Rolling US Economy Into The Shitbin Thread

dude this situation has v little to do w/low info investors - they control too small a share of the pie to matter too much - unless u consider instiutional investors to be low info - right now theyre seeming more low sense than anything

hahahahaha well whichever you want to call it. I will pretend low info because it's a better excuse - "I was too busy working on my car and raising my kids right, I didn't have time to take a hard look at the fundamentals of where I put the endowment"

"this bernie madoff seems like a nice fellow!"

rich ppl cant be expected to use google

it's just generally a bad idea to let low-information investors publicly trade shares in investment/lending businesses.

it's not the whole of the solution but i actually think the NYSE and other exchanges should go back to forbidding investment banks to list. increased shareholder activism/awareness can't change the fundamental relationship between an ibank's performance, its share price, and its ability to lend and i've read convincing arguments that initial stages of the crash, esp w/r/t to lehman bros would not have been so bad if the ibanks had been private parternships still.

that's partly a tautology - the ibanks were able to become so leveraged because they were public cos. in the first place but still affirms the central argument

yah thats def one of the no brainers as far as restructuring goes

more big picture forecasting from the wsj about retail

fun times housing interactive graphic http://www.nytimes.com/interactive/2008/12/04/business/economy/HOUSING_PRICES_GRAPHIC.html

A friend confessed to me the other night she is a Madoff victim (grandparents from Queens steered her folks to him).

http://img.photobucket.com/albums/v134/tracerhand/Thecarindustry.jpg

i've read convincing arguments that initial stages of the crash, esp w/r/t to lehman bros would not have been so bad if the ibanks had been private parternships still

you have a number of things working in favor of a horrific outcome as a publicly traded ibank - shareholders demand growth on par with similar outfits, meaning you have to stoop to wamu standards, risk is being held by those shareholders, meaning who cares if you stoop to wamu standards, and yeah basically an individual broker or other money manager eventually has all his or her priorities completely thrown out of whack in favor of following the herd to the poison well and damn the consequences.

lol efficient markets. ibankers certainly did and may still argue that the demand for growth and the risk of return would be linked and properly priced in the market. or they may now be bleating that sheepish refrain of more/better/smarter/ regulations + greater transparency idk. i think your right, actually - but those problems arent eliminated by delisting Deptford and Sharpman.

the argument as i understood it was more about preventing a loss of confidence from turning into a self-fulfilling prophecy which is some old knowledge probably maybe but it isnt always a wonderful life

Re low-info vs institutional investors 3 days ago: dichotomy possibly not altogether clearcut:

guys helming local government eg counties/municipalities/departements/communes/provinces with sometimes LOTS of funds to sink into vendors (yes) that might convince them things are safe & sound, while being only regular elected officials with barely any economics between them: low low info + at the same time pretty "institutional"?

thats a good point tho i still say the vast majority of institutional investors are typical high info insider financial types what w/yr mutual hedge pension and all other sorts of funds

id love to see a breakdown of all this shit and obv a lot of the time the low info and pro info people are in on it together

story of the financial crisis as told through one arizona shack http://online.wsj.com/article/SB123093614987850083.html

btw im so jealous of this lady for getting her v own wsj dot portrait

we're saved btw: http://www.nytimes.com/2009/01/03/business/economy/03econ.html?_r=1

FYI you can commission stipple portraits

yah i just found that - i prefer to earn mine tho

the wsj is weird it has some of the best reporting on markets and politics and a decent food column but then it was really weird and creepy articles like that one last week about why liberals hate the suburbs

the editorial board was taken over by supply-side wackjobs like forty years ago but otoh they have to compete with the FT

http://ibdeditorials.com/IMAGES/cartoons/toon010509.gif
http://ibdeditorials.com/IMAGES/CARTOONS/toon122908.gif

http://picayune.uclick.com/comics/gm/2008/gm081231.gif

shit, wrong thread

lil primer on the irish economy http://www.nytimes.com/2009/01/04/business/worldbusiness/04ireland.html

That deal amounted to 54 million euros an acre, one of the highest amounts ever paid for land in Europe. His subsequent architectural plan featured a soaring Dubai-like office tower cut in the shape of a diamond that anchored a futuristic community of expensive houses and glamorous shops, and the price tag of one billion euros shocked Dubliners with its gall and ambition.

dubailin

i hate my generation and everyone in it - http://www.economist.com/business/displayStory.cfm?story_id=12863573&source=hptextfeature

