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You are here: Home / Politics / Domestic Politics / The Market is a Six Year Old on a Sugar High

The Market is a Six Year Old on a Sugar High

by John Cole|  March 16, 20099:55 am| 78 Comments

This post is in: Domestic Politics

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With all this talk about investor confidence and confidence in the market and confidence in the future, you know who doesn’t have much confidence? Me.

I’m listening to the “market analyst” on CNN, and she assured me the market is going to rally today because, and I’m paraphrasing, “they were reassured by Ben Bernanke’s appearance on 60 Minutes.”

Really. No wonder we are in this mess. That is how my ex-girlfriend picked restaurants- “Let’s go here. I liked the look of their greeter.” If this is how the market really operates, I would not be surprised if this is just another short-term rally before the next plunge to the bottom.

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Reader Interactions

78Comments

  1. 1.

    zzyzx

    March 16, 2009 at 9:56 am

    But but but but… the market is the ultimate purest decider of all truth and value. DO NOT QUESTION THE MARKET!!!!

  2. 2.

    SpotWeld

    March 16, 2009 at 9:58 am

    ..well, the short term market is like that.
    I like to pretend that the long term trends of the market are actually driven by, well, market forces.

  3. 3.

    dollar general spice

    March 16, 2009 at 10:01 am

    Thing is, they’re just taking stabs in the dark, trying to influence the public but they have as much of a clue how this will turn out in the end as you do, as any of us do. But they can’t shut their yaps for a minute as long as it doesn’t involve real reporting. We just need to look at these stories as "fill time" – not as useful information, see CNBC

  4. 4.

    Tim H.

    March 16, 2009 at 10:01 am

    Well, what Bernanke really said to Wall Street is that the helicopters are still flying. So short term they like it.

  5. 5.

    cleek

    March 16, 2009 at 10:02 am

    put your faith in the market. in the market you must trust, to receive the invisible hand job.

  6. 6.

    sarah

    March 16, 2009 at 10:02 am

    and when we dance and chant in the field it will rain. the market, like the weather, is unpredictable but controlled by large outside forces, the effects of which are only a symptom of the overall climate. even good market analysts are like meteorologists in that they’re only good in the short term, if at all.

  7. 7.

    Ash

    March 16, 2009 at 10:05 am

    I’m personally waiting for one of the idjits on CNBC to tell me that "The markets are probably going to plunge today because Obama looked sort of sweaty and that indicates to the markets that they’re making him worried and they should thus act accordingly."

    I give it two weeks.

  8. 8.

    dollar general spice

    March 16, 2009 at 10:06 am

    Um, and shouldn’t Bernanke’s comments be viewed with a healthy dose of skepticism now? Would not reasonable individuals view his comments with at least the same amount of skepticism as pretty much everything Obama does, at least within "respected circles" such as CNN? And, also, I thought that whatever the market does is a direct reaction to whatever Obama does on a given day. I’m confused.

  9. 9.

    jibeaux

    March 16, 2009 at 10:11 am

    The markets will continue to go up until the "Dow 36,000" guy announces that they’re going to keep going up.

  10. 10.

    Incertus

    March 16, 2009 at 10:12 am

    @dollar general spice: One of the jabs that Stewart made at Cramer that kind of got lost in the shuffle was when Cramer said something to the effect of "we’ve got 17 hours of live tv a day to fill" and Stewart replied "maybe you ought to reconsider that." Indeed–it’s difficult to look at the long term trend when everyone around you is screaming about–and making shit up about–the short term and immediate.

  11. 11.

    Bulworth

    March 16, 2009 at 10:12 am

    I actually watched the Bernanke interview, although I didn’t find it terribly informative. In answer to the first question about getting out of this mess Bernanke essentially said something like "well, we need to get the financial system and the banks straightened out". Really? And what does that mean? What will that take? At another point he worried about a lack of political will to do what (?) was necessary.

    All in all, though, his answers didn’t strike me as being in line with the "Leave the markets alooooooonne" philosophy of our Great and Glorious Market Ruling Class.

  12. 12.

    AhabTRuler

    March 16, 2009 at 10:12 am

    Well, in fairness, we are Americans, so we are, collectively, "a Six Year Old on a Sugar High," with nuclear weapons and imperial economic ambitions.

  13. 13.

