jpiretti

Why Government Is to Blame for Market Bubbles

Clive, I think you sum it up perfectly. Short term spectacular compensation does not exist if resources are allocated efficiently and resources can't be allocated efficiently if managers are forced to show spectacular results from quarter to quarter, which is how they justify their compensation. I would add shareholders and their short term sensibilities on my short list of culprits.


On Jun 08 06:16 AM Clive Corcoran wrote:

> "The market in a bubble deviates from equilibrium"
>
> This sentence appears to echo the neo-classical notion from economic
> theory that under "normal" circumstances markets seek out equilibrium
> which I believe is fundamentally flawed.
>
> The EMH is the icing on the cake of an even more profoundly erroneous
> view that contemporary markets exist to allocate resources efficiently
> etc.
>
> I would suggest that, now more than ever since the events of late
> 2008, they exist to transfer value from the witless public sector
> (i.e. managed by bureaucrats) to the oligarchical private sector.
> This is achieved via, in Hyman Minsky's terms, Ponzi finance.

The Leading Cause of Personal Bankruptcy

I have never understood the argument that a for-profit health insurance network would be considered the most efficient. Let's use Apple Computer as an example. They make wonderful profits the old fashion way...they produce products that people want and are willing to pay a premium for. What is the most effective way an insurance company maximizes profits?....deny services!...how can we have a world class health care system under this business model?

A Rally of Historic Proportions

So who are these individuals who have the required capital to determine index swing prices while completely staying out of the light of transparentcy? Is it Bill Gross, who runs more money than anybody else...who 5 years ago said the Dow 30 should be at 5k while it was on it's way to 13k?...or is it the PPT which can't seem to plug a plunge to save their lives. Is it the brain trust at Goldman? While being slightly less stupid than most, I don't see any co-ordinated brilliance on their part....can someone give me a name?


On Jun 03 01:44 PM Davewmart wrote:

> The aim was not to regulate or run the derivatives market reasonably.
>
> It was to game the system, to extract insiders profits throughout,
> not for the company but into individuals pockets. In this they have
> been brilliantly competent throughout.
>
> Jpiretti wrote:
> So now the "hell of a job Brownie" powers that be, who couldn't self
> regulate the 60-70 trillion dollar CDS market which created the huge
> dislocations in this economy, destroying massive swaths of their
> own wealth are now the shrewd,competent organized entity you describe....tough
> argument to make...maybe I am just a little naive.

A Rally of Historic Proportions

So now the "hell of a job Brownie" powers that be, who couldn't self regulate the 60-70 trillion dollar CDS market which created the huge dislocations in this economy, destroying massive swaths of their own wealth are now the shrewd,competent organized entity you describe....tough argument to make...maybe I am just a little naive.


On Jun 03 07:12 AM dcb wrote:

> Dr. Leeb,
> you have clearly not done enough reading regarding this rally.<br/>To
> be honest I have written too many posts to go over it again here.
>
>
> From the middle of april to the end of may money flow was out of
> the s&amp;P yet the market didn't drop?
>
> tyler durden and others point out strange effects of prop desks.
> many last minute saves of billions and billions of dollars when key
> resistence levels were close or at the end of the day. the way the
> 880 was like a solid wall for no reason, how about last fridays action
> at the close when the descending triangle was about to be confirmed.
> Note how banks has equity offerings on tap for tuseday
> after you knw monday was going to be huge because to the billions
> bought at the close friday (painting the tape).
>
> Much of the action of this market is based on easily seen illegal
> activity for anyone who wants to do the research to see it. Therefore,
> I conclude the market has actually attempted to correct back to some
> reality but hasn't been allowed to.
>
> Reality will come back into the market when allowed to. I will also
> point out that the head of the NYSE actively encouraged retail investors
> not to participate in this rally, leaving his former coworkers at
> goldman to enjoy the majority of easy gains.

Is This Rally the Real Thing?

Brazil might have taken #1 as far as inport suppliers (they were #9 to USA #4 in 08'), but not trading partners. Brazil was not even in the top 10 in 08' (Singapore was #10 with 15% of USA's level @ #1)


On Jun 02 10:51 AM User 207783 wrote:

> Actually, there is another scary fact re: China. As of last month,
> Brazil replaced the US as their #1 trading partner (per NPR). The
> question is: how far can we slide, before the Chinese consider our
> trade expendable, and sell our debt anyway?

Is This Rally the Real Thing?

