I’m not sure this really explains what happened.
Any night I’ve been out in the city — last night was Porter House, and Monday was Kellari Taverna — Wall Street appeared to be enjoying a hearty supper and a glass of wine, but I didn’t see any evidence of drunken behavior.
Of course, if your entire world view is predicated on the belief that tax cuts cure all ills, and that any sort of regulatory supervision — even of FDIC insured banks by the Federal Reserve — is an evil to be avoided, well, then, it might look like drunkenness to you.
To everyone else, it merely looks like an incompetent administration executing an ill thought out philosophy, and poorly at that.
That’s probably the most accurate comment that W has made during the past 7 years.
I suspect lobbyists doling out cash had a BIG influence on government behavior. Or were the lobbyists wheeling around the keg?
In vino, veritas.
I guess whoever took the video is through being a political reporter in the US….
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.
Wall street got drunk and has a hangover… So I guess policy makers now want to introduce it to coke and meth to cure the hangover?
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.
CalculatedRisk has a post up this AM about soaring mortgage rates and declining mortgage apps. I hadn’t been paying attention to rates, but when I saw that jumbos are averaging 7.85% it was like a bucket of ice water thrown on me.
The housing market decline looks to be accelerating.
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.
For what it’s worth, even though I have switched political parties and try to bash John McCain every time I can on my blog ( http://cnbcsucks.wordpress.com ), I have never said or written anything bad about the President, as unpopular as he is in certain circles. It is refreshing to see him speak candidly. I personally am with Toro on Wall Street’s habit being not alcohol but crack cocaine. And judging by how Wachovia’s market cap went up yesterday by $8B on the same day it announced a $9B 2Q loss, there is an appetite out there by some people to swallow anything they can get their hands on.
I guess instead of sleeping and drinking water, we are just going to use the tail of the dog to cure the hung over
President Bush said the other day in Houston that Wallstreet got drunk
read it here:
Bush would know.
Dow hit brick wall at 11635, right about where I called it. Major problem for bulls just arose…put/call is printing .62!!! That is unsustainable…that is multi-year low levels…dangerous reckless bullishness in such a crisis environment. Few are protecting themselves.
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..
Is it Wall Street, or Main Street, that has to deal with the hangover? I would think both, unfortunately.
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.
WB still going up and up . I guess some have an all nighter .
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…
Yeah, and the regulators didn’t take their keys. You know what happened next.
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?”
There have been quite a few books written, can’t name a title sorry, whose thesis is that the increasing complexity of financial engineering and globalisation have together essentially put corporations beyond the reach of the nation state. I’m not sure I buy this theory entirely as the EU, Russia and China show signs of still being able to take a bite out of the odd hide but it seems fairly clear the regulation of financial institutions in the US has proved completely beyond the capacity of the govt. It’s hard to tell to what extent this was politics, quite a lot I suspect, or the simple fact the banks etc employ smarter people and make it worth their while to skirt the law. For example the investment banking arms of big banks, hedge funds, private equity are structuring enormouly complex deals every day and employ armies of lawyers to ensure they legal…just. In some cases of over enthusiasm they even drift over the line. Quite honestly I’m not sure the lumbering elephant of govt is ever going to be able to keep up with these guys and this is doubly so when the political will does not exist.
Wall Street is really drunk right now and about to stagger into oncoming traffic.
Margaret Brennan at 11 AM EST says market is just nearing new highs…I see it down about 60 from new highs and plummeting…have I lost my marbles? maybe I’m drunk.
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.
Is the marketing (particularly the financials) getting ahead of itself here thinking that the worst has finally hit and will turn around quickly? I could be wrong, but I’m betting that’s the case………
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!!!
You guys don’t really believe that ANY administration makes economic policy outside of what the “invisible hand” behind the banking system desires do you?
We’re in a “quiet before the storm”….take advantage of it.
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.
What was evident from the Bush tape is his being unable to accept any responsibility. It’s all Wall Street and they will have to solve it. Meanwhile the Feds are trying to bail out everyone that had their hand in the till. Can you imagine trying to explain what policy moves need to be implemented to this goofus.
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.
“… if your entire world view is predicated on the belief that tax cuts cure all ills, and that any sort of regulatory supervision — even of FDIC insured banks by the Federal Reserve — is an evil to be avoided, well, then, it might look like drunkenness to you”.
First, I disagree with those who say that tax INCREASES cure all ills.
As for the matter of regulation of all those who participated in the creation, purchase and sale of mortgage backed securities, I would disagree with those who want to pin this solely on the current administration. 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…? Did we hear from ANY member of Congress during this period on the subject of regulating banks and brokers? Of course not. The leading Democrats in Congress (and the Republicans as well) are just as guilty as members of the Bush administration.
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)
If Moonshine was the worst of our problems..
I must admit, although very conservative in my fiscal and political views, I have been very disappointed in this president. I think he is a more crass and common man than most presidents have been, and I think he is out of his element.
I don’t think this is Wall Street’s fault at all..I think the policies of this administration led to this, with special emphasis on the Greenspan rate cut to 1%, which basically made money cost nothing…at least as long as you were making more than 1%…I believe this policy, more than anything else, got us where we are today…
I looked at the Money Magazine web site this morning as I was drinking coffee..there are a series of short articles by individuals and families on how they are coping with this economy…I know everyone here has at least glanced at it…I was stuck by two common threads..one was a lack of education in those folks who were really suffering, and second was an inability to accept “delayed gratification” for those who bought NOW and were in big trouble when the economic climate changed…my profession required many years of post-graduate study, and those of us who do what I do understood delayed gratification and the need for a long term plan…so many with credit card debt, harsh ARM’s, dried up jobs, poor family plans for harsh economic reality seemed to have been living their lives just one day at a time, with no real thought for the future…
Anyway, not a fan of W….but certainly not a liberal and concerned about where the good old USA might be headed…
Bruce in Tennessee
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?