    El Cid

    March 16, 2009 at 10:14 am

    To rephrase, I truly would be surprised if these temporary market gains ended up indicating anything.

  14. 14.

    Montysano (All Hail Marx & Lennon)

    March 16, 2009 at 10:14 am

    Remember: J.H. Kunstler’s book about collapse was called "The Long Emergency". This sense (and reality) of broken-ness and crisis may drag on for years. We’ve certainly earned it.

  15. 15.

    chopper

    March 16, 2009 at 10:14 am

    yeah, to me its a sign that the fundamentals of our economy are in shit shape – the markets rallied last week mostly because citi released an internal memo claiming that they made money in january. that’s all it takes these days, an assertion that one company actually made a profit during a month.

    or, 60 minutes had a bit that made some people feel a little better.

    how jittery is that.

  16. 16.

    gray lensman

    March 16, 2009 at 10:15 am

    The market: sheep running from one side of the pen to the other. One of them takes off for no apparent reason and they all do. This is why they can be herded by a smart dog, or a wolf, or a hedge fund manager.

  17. 17.

    Bulworth

    March 16, 2009 at 10:18 am

    @gray lensman:

    That sounds about as accurate a depiction of the process as anything I’ve come across so far.

  18. 18.

    Cyrus

    March 16, 2009 at 10:18 am

    If this is how the market really operates, I would not be surprised if this is just another short-term rally before the next plunge to the bottom.

    Dollar general spice is right: this isn’t really how the market works. Attributing a rally to a 60 Minutes interview is just post hoc ergo propter hoc reasoning applied to chaotic, nearly-random system. Particularly if you go by the Dow. It’s based on a small enough number of companies that individual events in the personal lives of people on Wall Street can throw things off. Over months or years, stock prices correlate to the overall strength of the economy, but on a day-to-day basis you might as well flip a coin. This is not how the market operates, just how CNN operates.

    (Disclaimer: I don’t know anything about it, just what I glean from other blogs.)

  19. 19.

    Ash Can

    March 16, 2009 at 10:25 am

    Really.

    Yes, really, because Bernanke’s a well-known financial guy to investors. However, this is only one of several reasons the market is up this morning. Furthermore, keep in mind that the market is so far down at this point that "up" really does look like "up" these days.

    PS: If this CNN market analyst cited Bernanke’s interview as the :only: reason she thinks the market’s going up today, her report’s not worth the electric bill it takes to broadcast it.

  20. 20.

    Olliander

    March 16, 2009 at 10:27 am

    I’m listening to the “market analyst” on CNN

    A blind monkey can predict market rallies or selloffs early in the trading day. Between 10:20 to 10:30 is when the "sanity" typically comes to the market whether to the upside or the downside, and starts the general direction of the trading day.

    As for the overall market, after nearly a month of nothing but weekly declines, last week’s rally was bound to happen. What’s disturbing is that it was an orderly sell-off, not a lot of fear or capitulation. Also, there are alot of investors who shorted the market and they need to cover those transactions.

  21. 21.

    Jeff

    March 16, 2009 at 10:27 am

    In fairness to the market, most analysts had their credibility destroyed long ago, and the one you saw was probably one of that lot.

    In fairness to the analysts, six years old is probably giving the present market too much credit for rational analysis. Try two or three.

  22. 22.

    Dr. Rockso

    March 16, 2009 at 10:30 am

    @ Cole

    “Let’s go here. I liked the look of their greeter.”

    I disagree. These guys are more the type to say: "Let’s go here. This looks like the most expensive and therefore must be the best."

  23. 23.

    camchuck

    March 16, 2009 at 10:36 am

    Bernanke, meh. The market is going up because of Ronald Reagan, George W Bush and Glenn Beck. In that order.

  24. 24.

    Adrienne

    March 16, 2009 at 10:38 am

    an assertion that one company actually made a profit during a month.

    I don’t meant to rain on your populist parade, but that was, seriously, a BIG deal. Citi is not just any ol’ company. Citi’s announcement was important for a critical reason. Citi is a very large international bank whose health is very important to the overall banking system due to its size, reach, and scope.

    Basically, the fact that Citi made a profit last month, at a time when banks are doing SHITTY is reassuring. It indicates that whatever is being done to get the banks out of the muck may be starting to have some effect, and if so, that indicates that OTHER banks may soon improve which will begin to soften up the credit market which is, you know, the point. The freezing of the credit market is an integral reason for the recession deepening so sharply since September.