I am always amused when individuals wax philosophic with flowery prose on how the world outside of their head is delusional when the simple fact is...their on the wrong side of the trade. I feel I can say this because for the majority of this advance I have been hedged. One of the 4-5 long term indicators I use is a 20 month moving average (in on 7/03 @ 974, out on 1/08 @ 1380)..although the monthly RSI has breached above 30 ( first time since 4th QT. 02'). I am a CMT, so I tend to be more mechanical, but all this political/societal talk to claim the markets are "wrong" is a side show and quite useless. The markets are never wrong by definition. If you as an investor are on the wrong side of the market, is it so comfortable to be "right" and insolvent?

Is This Rally the Real Thing?

Price is reality. There is no other reality in the market but price...although both are fleeting. As far as your dealership/vengeance theory...according to the FEC, 88% of US dealerships contributed to the Republicans the last cycle, so even if 100% of the dealerships that were dumped (by the corporate parent, not the admin.) were registered Republican, it would not be statistically significant...but good luck on your "Big Bad Wolf" theory.


On Jun 02 06:53 AM socrateazz wrote:

> Who lives in reality? I wonder! what is truth? What is actuallity?
> Is propaganda really that strong? Are the masses that blind? All
> will be revealed in the end. Get high on the stock market! Might
> as well! Being drugged by propaganda still feels good. Has worked
> throughout history. Unfortunantly, the more brainwashed a society
> becomes, the deeper into an abyss it goes. Fortunately, the future
> is tomorrow and not today! I see people looking after themselves.
> The media has two pressures causing them to print certain ways. First
> they know if what is printed is too negative toward the Democrat
> leadership, they will be punished by IRS. Why do you think the tax
> laws are so vague? And why is does everybody with leadership on the
> Democrat side tend to end up with seemingly invulernabillity when
> they seem to be so full of manipulative tax cheats? I think they
> own the IRS and a few other organizations. On the other side. I think
> the Democrats have even more dirty pool. I would not be surprised
> if somebody was to investigate and find the dealerships chosen to
> be dumped were dumped because that dealership advertised on the wrong
> radio or TV shows. I would bet on it. If I were a betting man. The
> goal is to sink all the inappropriate groups and support those who
> are politically appropriate. Talk show groups are inappropriate because
> they do not tow the line properly supporting the power group who
> is actually those who complain of others misuse of power. The goal
> seems to be: Cut out supports and the truth will collapse into the
> proper leaders own reality. God have mercy on all, for fools are
> treading on melting ice.

“A nation that is afraid to let its people judge the truth and falsehood in an open market is a nation that is afraid of its people.” - John F. Kennedy (1917-1963) [HT: Across the Curve]

Christ! your right. I need to relax.


On May 29 12:25 PM Tony Petroski wrote:

> No militarism. I'm just funnin' with you. Lighten up jperetti. Things
> aren't as serious as they seem.
>
> That's "sense," not "sence."

“A nation that is afraid to let its people judge the truth and falsehood in an open market is a nation that is afraid of its people.” - John F. Kennedy (1917-1963) [HT: Across the Curve]

Gee...I am not sure if that is the opinion of a historian or a silly political hack? I 'll let others decide. Right wing politicians are no different now than they were in '62. They wanted to bomb Cuba then as they want to bomb Iran now. Without a sence of history, you get stupidity as a replacement. The Bay of Pigs incident saved us because Kennedy knew during the missle crisis he needed to reject his military advisors (who served him poorly during the Bay of Pigs) and opted for civilian advise (including his brother) who developed the naval blockade option. What militarism are you referring to?


On May 29 10:17 AM Tony Petroski wrote:

> jperetti: George Bush and Cheney are gone. Can you imagine Obama
> and Biden handling the missile crisis? Obama would rush down to Havana
> and apologize for the Kennedy's (I'm including Bobby) militarism.

“A nation that is afraid to let its people judge the truth and falsehood in an open market is a nation that is afraid of its people.” - John F. Kennedy (1917-1963) [HT: Across the Curve]

Can you site me the source of this partial quote. I would like to read the entire quote.


On May 29 07:50 AM Neil459 wrote:

> And then we have the latest Obama comment, ". . . transparency will
> have to wait until we have time [ or are have most of our agenda
> passed without the people knowing what it is. - editor]"

“A nation that is afraid to let its people judge the truth and falsehood in an open market is a nation that is afraid of its people.” - John F. Kennedy (1917-1963) [HT: Across the Curve]

I don't know how you define right wing. In terms of tax policy, it was fairly easy to cut rates after the post WW2 boom, but in terms of foreign policy, could you imagine the Cubian missle crisis handled by Dick Cheney and the neo-cons? We would have to depend on the roaches to pay taxes.


