Wall Street Got Drunk!

That’s probably the most accurate comment that W has made during the past 7 years.

In vino, veritas.

I think he’s projecting his own old behavior onto Wall Street. Although. in that case, he should also have said that Wall Street went on a coke binge.

Frankly, I think the President was being generous. “Strung out on crack cocaine” may have been a more accurate statement.

And Barry, though I agree with your assessment that this administration is incompetent, I am highly skeptical that the Federal government would have been able to legislate or regulate away this debacle. Almost certainly, a better regulatory architecture would have mitigated the effects on the margin, but I have yet to see a government able to successfully regulate excessive greed and fear. Well, at least in the non-Communist world where they don’t shoot speculators. Plus, the genesis of this debacle began well before anyone had heard of Bush, and its biggest enabler was busy signing multi-million dollar book advances and basking in the radiant glow of a pandering press and Wall Street.

T.

The instant Paulson proposed backing FRE/FNM, 10-yr bond and mortgage rates shot up, and have not stopped climbing. This is not a coincidence.

The drunkenness is the “ivory tower” belief of Paulson and Bernanke that this (rate increase due to their stupidity) would never happen.

These two need to be replaced yesterday. Of course they won’t, because they personify the ultimate Republican agenda — give American taxpayer money to the wealthy.

I guess instead of sleeping and drinking water, we are just going to use the tail of the dog to cure the hung over

Drunk?

Bush would know.

has anyone tried shorting the stocks on the “restricted list” and been denied?

Just curious because I am able to place orders to short all fo them..

Toro:
Has the answer. It was all Clinton’s fault.

“Plus, the genesis of this debacle began well before anyone had heard of Bush etc etc.”

We sit in the ruins of seven years of totally incompetent fiscal, regulatory and monetary management and we get a bit of excuse making saying no one could have dealt with this problem but apparently it was all the fault of the president who left office eight years ago, presided over one of the greatest economic expansions in history(he had some luck but created some too), created about 22 million jobs, and left with a budget surplus.

Get real buddy, you’re letting your Clinton hate show.

Like the drunk (or cokehead), it’s a case of the drunks (emerging from a very big bar located at the corner of Wall and Broad) wrecking their sports/luxury car, and miraculously walking away.

While the family of four (Main Street) in the minivan gets helicoptered to the nearest trauma center for emergency surgery to save them, followed by months, if not years of reconstructive surgery.

Granted, some of the people in the minivan weren’t so good at keeping their seatbelts on, but still…

The line Bush missed saying was:

“And they got drunk on the low rates my administration kept serving ’em. Heh, those fellas just can’t handle the good stuff, yah know?”

Wall Street is really drunk right now and about to stagger into oncoming traffic.

Steve, i agree.

We are at a very interesting junction here.

All the crap rallied last week while the companies that are still OK on fundamentals have been taken to the woodshed behind the scenes.

The economy is getting WORSE.

In my opinion the pundits should be watching the action in the energy and tech sectors not focusing on the financials short squeeze.

Steve Barry<---, your narcissistic rants and numerous market calls are more suited for the Las Vegas crowd---you impress me as someone who is one bad trade away from living in a cardboard box. I have been at this business long enough to know that making market calls is a fools errand, and my friend you are a fool!!!

Regarding the seemingly bizarre mismatch between the markets currently and the underlying economic fundamentals, some of the biggest runups in the Dow in history were during the Depression. This should give those confidently stating “we’re not in a recession and besides it’s over anyhow” a bit of a pause, but that’s expecting entirely too much of the cheerleaders.

Gunthestops,

You impress me as a blowhard who knows nothing…at least I post opinions and back my market outlook with hard data. This is the best post from you I could find:

Bush the idiot is on TV right now–explaining oil supply and demand—Lord save us!!!!!!!

Posted by: gunthestops | Jul 11, 2008 12:08:39 PM

Making market calls is a fools’ errand? Than WTF are we all doing here? You want a board that makes no market calls and just insults politicians? I don’t trade at all quite frankly. I took my position in QID last summer and have consistently added to it. I have not sold one share, despite many sharp rallies. That’s called conviction. You and your Wall Street cronies are the ones who will soon be in cardboard boxes.

from the Political Scientist of our current schema:

“There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
John Maynard Keynes – The Economic Consequences of the Peace (1919)

http://www.the-privateer.com/gold1.html

If Moonshine was the worst of our problems..

W. has been over his head since day 1. However, what he says here is basically true. That’s why we have laws governing regulation and oversight. (Basically, the laws W spent the last 8 years either ignoring or trying to get overturned). Anyways, he was never much for rithmatic or readin’, so how would he know?

