Late Night Reading

A few tidbits for your evening amusement:

Confessions of a risk manager (The Economist)
An insider explains why it is so hard to stop traders behaving recklessly

Financial Cowboys Need to Be Lassoed, Corralled (Bloomberg)

Repel the calls to contain competitive markets by Alan Greenspan (FT)

Uncle Sam’s Wonderful Fantasy (Barron’s)

Discounters Make July Gains (WSJ)

Economists: Most Stimulus Went Into Savings (Real Time Economics)

How to build a US recovery by Lawrence Summers (FT)

The Difference between a bull market and a rally in a bear market (Barron’s)

8 who saw the crisis coming……and 8 who didn’t (Fortune)
year after the credit crunch began, Fortune looks back at who saw
trouble ahead, and who just ended up in trouble. (Warning — click
whoring at its finest)

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What's been said:

Discussions found on the web:
  1. Steve Barry commented on Aug 7

    Most of you are aware that the weaker dollar helps the earnings of multinational corporations based in the US in two ways…it makes our exports price competitive and when foreign earnings are converted back into dollars, more dollars come back. The dollar is now baouncing. In fact, from my dollar chart we see first that the dollar has broken above its 200 day MA. Second, by looking at the 65 day (1 quarter) moving avg of the dollar index, we can get a rough idea of how foreign revenue was boosted by the weaker dollar. For example at qtr end on June 30 the dollar was at 73 vs 82 a year ago…so y/y, foreign revenue got an 11% boost. this is quite a boost to earnings. Looking forward though, I believe that if the dollar continues this bounce, by 12/31/08, the boost will be practically zero. Next year it could start hurting foreign revenue.

  2. AGG commented on Aug 7

    Those who “saw” it coming? I hate rain on Fortune’s parade, but it ain’t here yet. We are just getting started with “IT”. Look in your rear view mirror in 2010 and then you can talk about who saw it coming.

  3. Steve Barry commented on Aug 7

    The boys at Comstock Fund have been calling this for years. It’s tricky to give credit for accurately calling this, because anyone who called it for the right reasons had to be early. Who could have foreseen such a collapse in lending standards that allowed the debt bubble to continue as far as it did? As for what is still to come, I have to think that due to the size of the debt bubble in all phases of lending, a depression is called for. The junkie has to hit rock bottom before he can truly recover.

  4. Jcoup commented on Aug 7

    One of the prescient eight Fortune omitted was Michael Metz of Oppenheimer, who sadly just passed away yesterday. Look back at some of his comments over the past two years and keep in mind that this was someone at the end of his life who has less self-interest in promoting a particular agenda than the average strategist.

    At a time like this, Wall St. could have used some of his wisdom and experience. He was a real gentleman too.

  5. roger commented on Aug 7

    I don’t know. If you advocated getting out of financials in 1999, as one of the 8 who saw it coming did, I don’t see that as prescient, but losing your clients an amazing moneymaking opportunity. Doomsaying that is prescient isn’t the general the sky is falling stuff, for someday the sky will fall. It is more targeted than that. Someday the financial sector will rise again. Then it will fall again. Predictions like that are not exactly great forecasts. I can forecast that a hurricane will hit Florida in the next ten years, and I bet I’d be right, but it wouldn’t make me a prophet.

  6. Anonymouse commented on Aug 7

    I just spent (wasted) tne minutes reading Greeny’s piece in FT. Talk about self-serving. His thesis is that the invisible hand will solve all. Except for covering the losses, that was the government’s job.

    I especially like his point that everyone thought hedge funds were risky, but that the real problem turned out to “have been predominately in the most heavily regulated institutions – banks.”

    No mention whatsoever, of the role repealing Glass-Steagle while maintaining (an undercapitalized) FDIC played. No mention of the role his unending flood of excess liquidity played in inflating these serial asset bubbles. No mention of moral hazard. Of the wastefulness inherent in our ‘investment’ in a non-productive asset like housing, much less how nonsensical it is in a high cost energy environment.

    I wish there were a blog attached so his adoring public could deliver the fragging he deserves.

  7. tradeking13 commented on Aug 10

    In “Uncle Sam’s Wonderful Fantasy”, I don’t understand how higher import prices reduce the GDP deflator. Barry, maybe you could expound on this in an upcoming post? Thanks.

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