  25. 25.

    dollar general spice

    March 16, 2009 at 10:38 am

    Cyrus, exactly. And you don’t have to be a stock market analyst to figure it out. But they can’t just report that the market is up or down on a given day. It has to *mean* something. Any fool can see that short term market behavior at this point, well at any point, really, is a ridiculous barometer by which to determine what is going to happen to the economy in the long-term. If an idiot like myself can figure it out . . . well, that’s why I don’t follow cable news anymore, they insult even my limited intelligence, which is really damning. Oh well, I guess they have to continue to pretend and project that we are not fucked. That’s pretty much their job now.

  26. 26.

    Barbara

    March 16, 2009 at 10:39 am

    Right, but you also have to remember that the market works the same way in reverse: refusing to eat at a restaurant with a greeter who isn’t attractive no matter how great the chef and the menu.

    In other words, you can’t trust each day to day gyration as being something significant in and of itself.

    You have to look behind them as they pile up one on top of another. There were a lot of forces at work last fall that made the swoon something less than an indicator of raw economic realities — but by December, or January at the latest, I think that changed, and now, the more recent decline really is a response to economic fundamentals. However, if you look at prior recessions you also see that the market usually bottoms out before the economy does. Which does lead to what might be viewed as an overlap where optimism is being internalized by investors before it seems to be justified by external economic data. This is why I gave up trying to invest on my own. And my husband is even worse at this than I am.

    And so we go on.

  27. 27.

    schrodinger's cat

    March 16, 2009 at 10:40 am

    Instead of pontificating on every gyration of Dow 30, why don’t these reporters do some real reporting instead, ask hard questions like Jon Stewart does.

  28. 28.

    camchuck

    March 16, 2009 at 10:44 am

    @Adrienne:

    The Citi memo was certainly taken as significant news.
    But John Hussman succinctly puts it into perspective:

    Meanwhile, the excitement of investors last week about Citigroup posting an operating profit in the first two months of the year simply indicates that investors may not fully understand the term “operating profit.” Citigroup could burst into flames while Vikram Pandit sells lemonade in the parking lot, and Citi would still post an operating profit. Operating profits exclude what happens on the balance sheet.

  29. 29.

    sgwhiteinfla

    March 16, 2009 at 10:45 am

    The bank Barkleys overseas came out and said they are now making money too and thats probably the biggest reason for the bounce whether it ends up being sustained or not. The truth is its lazy ass journalism to claim that what this person said or what that person said is affecting the market unless that person is announcing their company just beat estimates or if that person is changing monetary policy. Other than that its all bullshit. It is what it is.

  30. 30.

    Olliander

    March 16, 2009 at 10:45 am

    @Adrienne: You make a great point and I agree. The announcement by Citi (and BofA) essentially sparked the rally last week.

    However, operating conditions for banks are favorable right now, in the sense that borrowing from the Fed basically costs the banks nothing, while charging their customers at prime, which is at 3.25%—car loans, equipment loans, etc., obviously get higher pricing. So the rate curve favors banking operations right now.

    The problem is that just because they’re profitable, doesn’t take away from the huge holes in their balance sheets.

  31. 31.

    Tim H.

    March 16, 2009 at 10:46 am

    Basically, the fact that Citi made a profit last month, at a time when banks are doing SHITTY is reassuring.

    You actually know nothing of the sort. You know that a bank executive said Citi made a profit (excluding writedowns!!!!!) in a memo to employees, to whom executives lie regularly. The market really has bupkiss to go on, besides wishful thinking.

  32. 32.

    dollar general spice

    March 16, 2009 at 10:47 am

    @schrodinger’s cat: Heh, they should be embarrassed as shit. Stewart showed that a comedian can do better research and and ask tougher questions than they can, e.g. it’s really not that hard when you don’t have an agenda other than getting at, rather than obscuring, the truth.

  33. 33.

    Bill H

    March 16, 2009 at 10:49 am

    BofA annonces it will "likely" make a profit in 1st quarter. The "toxic assets" are still on its books and it is still insolvent, but since it will "likely" make a profit (and since bailout money now disallows big bonuses), it doesn’t need bailout money and its stock is a good buy. Buy, buy, buy. Buy stock in an insolvent company that will "likely" make a profit of undefined amount in a single period. These are supposedly adults.