Charlotte Gardner, a 25-year-old Californian who was made redundant by a financial-services firm in November, has since been using online job and social-networking sites, as well as micro-blogging services such as Twitter, to promote her skills to potential employers. Ms Gardner, who is optimistic she will find another job soon, describes herself as “a glue kid” — someone who can get different kinds of people to work well together.

lol

the straw that stirs the drink, i'm sure...

its really just like the dotcom crash except so much worse

michael lewis on what happened http://www.nytimes.com/2009/01/04/opinion/04lewiseinhorn.html

and hoe to fix it http://www.nytimes.com/2009/01/04/opinion/04lewiseinhornb.html

david einhorn rules too I watched a youtube of him for give a talk for like 30 mins and am thinking about checking out his book

mr. einhorn certainly deserves the "LOL-ing up his sleeve" award for 2008 for his bulldogish stance on Lehman Bros. shame that the folks who mattered didn't pay him as much mind as they should've.

ya well for most of these dudes banking $100m was a more attractive proposition than being called smart after all fell down

frankly i would rather have $100m than be called smart

something kind of fucked up happened during my generation that becoming a federal civil servant seems almost like a punk rock thing to do

hahaha

of course, some federal civil servants see it as a backdoor route to scoring some mad cash later in life (particularly and not coincidentally with respect to gigs @ the SEC) -- so there are some billy idols sprinkled in with the ian mackayes in that punk rock scene.

worth a read:

http://www.nytimes.com/2009/01/04/magazine/04risk-t.html?_r=1

Krugman today predicting grt depression II

I wouldn't say he's predicting as much as showing how it could happen

or how it will happen unless the democrats grow a goddamn spine from the stem cells of murdered babies

or how it will happen if republicans don't stop being little twerps

or how it will happen if republicans don't stop being little twerps

the laws of gravity will be repealed by God before that happens ... they were twerps during the 1930s as well (which Krugman has also written about).

i'm more worried about the "blue dog democrats" who will try to scuttle any Obama-led economic recovery package on the grounds of bloating the deficit and national debt. we can debate how much of that comes down to ideology or self-interest.

yeah those crazy people who worry that adding a trillion in deficit or debt, as if it could negatively affect our economic stability in the long term.

http://moreorlessbunk.files.wordpress.com/2008/01/hoover.jpeg
o hai don ;)

worth a read:

http://www.nytimes.com/2009/01/04/magazine/04risk-t.html?_r=1

― Ed, Sunday, 4 January 2009 22:11 (Yesterday)

I came to my own conclusion at least several years ago, with no real background in economics or statistics or math, that mathematical risk models were probably mostly bunk. It only takes intuition to realize that it's not possible to model the unpredictable, that it's human nature to think a catastrophe is less likely than it really is, and that models are exactly the kind of thing that lull people into a false sense of security with their pseudo complexity. Sometimes I'm tempted to think that they were an outright fraud designed, or at least used, to convince naive investors that sophisticated tools were being used to manage their money. That's most of what Wall Street is really about.

Don where have you been with that attitude every time tax cuts have been proposed, eh? We could have used you!

Hurting I thought that article was fascinating but 1) the endless paragraphs about Mr Black Swan were pointless and irritating and 2) the defenders of VaR kind of have a point when they say it's a model for 95% or 99% of situations and actually it performed exactly as expected. This is a 1% situation we're dealing with and the fact that managers and executives didn't have plans for dealing with it has nothing to do with VaR itself. Of course if he'd said that in the beginning of the article he wouldn't have reached his 9000 words or whatever it was, and wouldn't have got to fawn over "NT" - as I call him. One last quibble with it - when you promise an anecdote it should be snappy and tellable in a pub. He takes two pages to get around to it.

http://www.motherjones.com/kevin-drum/Blog_WSJ_Retail_Bankruptcy.gif

I'm not sure letting this amount of businesses fail is going to do much for our long-term economic stability either.

I came to my own conclusion at least several years ago, with no real background in biology or zoology or chemistry, that evolutionary models were probably mostly bunk. It only takes intuition to realize that it's not possible to model the unpredictable, that nature can evolve organisms of incredible complexity spontaneously, and that models are exactly the kind of thing that lull people into a false sense of security with their pseudo science. Sometimes I'm tempted to think that they were an outright fraud designed, or at least used, to convince naive believers that sophisticated facts were being used to explicate God's creations. That's most of what "science" is really about.