I don’t see anything wrong with a metaphor. To me that’s hardly news. Our economy is so unimaginably strong, that once it started to teeter – it affected the rest of the world, right after they started pointing fingers and laughing. Its a tricky time for everyone, but everyone needs to be responsible and realize that this happens every so often, and that we always get out of it. Not because it just happens, but because man is exceptional at surviving anything. We are still far from a recession, though many would tell you otherwise, because bad news sells. Just my thoughts.

Tennyson – Pollyanna much?

Although the point is true, that man survives anything. The point is also true that whatever the economic ill, government is to blame. People in the comments blame, alternately, drunken wall streeters and government regulators, but the truth is that none of any of the current leveraged mess would have been possible without exclusive government control over (1) money and (2) laws.

This wasn’t a cocktail party that got out of hand. The artificially low Fed Funds rate was part of a sober and concerted strategy to republicanize the country. Who needs services from the government when your house goes up in value a hundred grand a year? Just keep my takes low, damnit! And who cares if we’re illegally occupying Iraq and torturing people in Cuba? Woo-hoo, I’m rich, Zillow told me so!

“Wall Street got drunk?” Shut your trap, you pathetic, sickening criminal. Crawl back in your cage and wait for January.

DL:
“Did we hear even one small peep from Chris Dodd, Barney Frank or Chuck Schumer (on the issue of financial regulation) during the period from 2002-2005…?”

Perhaps it escaped your notice that the Republicans were in control of both houses for this entire period.

“First, I disagree with those who say that tax INCREASES cure all ills.”

I don’t think BR said that and speaking as a fiscal conservative but social liberal I certainly don’t. The problem with the Bush admin is that tax CUTS along with hands off regulation and a huge increase in public spending (we’re about to have the sixth I think increase in the public debt limit on Bush’s watch in which time it’s almost doubled!) were the central planks of their economic policy. If you know any others state them. Combine these with the lax monetary policies of the Fed which allowed consumers and Wall St to run wild and you have brought about the current situation.

The problem with doctrinaire Republicans like yourself is that your policies have basically brought about this situation and now it Chuck Schumer’s fault. I’m also a monetarist and on Bush’s watch there has been a phenomenal increase in M3 which they oh so conveniently stopped counting back in 02. None of this is fiscal conservatism, Clinton was much more fiscally conservative.

Basically what the last eight years proves is that the Republicans don’t know how to manage the economy. Be a man, face it. I have.

It was blunt, to the point, like Bush. It did confirm most of our suspicions however. I don’t think he’s capable of defining cause and effect.

I’ve concluded if you want a lot of comments, put up anything political. You don’t even need to take a side. Grease the skids of debate and step back. The venom on here is really quite reflective of the anger in society today. Grant’s remarks in the WSJ as to no outrage are almost silly. People are pissy on both sides of the political isle. That’s necessary and very healthy. Debate and open criticism are very constructive components to solving problems.

I’m not stupid enough to take sides as I know that both parties are the mirror image of each other but Bush got the shaft in having to deal with a difficult economy, Wall Street’s scam and the first terrorist attack on our soil but then his management of very difficult problems isn’t exactly endearing either.

Let me throw a little gasoline on the fire and say that anyone who believes interest rates at 1% are the problem are clueless. One might wonder why the Fed had to take rates from 6%+ to 1%. The economy was on life support and they were simply doing what they always do in trying to re-ignite it. It’s more telling that it took so much stimulus to restart it. The Fed does the same thing at the signs of weakness and has for eighty years. That this time took so much should tell you more than the view that rates at 1% had anything to do with anything.

Greenspan didn’t tell banks to throw risk management out the window and start pissing down their legs. WTF does Alan Greenspan have to do with a banker that doesn’t have the foresight to understand the risks of throwing money from the back of the truck like bubble gum at a parade?

Regulators could have mitigated much of this risk. And, there are many of them who were telling us of the risks before or as they unfolded in almost every market.

If Greenspan is guilty of anything, it’s being the lacky Wall Street used to get what they want. Then they threw him under the bus in a bout of blaming someone else.

Robert:
“What the hell does the President have to do with people flipping houses in California? And running up credit card debt? And Greenspan slashing rates?”

Rather a lot actually but it would take too long to explain and judging by the percipience of your comment I’m not sure it’s worth the effort.

bdg123:

“Let me throw a little gasoline on the fire and say that anyone who believes interest rates at 1% are the problem are clueless. One might wonder why the Fed had to take rates from 6%+ to 1%. The economy was on life support and they were simply doing what they always do in trying to re-ignite it. It’s more telling that it took so much stimulus to restart it. The Fed does the same thing at the signs of weakness and has for eighty years. That this time took so much should tell you more than the view that rates at 1% had anything to do with anything.”