  34. 34.

    smiley

    March 16, 2009 at 10:50 am

    Related because he’s going to talk about the economy but this has to be a first. I wonder how the markets will react.

  35. 35.

    Rommie

    March 16, 2009 at 10:50 am

    It’s more like Beavis on a chocolate-syrup induced Cornholio high, but I agree with the idea.

    I am going to love the delicious tears if AIG causes a true examination of the bailout fraud going on because they couldn’t lay low and sit on their bonuses for a while.

  36. 36.

    Drew

    March 16, 2009 at 10:50 am

    This market is and has been dominated by technical analysis and black boxes for years. There can be a sizable pop to it because the move down has been so hard and fast that the difference between the current market charts and its moving averages have grown wide. There is virtually no support to the downside, and tons of resistance to the upside. The market will try to test the moving averages to the upside, then fall to those on the down side which will have moved up from where they previously were (in the 3500 area for the Dow). It’s physics, not economics.

  37. 37.

    Brian J

    March 16, 2009 at 10:52 am

    I don’t think it’s the worst thing in the world that people are a little more confident after seeing some optimism from the Fed Chairman. It’s not as if they are reacting to someone on CNBC who isn’t much more qualified than any of us to discuss the economy.

    I say this because I’m pretty sure that if there is a lot of reason to be worried, the reasons for feeling that way will reveal themselves soon enough. In other words, all of the happy talk in the world can’t mask a huge pile of bullshit, so if there really is a reason to feel one way or the other, we’ll know.

    Then again, there’s supposedly a decent amount of academic literature that says the financial markets reflect very poor thought processes and decision making. So who the fuck really knows what’s going on?

  38. 38.

    chopper

    March 16, 2009 at 10:56 am

    @Adrienne:

    yet the mortgage mess is still here, commercial real estate is next on the chopping block and a looming credit card crisis is waiting in the wings.

    in short, the banks are fucked. for a while.

    but citi puts out a generic optimistic memo and everyone goes apeshit. i mean, this wasn’t a quarterly report or anything. it was a fuckin’ internal memo. who knows if it’s actually true or not? who cares! buy citi!

  39. 39.

    Fwiffo

    March 16, 2009 at 10:56 am

    We’re going to be living in caves, wearing loincloths. And we deserve it.

  40. 40.

    mr. whipple

    March 16, 2009 at 11:00 am

    I’m listening to the “market analyst” on CNN, and she assured me the market is going to rally today because, and I’m paraphrasing, “they were reassured by Ben Bernanke’s appearance on 60 Minutes.”

    Freaking idiots. They kept bitching that Geithner looked ‘young’ and didn’t ‘reassure’ them….as if what was needed in a TSec was an old white haired dood that came across like Marcus Welby and just told them all was gonna be well.

  41. 41.

    Miriam

    March 16, 2009 at 11:01 am

    Citi is losing money hand over fist – that is why they had to take TARP funds. People are defaulting on their home loans left and right, and there is probably going to be a major correction due to credit card defaults too. ‘Making a profit’ in this context is just bogus.

    Even with this little bump in the stock market, the Dow is mirroring the crash of 1929. That took a few years to bottom out too and had little ups and downs along the way.

    I’ll start to believe that we’ve really hit bottom when the pundits stop being optimistic and tell everyone it is time to sell.

  42. 42.

    jcricket

    March 16, 2009 at 11:02 am

    yet the mortgage mess is still here, commercial real estate is next on the chopping block and a looming credit card crisis is waiting in the wings.

    This is what scares me… If those things really happen (massive credit card defaults, defaults on commercial real estate) we’re going to be in this mess for a looooong time, no matter what Obama does. I’m still waiting for all the retail stores/chains to close like I keep hearing about.

    Even ignoring the impact of the defaults, havings tons of extra resident and commercial real estate will be like a "hangover" depressing prices, construction jobs, ancillary jobs (construction equipment, etc.) for years.

    Sadly, as pessimistic as I am in the short run, and as cynical as I am as a person, I am optimistic for the long-run. I don’t know why, but maybe it’s selfish? The idea that I’ve "peaked" just doesn’t sit right with me, and so I predict a society/country that rebounds from this recession like it’s rebounded from every other one in the last 70 years.