Can you imagine trying to explain what policy moves need to be implemented to this goofus.
But he said he has a “strong dollar” policy:
“Oh, what’s that again? I can’t hear you – ol’ Benji fired up that damn printing press again makin’ more of those stong dollars. Jesus that thing makes a racket.”
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.
Thank god Obama will solve all our problems. He’s for change, so that has to be good..right?
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.
Jay, thanks for the endorsement. Yes, Barack Obama will solve all our problems.
@Pete: WB now up 0.83 to 17.63. Steel could sell oil to the Arabs if we actually had any off our shores.
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.
Only disagreement I have (other than I never voted for W) is that many of those in trouble that you describe grew up in a time of plenty and have been “educated” by the MSM, banks, and credit card companies to not delay gratification. Just think of how many educated people actually believe what CNBC dishes out. Then think about the uneducated.
Credit card companies visit campuses to sign up students who have no income. I know well one young person who signed up with Sprint, made a couple of payments and then stopped. His account was cancelled and he was unsuccessfully dunned. But a few months later, here come the offers for a new phone. I know others with terrible credit who still get offers for credit. I could go on and on with examples, but you get the idea.
It was all about generating accounts that could be packaged and sold and result in bonuses for the financial companies, no matter how poor the quality was. Now the borrowers and those who bought the accounts are stuck with them. As are we.
“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.
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? I have a lot of disagreements with him, but get serious. On one hand we have those saying he is an evil genius fooling everyone and carrying out his diabolical plans. On the other hand hes a bumbling fool that knows nothing. And I agree with Barry. We need tax rate increases on the bottom 50 percent of wage earners. Either that, or quit spending money like drunken wall streeters.
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.
Thanks. I agree with your commments, too. My second son, who is very smart, grew up in circumstances much different than my childhood. When he finished college, he had no debt, at least college debt…His mother and I funded his college, as we did for our other two kids…
He’s been out of school now for several years and he and his wife now have 43k in credit card and other debt…and this is almost inexplicable to me…he and I have talked about it, but he too, fell for the easy money…so I am not preaching to everyone else when I mentioned Money Magazine…my own bright Nimrod has done the same thing…
Bruce in Tennessee
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.
When you give a free hand to crooks, corruption continues until there is no more money, infrastructure or decent society.
There are people posting here that wouldn’t steal even if assured of impunity. However, there are others here that are not criminals only because they think they can’t get away with it. On the surface both look the same. One is the bee nd the other the termite. The termite thinks the bee is a chump. The bee knows the termite is eroding the structure of society. We have way to many termites. I wish I knew how to winnow out the termites but it seems they are everywhere these days.
“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.
Sadly the lack of oversight, which is a big part of government that BushCo has been derelict at, is a theme with this administration whether one talks about economy matters, disaster response, our food supply or environmental concerns.
“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.
You are completely wrong. But, it sounds good to you. Post 2000, employment weakened drastically, capital expenditures went into a depression (where they will are), wages grew at the slowest rate on record (starting in 1930), and only borrowing kept the recession from showing its ugly head. But, you keep believing whatever you want.
Hey bdg123, are you the same “bdg” who posted the first negative comment (“lowlife”) on my blog ( http://cnbcsucks.wordpress.com )?
Of course, if your entire world view is predicated on the belief that tax cuts cure all ills, and that any sort of regulatory supervision — even of FDIC insured banks by the Federal Reserve — is an evil to be avoided, well, then, it might look like drunkenness to you.
Of course, if your entire life experience is getting drunk and wrecking everything you touch, then ‘getting drunk’ becomes your default analogy for any screwup.
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.
Greenspan lowered rates too far and for too long…the economy was not on life support…however, the Fed can explain what they do in any form they wish, so if that is what you believe, ok….if rates weren’t that low and money wasn’t that easy, I still believe we wouldn’t be where we are today…
Clueless in Tennessee
“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.
I am certainly no fan of Clinton…and I voted for Bush…Clinton was, I think, a sociopath, who needed adulation just to get through the day. He must be smarter, much smarter, than W.
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.
“You are completely wrong. But, it sounds good to you. Post 2000, employment weakened drastically, capital expenditures went into a depression (where they will are), wages grew at the slowest rate on record (starting in 1930), and only borrowing kept the recession from showing its ugly head.
But, you keep believing whatever you want.”
I will if you don’t mind. I don’t have the time now to go and dig out all the numbers for 1979-1984 and 1990-1992 but both those recessions particularly the one at the start of the 80’s when something like 8 million jobs were lost on a smaller workforce and there were maybe 9 negative quarters for GDP were much deeper than the brief slowdown after the dotcom bust where if I remember correctly GDP was only actually negative for two quarters. I was there for all three of them. And 2001-2002 was a mere blip.
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.
yep – ditto your thoughts
John | Jul 23, 2008 10:36:15 AM
AGG | Jul 23, 2008 2:23:08 PM
and it’s our fault for being asleep at the wheel? please how many jack of all trades master of none do you want? money is making a mess of the world
“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.
he stole my line posted here a year ago!
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.