Actually by comparison with the recessions at the start of the 80’s and 90’s the one after the dotcom meltdown was exceptionally mild both in terms of job losses and contraction of GDP. The economy was certainly NOT on life support although the markets had taken a pounding. The problem with the 1% part of the economic clock which is made up of many moving parts of course is a) did he need to go that low and b) did he need to stay at 1% for two years! The charge against Greenspan as you are apparently unaware is that he kept interests rates artificially low long after the economy had reignited from it’s relatively brief and shallow, in historic terms, slowdown.

Hey bdg123, are you the same “bdg” who posted the first negative comment (“lowlife”) on my blog ( http://cnbcsucks.wordpress.com )?

Come on, lay off Bush. This is the government our apathetic, civically stupid electorate got. Let’s take some responsibility instead of projecting it all onto one man.

“Crass and common”? One supposes Clinton and his antics eludes some members of the audience. Clinton hate, indeed.

Anyone who thinks that the current malaise is a product of the Bush White House should be aware that the origin was an 11th-hour bill inserted into a government appropriations bill Friday, December 15, 2000, the so-called Commodity Futures Modernization Act. This amendment created sweeping deregulation in the markets that encouraged banks to push the risk-envelope, creating what Warren Buffett termed “financial weapons of mass destruction”. The legislation enabled credit default swaps to serve as a backstop to increasingly irresponsible lending practices, with banks seeking to offload risk for bad loans to insurance companies and investors.

For this, you can thank people such as Phil Gramm and Robert Rubin.

John @ 2:10:12 PM

I am not arguing that it’s all Schumer’s fault.
And while it is true that the Republicans were in the majority, the Democrats were hardly defenseless. Any one (or all) of the Schumer/Frank/Dodd triumvirate could have called a press conference any time during the period 2002-2005 and argued for more regulation. Had they done this, and nothing more, that would have gone a long way towards “immunizing” themselves from later criticism. To their credit, none of these three politicians is now accusing Bush of lax regulation (at least not that I’m aware of). But many others (outside of government) seem to hold the view that it’s all Bush’s fault, and the Democrats had no say. This is untrue. The Democrats had (during the period 2002-2005) a great deal of power to influence public opinion on the issue of regulation (concerning mortgage-backed securities), and they chose to remain silent.

For members of Congress and the Administration, the old adage is true: if you’re not part of the solution, you’re part of the problem.

DL:
Actually Dodd, Frank and Schumer have been vocal on the lax regulatory climate for years. And guess what, they were powerless, particulary Frank in the house who is one of the smartest guys in congress.

Your theory seems to be the audience is to blame for a lousy performance by the singers because they didn’t boo loud enough.

John

“Get real buddy, you’re letting your Clinton hate show.”

I supported Gore and Kerry and the Democrats in the 2002 and 2006 Congressional election, even though I believe the populist policies of the 2006 incoming freshman class will ultimately be bad for this country. I am a member of neither political party and as a professional investor, I analyze the macro political economy to the best of my abilities through the lens of money management, not political affiliation.

T.

There you go showing your lack of understanding. Let’s let the market decide…. Uh, banks have fallen to ten and twenty year lows. They have already told us all of the growth in the last decade and longer was a debt binge so your supposition that 2000 was a mild recession has been completely invalidated by the markets now discounting reality. Markets are always wrong in the short term as Ben Graham told us. Not the markets are weighing in with reality.

After 2000, the economy saw a tremendous amount of jobs shift from production to consumption. That shift was propped up by a consumption binge so it masked over any employment issues that would have arisen without banks going on a drunken stupor. But then I wrote about this ages ago. You cite statistics that are completely irrelevant. And, if you really understood what you were talking about, you would know all the Fed does is follow short term treasures – whose rates are set by the market. The market was vomiting and the reason why FF stayed so low for so long was because short term market rates collapsed.

Also, isn’t it ironic you blame the Fed yet short term rates are right back where they were post 2000 and guess what? Banks are lending anything. The Fed did the same thing as it always does……just as I wrote above…….and because banks are finally employing risk in their strategies, we aren’t seeing any of the same outcomes. This is a Wall Street mess and you have fallen for their happy horse shit of blaming Greenspan. But then that is the most popular view right now – and as popular views are often wrong…….

You must be an economist because you have no idea what is going on.