  43. 43.

    Ash Can

    March 16, 2009 at 11:03 am

    @smiley: ::snicker:: That should make a few Republican heads explode. I can just hear them stamping their feet and crying for equal time. (Fairness Doctrine? What Fairness Doctrine?)

  44. 44.

    Comrade Darkness

    March 16, 2009 at 11:09 am

    I would not be surprised if this is just another short-term rally before the next plunge to the bottom.

    This is why Roubini is shouting "sucker’s rally! sucker’s rally!" as loud as he can.

    More people probably lost money in GD I on these bear rallies than on the primary fall.

  45. 45.

    Brian J

    March 16, 2009 at 11:09 am

    Freaking idiots. They kept bitching that Geithner looked ‘young’ and didn’t ‘reassure’ them….as if what was needed in a TSec was an old white haired dood that came across like Marcus Welby and just told them all was gonna be well.

    I don’t think the people on Wall Street are as calm or level headed as some think they are.

    I’m surprised nobody mentioned this, or maybe people did and I missed it. But it’s worth mentioning (again). Here’s former Bear Stearns CEO Jimmy Cayne discussing Tim Geithner in a book that will soon be released:

    “The audacity of that p—k in front of the American people announcing he was deciding whether or not a firm of this stature and this whatever was good enough to get a loan,” he said. “Like he was the determining factor, and it’s like a flea on his back, floating down underneath the Golden Gate Bridge, getting a h–d-on, saying, ‘Raise the bridge.’ This guy thinks he’s got a big d–k. He’s got nothing, except maybe a boyfriend. I’m not a good enemy. I’m a very bad enemy. But certain things really—that bothered me plenty. It’s just that for some clerk to make a decision based on what, your own personal feeling about whether or not they’re a good credit? Who the f–k asked you? You’re not an elected officer. You’re a clerk. Believe me, you’re a clerk. I want to open up on this f—-r, that’s all I can tell you.”

    Maybe he legitimately had no clue, although that doesn’t seem likely. But really, shouldn’t a CEO know what the fuck is going on with his company? If so, based on that little tirade, it’s not surprising to think that this douchebag was off playing bridge in Detroit the weekend his company became nearly worthless.

  46. 46.

    Brian J

    March 16, 2009 at 11:10 am

    This is why Roubini is shouting "sucker’s rally! sucker’s rally!" as loud as he can.

    He’s also got much of his money in stocks, if what I read is correct.

  47. 47.

    Ash Can

    March 16, 2009 at 11:14 am

    @Miriam:

    I’ll start to believe that we’ve really hit bottom when the pundits stop being optimistic and tell everyone it is time to sell.

    You’ll never, ever hear that at the bottom, though. If you do, it’ll be from someone who truly knows nothing about the market. Or it’ll be from someone talking about some isolated sector that’s way up for some reason and whose gains have no visible means of support — and I don’t think any such sector exists at this point. Even the most blockheaded pundits recognize that "the bottom" is no time to sell.

  48. 48.

    Comrade Darkness

    March 16, 2009 at 11:24 am

    @Adrienne: Basically, the fact that Citi made a profit last month, at a time when banks are doing SHITTY is reassu…

    Hang on here. We gave them, what? 45 billion? (or $320 billion, or something . . .) When I saw that headline, I thought, what a joke. Money is fungible. How the hell can anyone *trust* that they made an honest to god profit as opposed to shoving numbers around on the books? How could you even discern the difference given that their windfall gifts exceed their market cap several times over.

    Sucker’s rally doesn’t cover it.

  49. 49.

    Comrade Darkness

    March 16, 2009 at 11:26 am

    @Brian J, in the last interview I saw, he said he was entirely in cash. That was just a few days ago.

  50. 50.

    The Grand Panjandrum

    March 16, 2009 at 11:30 am

    Most short term moves in the market, especially daily moves, are generally based on emotion. But to sustain it we need some there there. That will come when we actually start building and buying stuff again.

  51. 51.

    Miriam

    March 16, 2009 at 11:33 am

    What I meant was that because the pundits are consistently wrong – as long as they are optimistic, I know that we are in trouble. As soon as they are pessimistic, I’ll know we will be ok.

