ritholtz

Citi's Pandit Should Learn from AIG's Benmosche About Handling Government

Sorry if my appreciation of financial reality regarding $185 billion in taxpayer money thrown at this bankrupt company somehow interfered with your cheerleading of yet another CEO's sales pitch.

I don't know your investing track record, but this sort of CEO worship typically leads to enormous investing losses.

No One Saw This Coming?

Add this to the list from 2005:
URL: www.thestreet.com/p/rm...


"My position is that housing is not in a bubble -- yet. But it is an increasingly extended asset class that may be subject to a significant correction in the future. But a 25%-35% retracement is a very different situation than a bubble (recall that the Nasdaq dropped 80%), primarily because there are very different consequences for both homeowners and investors."

Clarifying 'Speculation'

That has been my position for many years:

See: Apprenticed Investor: The Folly of Forecasting www.thestreet.com/stor...

Bailout Nation: Merkel Reviews Ritholtz

Sounds like your investment strategy is really paying off!


On Jun 13 08:22 PM StockCreeker wrote:

> lol that's pretty clever +1
>
> I'll probably pickup his book in a couple weeks in the 99 cent bin.
>
>
> On Jun 13 02:56 PM User 430816 wrote:

Bailout Nation: Merkel Reviews Ritholtz

Don't look at the 1980s snapshot, look at the moving picture. Detroit had already begun losing share to imports.

What Detroit had was inertia (people were used to US cars) patriotism (the generation that fought WW2 against the Germans and the Japanese were less likely to buy their cars).

They also had the growth of the baby boomers, whose outsized demographic bulge masked the market share loss. Every year, the Big 3 sold more cars than the year before -- it looked like growth, but it was really population increases.





On Jun 13 02:23 PM JWhitling wrote:

> I'm not really trying to argue the case too strongly, except to say
> that during the 80's, by and large Detroit built what many people
> wanted to buy.
>
> If you look at the proliferation of new brands in the US since the
> early 90's I think you will find that's where the real problems began
> for Detroit. Unions or not, you cannot compete with third world countries
> when it comes to labor intensive production.
>
> You can shed all the unions you want .. but how do you ever compete
> with Korea, for example? I would say that we need to tax the hell
> out of imports from state run enterprises around the world. State
> run enterprises ARE NOT free market capitalism, no matter how cheaply
> they can manufacture.
>
> It's my fervent hope that health care reform will go a long way to
> putting US manufacturing back on track. IMO, without competitive
> mfg we're toast. In a country of 300 million not everyone can run
> a hedge fund, and it's not like our education system is doing more
> than creating the same series of ultra high educated, and ultra low
> educated populations. Like it or not, we have to find a way to put
> the lower classes to work, or there won't be any increases in GDP.
>

Bailout Nation: Merkel Reviews Ritholtz

The case I made is that the US auto industry would likely have been healthier had Chrysler been abler to restructure in 1980 -- shedding the onerous union contract (a carry over from the 1950s) including very generous health care and retirement benefits.

We cannot tell for sure because there is no control group -- no counter-factual universe where Chrysler is allowed to go belly up. In the book, I make suppositions as to what might have happened.

But we do know what DID happen post bailout: In 1980, the big 3 had a 75% market share in the US; Its now down to 47%. And the UAW had 1.5 million members; that is now down to under 400,000, and likely to hit 250k this year.

If that is your idea of a successful bailout, I'd hate to see what you think a failing one looks like . . .

-Barry


On Jun 13 09:15 AM JWhitling wrote:

> I enthusiastically bought this book on it's release and since I follow
> Ritholtz' Big Picture blog I felt I knew what to expect. Early on
> in the book, one of things that disappointed me was Ritholtz' recollection
> of the facts in the Chrysler bailout. One of the key arguments in
> the book is that any intervention/bailout distorts the market. <br/>
>
> I agree with that, in general. But Ritholtz makes a case that letting
> Chrysler fail in the early 80's would have been good for the US auto
> industry. He then states that the US auto industry sucked in the
> 80's. I think not. Ford, for instance, in many of those years had
> 8 out the top 10 vehicles in the US. That is pure dominance. And
> in Chrysler's case, the advent of the mini van opened up a whole
> new market segment for the customer to choose. So, in short, it was
> not at all like Ritholtz states, and since this is one of his key
> examples it kind of invalidates the book's arguments. Actually one
> could easily argue that the Chrysler bailout was a nearly ideal example
> of the good that can come from a bailout.
>
> After that example I lost interest. I'm sure I'll finish it on some
> dredge of a flight but I wonder, after that, if I can really get
> behind the book. If you're going to hang a book on a premise, you
> should carefully review your facts first.
>
> as a last point .. should it be called bailout if the loan is repaid?
> I think not ..

The Strange Death of American Capitalism: A Review of 'Bailout Nation' by Barry Ritholtz

Thanks for the thorough and detailed review! Its obvious you read it closely, and I appreciate the effort.

And I am very pleased you enjoyed it!

What Others Are Buying on Weakness

We were short JEF back in October and November -- it hit our downside target of $8, and we covered.

The Myth of the Credit Market 'Push'

I cant find any prior examples from history. Can you show me something specifically that proves this statement is false:

"During a 5 year period from 2002-07, the basis for mortgage lending was NOT the borrowers ability to pay -- it was the lender's ability to securitize and repackage a mortgage. This has never happened before . . . "

Financial Terrorism of the Real Kind?!

You omitted this paragraph:

"Joe asked the question: Is anyone investigating whether this is a case of financial terrorism? He wanted to know if someone was at least looking into this question (Joe is buds with Jim Cramer, and mentioned it to him, who then omitted to cite in his column that this was Joe's theory, not his own)."

Cramer took the idea from Joe

Big Picture Points Out 50% Retracement

That was off of the July 15 lows, which also presented a trading opportunity (see this: finance.yahoo.com/tech...? )

But it did not hit the 50% retracement line of the 2002-07 cyclical bull -- this drop did.

Bull or Bear Market?

On October 11, 2002, the S&P500 stood at 835. Six months later, on March 07 2003, it was 829. That's why most people mark the end of the Bear market as march 2003.

Note that SPX is are far better proxy DJIA (500 stocks versus 30)

OER, CPI, New York Rentals And The Fed: A Strange Love Story

Excellent criticism -- its now 1 year later, and pretty much every critique you had proved to be wrong.

We Don't Need No Stinking Market Capitulation

Its not that I want to see a 5% down day -- its just that such a day will have significance reflecting a better psychology. As of now, there is still too much complacency for the bear market to end.

We own selective equities, closed most shorts early in the month, but still have a decent cash position. This rally can run for a few weeks or months, but we doubt it reflects the 08/09 recessionary lows . . .

Blogonomics: The Seeking Alpha Model

My last comment on this issue -- if you believe this was merely because of an embarrassingly poor headline not of my writing, then you have a fundamental misunderstanding of contributor complaints.

For example, grabbing 4 of my posts a day was simply excessive. It made me realize how one sided the arrangement had become.

I noticed you posted a help wanted ad for "Contributor Relations Manager" -- that certainly won't hurt.

But I do not think you actually understand the situation at all. I suggest that we should take the rest of this conversation off line -- for your benefit.