On May 29 08:32 AM Tony Petroski wrote:

> Kennedy, a democrat, was a right-winger by today's standards.
> Bring back the tax-cut.
> Walter Heller, where are you?

Robert Reich: What Industrial Policy Should Be

It should be noted that even before proactive global instability in the Middle East made energy producers wealthy beyond their hopes that the US taxpayers were subsidizing horizontal producers 85-90 billion per year just from our military budget just to secure overseas facilities. This does not take into account the exploration subsidizes and tax writeoffs. Because of this we pay half the price per gallon of petrol then the Europeans. This has effected our consuming behaviour in terms of what kind of cars and transportation systems we demand. This is not a "free" market and thus US citizens have not demanded a world class transportation system. I would love to see a "real" free market energy policy, but if we did consumers would be demanding a transportation system that looks more like Reich's vision of the future than what we have now, which is tax payers subsidizes of oil producers vs block grants for new technology ( which is what Clinton did in the 90's in silicon valley). Either way, the market is not be "free" and never has been. With full transparency of cost/benefits, voters will need to choose leaders that share their values and vision of the future and they will have to implement a long term strategy. The oil/energy industry has never shown a clear vision of that future and it's not their fault. Shareholders demand results from quarter to quarter which destroys long term goals that benefit all Americans.

John Paulson: Time to Get Back into Real Estate?

My apologizes. I am thinking of a former partner of Paulson's. He did graduate from Harvard's MBA program. Maybe not all "B" school grads are useless.


On May 21 09:27 AM jpiretti wrote:

> "To suggest that a guy who spent his life in a Wall Street office
> managing real estate funds has any business managing actual real
> estate scares the hell out of me."
>
> Your correct. I don't put much stock in a Wharton or Sloan MBA determining
> the value in RE or the financial markets in general. The difference
> is Paulson is an electrical engineer by trade and comes to view markets
> in a much more vibrant analytical viewpoint. I am interested to see
> how this plays out considering his contempt for Wall St. has made
> him awfully successful.

John Paulson: Time to Get Back into Real Estate?

"To suggest that a guy who spent his life in a Wall Street office managing real estate funds has any business managing actual real estate scares the hell out of me."

Your correct. I don't put much stock in a Wharton or Sloan MBA determining the value in RE or the financial markets in general. The difference is Paulson is an electrical engineer by trade and comes to view markets in a much more vibrant analytical viewpoint. I am interested to see how this plays out considering his contempt for Wall St. has made him awfully successful.


On May 21 08:28 AM 2houndz wrote:

> I wouldn't touch this new fund with YOUR money. This behavior is
> at least partially responsible for the real estate meltdown to begin
> with. People who thoroughly understood finance and value creation
> jumped into commercial real estate directly. Oh yeah, they understood
> that high leverage on a cash flowing asset was a good thing. What
> they knew nothing about was the actual underlying. DBSI in Boise
> knew full well how to convince investors they could make money, but
> when the rubber hit the road, their knowledge of real estate would
> not fill a teacup. See also GPT from Australia and the mess they
> created buying US and Euopean assets. See all the people buying derivative
> products based on both commercial and residential mortgages who had
> no clue that the underlying value could actually fall, or even that
> NOI could drop. See the thousands of people flipping houses who knew
> nothing about real estate, and got caught overleveraged when the
> music stopped.
> I'm not saying that the average person should avoid real estate investment
> at some level, but more often than not, it's been the blind leading
> the blind.
> I own apartments thru an LLC managed by a friend who has spent his
> career in the apartment business, not looking solely at value creation
> models on a spreadsheet, but also repairing roofs, hiring management
> companies, going door to door talking to tenants, and so forth. You
> know, all those things that someone has to do and understand to make
> a project successful.
> To suggest that a guy who spent his life in a Wall Street office
> managing real estate funds has any business managing actual real
> estate scares the hell out of me.

New Jersey Can't Afford Its Government

Sorry, according to a May 2007 GAO report, In total, contracts collectively worth over $762 billion have experienced significant overcharges, contract abuse, or mismanagement....in my anger, I rounded up. I am guessing that the fiqure is above 800 billion in the last 2 years.