  52. 52.

    JenJen

    March 16, 2009 at 11:38 am

    Your anecdote about your ex-girlfriend made me LOL. :-)

  53. 53.

    Brian J

    March 16, 2009 at 11:40 am

    @Comrade Darkness:

    I’m not sure what interview your referring to, but via Marginal Revolution, I saw this:

    Again, this is not necessarily so. Just ask Nouriel Roubini of New York University, who has a reputation as the most pessimistic economist in academe. He deserves it. His most recent paper, published last week, is entitled: “Can the Fed and Policy Makers Avoid a Systemic Financial Meltdown? Most Likely Not.”

    Nobody is more aware of the gravity of the financial situation, and nobody has done more to point out the risks of a systemic crisis.

    So how are Roubini’s own funds invested? They are 100 per cent in equities. In the long run stocks do best and he is not yet close to retirement, so he keeps putting more money into index funds each month.

    Fully aware of the gravity of the financial situation, he is also aware of the futility of trying to take action or to time the market. Those tempted to make the investing equivalent of a goalkeeper’s depairing dive should take note.

    It doesn’t say whether he’s in a decent mix of funds or individual stocks, but he’s still buying into the market.

    What makes sense for him probably makes sense for most people that are financially secure (little debt, a good, likely lasting income) and that want to take advantage of a situation. It’s unfortunate that this is how it had to happen, but as Dean Baker among others has said, the fall in stock prices and housing costs is really a big gift to younger generations, who will be able to buy in at dirt cheap prices. Of course, this means nothing if people can’t actually buy in, but still.

    I’m trying to plow more money into the market, but I should probably just buy and hold. Playing around with some "What if I had invested?" tools let me to believe I could short the market effectively, and if the funds I am taking a bath on are any indication, I bought in at the worst possible moment. Or maybe not.

  54. 54.

    Miriam

    March 16, 2009 at 11:40 am

    AIG finally released a list of counterparties.

    http://www.aig.com/aigweb/internet/en/files/Counterparties_tcm385-153017.pdf

  55. 55.

    Brachiator

    March 16, 2009 at 11:44 am

    I’m listening to the “market analyst” on CNN, and she assured me the market is going to rally today because, and I’m paraphrasing, “they were reassured by Ben Bernanke’s appearance on 60 Minutes.”

    I am struck by the combination of sheer stoopidity and over-reliance on conventional wisdom that still infects reporting and punditry about the economy. Despite the revelation that financial news programs are little more than fawning commercials for Wall Street, people want to pretend that "analysts" are honest brokers in information. Worse, they expect these fools to be financial psychics. George Stephanopolous, Chris Matthews and the guy on "Meet the Press" all asked their financial guests a variation of "when will the recession end?" The answer, of course, is "Nobody freakin’ knows!"

    If the market is reasurred by the comfortable pablum of the "Sixty Minutes" piece on Gentle Ben, then the so-called lords of Wall Street are bigger babies than I imagined. But Team Obama has obviously decided to manipulate the media (and the media loves to be manipulated) by sending out Larry Summers, Cristina Romer, and Ben Bernanke not only to cheerlead but to create a diversion to counter the criticisms about Treasury Secretary Geithner.

    This is all political theater. Sadder still was economic advisor Romer talking about stimulating consumer spending and confidence in financial markets. Seems to me that people will not spend if they have lost their jobs or are worried about losing their jobs. Unable to free themselves from a simplistic fixation on the Dow Jones Index, these experts seem unable to think seriously about jobs or wages. You can’t spend money if you don’t have money. Unless, of course, you’re a bank.

    Meanwhile, the Republicans, typically the handmaidens of Wall Street, are moaning about how Obama needs to deal with the "toxic assets" that banks hold — without increasing spending or raising taxes. These goons seem to be seriously suggesting that the federal government should take on the liability for all the bad loans that Wall Street made, leaving the financial markets free to get into trouble again, without any new regulations or even a promise to do better next time.

    Oh, and I am still waiting for someone to explain how the credit markets are so tight that no one has money to lend, and yet billion dollar deals can be made for drug company mergers. Just sayin’.

  56. 56.

    Michael

    March 16, 2009 at 11:45 am

    The truth is its lazy ass journalism to claim that what this person said or what that person said is affecting the market unless that person is announcing their company just beat estimates or if that person is changing monetary policy.

