts instead. Delete abusive comments, ban the offenders, but mechanically lift the ban after a week or four. Anyone who offends after that, I would ban. They would seem unlikely to change.
Some things, of course, should be an automatic ban: use of multiple aliases, spam posts, racebaiting, and such.
Barry, kudos on the banning. I enjoy your blog, and I enjoy the (usually) thoughtful commentors. But lately I have noticed comments getting a little more riled, (A clue is when there are a lot of comments.)
If people don’t agree with what you are saying, let them be respectful and logical about it, or tell them to go somewhere else!
The “rally” this week was a pathetic display of insider manipulation to cover option expiration. Rarely do I see 100 share lots pushing the SPY around. Lots of it yesterday.
They should be required to post publicly the day and time when they decide to crash it so all the nice little people can get out of the way.
Hopefully, those people who are not traders will read your advice and take it. I believe that a 30 pct decline is not far fetched. The bald-faced manipulation by insiders apparent in this weeks rally reinforces my sense that a big one is coming.
It is much more safe to sit it out in cash. If I’m wrong, oh, well.
It never ceases to amaze me that people respond to daily gyrations as they do. The market can tend to be countertrend OE week as Pete noted. The late stage stocks are pausing, topping, whatever. But most are losing steam. Without an assault to higher highs of late stage stocks, this is just gyrating until people get more clarity into the future of the economy.
If you don’t get the final 5%, which btw you’d only get in an index because internals typically are deteriorating as the indices top, but in the end you save yourself 10-20-30-40% or more on the downside, are you going to be bitching at Barry? And more importantly, you are able to sleep at night regardless of how far it goes down because you aren’t riding the wild yo-yo but are getting 5% in cash.
I don’t know how many ways to say it but investing is a game of odds. That translates into risk management. ie, Knowing when to take more risk and knowing when to be cautious or worse. Is anyone really convinced the potential dislocations aren’t real?
“I decided to ban some trolls — and I deleted a few of the ruder comments also.”
Now, can you please go here: http://forums.prospero.com/n/pfx/forum.aspx?webtag=bc-redsox and finish the job by banning Yankee fans?
Thanks in advance!
Debt will kill you financially