    Basically, it is the same as a claim that racetrack odds changed based on the advice of a single tout. There’s no objectivity involved in making the claim, just a subjective conclusion which is (more likely than not) completely incorrect, particularly in a chaotic system.

  57. 57.

    Hyperion

    March 16, 2009 at 11:50 am

    NPR also covered the Bernanke 60 minutes interview. They spent about the same time on the Red Cross torture report.

  58. 58.

    The Moar You Know

    March 16, 2009 at 11:52 am

    1. Do not watch the Dow. It is only 30 firms. Watch the S&P 500 instead if you want a better idea of what is going on with the stock market.

    2. This really is just another short-term rally before the next plunge. We will not see the "bottom" for a while yet, although my personal prediction is that the rate of fall is going to slow quite drastically.

    3. The stock market is only one indicator of the economy. We’ve had a decade of decent stock performance, combined with a decade of zero real income growth. If you look at the economy through the lens of stock prices, we did OK until 2008. If you look at it through the lens of worker earnings, we’re almost 10 years into a lost decade.

    4. The "bottom" happens at different times for different sectors of the economy, and those different sectors recover at different rates. By way of example, the stock market recovered from the Great Depression within ten years. However, the real estate market in some areas of the country did not recover their pre-depression prices until well into the 1950s.

    Bottom line: this isn’t over.

  59. 59.

    Maude

    March 16, 2009 at 12:08 pm

    I just read The People’s Panic by Michael Lewis.
    There’s a piece about Bear Sterns and what the CEO was doing while Bear was crashing. Cayne was playing golf and bridge. He must have had a real tantrum when he found out that Bear was going for sale.
    Lewis wrote about Cramer and his Bear statements.
    The book is disturbing because it shows how ignorant Wall Street is.
    If the Dow keeps steady or goes up, it may be the beginning of confidence returning.
    No matter what, Obama has done more than the last four presidents in the 1st hundred days to try to help the country and not a bunch of buds.
    Question: the guy who yelled about Madoff (sp) to Congress, stating that the SEC did nothing and he had the documents. Why didn’t he go to a financial reporter? He knew there were a lot of people who would get hurt by the scheme.
    It is possible that the big banks are changing their tune because Treasury let them know that the game was over.
    The nephew of Marty Perez wrote a book about working for Cramer. Cramer’s stock saying was: This is Wall Street. This is what we do.
    The nephew has an awful time there. Cramer smashed monitors and such things when he was mad, which was quite a bit.

  60. 60.

    Comrade Darkness

    March 16, 2009 at 12:18 pm

    @Brian J,

    http://www.youtube.com/watch?v=hk4TgUxX0fQ

    About 7:50.

    It was an older interview than I thought. It was linked off some blog comments, not for the content or roubini or taleb, which is good, but because of how ballistic the interviewers got at the suggestion that ceo incentives needed to be fixed. At about the 6:30 mark. It’s really astounding how much the cnbc guys and gals started shouting. They totally don’t get it (morons all of them). Management has every incentive to cheat if the risk is all on the taxpayers. Doesn’t matter what % bonuses are of the whole package. Doesn’t matter one whit.

  61. 61.

    Comrade Darkness

    March 16, 2009 at 12:21 pm

    @sgwhiteinfla, same thing, Barkleys got a few billion of our money as AIG’s counterparty.

  62. 62.

    Olliander

    March 16, 2009 at 12:22 pm

    Obama has done more than the last four presidents in the 1st hundred days to try to help the country and not a bunch of buds.

    Sec. Geithner (NY Fed president) helped orchestrate the bailout to begin with–please don’t assume he has no "buds" in hedge funds or on Wall Street that will be helped out by all this.

    Same for Larry Summers, protege of Robert Rubin, one of the biggest Wall Street "buds" out there. Rubin was running Goldman Sachs when the derivatives market was in its infancy and the street learned how to reap billions in profits using leverage.

    One of Geithner’s "plans" is to have private equity come in to buy up the toxic assets and resell them later, which Im sure will be a profit. Who do you think these private investors are? You and me? They will be his hedgie buddies for sure.

    Citigroup is as politically entrenched as a financial institution can be, the government now guarantees over $300 billion in toxi assets. This doesn’t happen just because they’re "too big to fail" It happens because your "buds" are deeply invested.

  63. 63.

    Olliander

    March 16, 2009 at 12:24 pm

    Obama has done more than the last four presidents in the 1st hundred days to try to help the country and not a bunch of buds.

    Sec. Geithner (NY Fed president) helped orchestrate the bailout to begin with–please don’t assume he has no "buds" in hedge funds or on Wall Street that will be helped out by all this.

    Same for Larry Summers, protege of Robert Rubin, one of the biggest Wall Street "buds" out there. Rubin was running Goldman Sachs when the derivatives market was in its infancy and the street learned how to reap billions in profits using leverage. Not to mention he was on the board of Citigroup while the balance sheet was loaded with flaming crap.

    One of Geithner’s "plans" is to have private equity come in to buy up the toxic assets and resell them later, which Im sure will be a profit. Who do you think these private investors are? You and me? They will be his hedgie buddies for sure.

    Citigroup is as politically entrenched as a financial institution can be, the government now guarantees over $300 billion in toxic assets. This doesn’t happen just because they’re "too big to fail" It happens because your "buds" are deeply invested.

    The dance continues…

  64. 64.

    Arachnae

    March 16, 2009 at 12:24 pm

    JCricket: I’m still waiting for all the retail stores/chains to close like I keep hearing about.

    Not sure what you mean, ‘waiting for’. Chains are closing all around me. There are burgeoning job openings for people willing to stand on a commuter route holding a big sign directing people to the store closing sales.

    WRT following the markets as a barometer of economic health – if the markets reacted to everything the pundits SAY they reacted to, it’s no wonder they’re in a hysterical swoon. The most annoying was the implication that Wall Street reacted to Obama’s inauguration… as if there was perhaps some doubt that it would really happen after he was, you know, elected…

  65. 65.

    Bootlegger

    March 16, 2009 at 12:50 pm

    @Miriam: Sign this petition.

  66. 66.

    Comrade Stuck

    March 16, 2009 at 12:50 pm

    @Tim H.:

    Well, what Bernanke really said to Wall Street is that the helicopters are still flying

    They are the ultimate wingnuts in this regard. They can’t function without someone telling them when and where to shit.

  67. 67.

    Michael

    March 16, 2009 at 12:54 pm

    The book is disturbing because it shows how ignorant Wall Street is.

    Despite the connections and privileges that come with great wealth (along with the inevitable accompanying manufactured aura of wisdom), the reality is that no maven of Wall Street is more than a standard deviation away from the average member of society in terms of intelligence or decisionmaing capacity. Some are just average and some even below that.

    The days of honoring the pretense are over – just because someone has great wealth does not mean that they are more successful in their decisionmaking capacity, nor does it mean that they are better analysts of macro-societal trends.

    It is time to rediscover the value of work, and to re-evaluate our view of capital.

    Finance is a means to an end, not an end in and unto itself.

  68. 68.

    Martin

    March 16, 2009 at 1:11 pm

    I don’t get the outrage over the bailout dollars going overseas. Since Nixon at least, the whole plot was to get foreign investment in US currency, markets, and so on. That makes the world dependent on our well-being and allows us to set the rules, to a certain degree. A big chunk of our current standard of living is a product of this. There are going to be times that we need to give up due to this – being an unequal partner in NATO adventures is one time, but the bailout is another. We invited the foreign investors in, we failed to provide oversight, and now they get to reap in the same benefits as everyone else because we invited them in.

    Once again, bitch at Gramm and Co. for this situation, not Geithner.

    Oh, and can someone explain to me how regulation is not a conservative ideal? Regulation designed to keep a market from running off the rails is the very definition of conservative. I don’t think people look at the circuit breaker in their house and think ‘what a radical, unproven thing that is’. Reason number 11 trillion why the GOP needs to go away.

  69. 69.

    Indylib

    March 16, 2009 at 1:24 pm

    @smiley:
    How long will it be before Ari Fleisher is on Faux telling us how unpresidential this is?

  70. 70.

    TheWesson

    March 16, 2009 at 1:50 pm

    Roubini’s not 100% into equities at this point.
    http://www.cnbc.com/id/15840232?video=1027496846&play=1
    He’s into cash.

    Citibank reported a ‘profit’ because it’s useful for Pandit to do so, presumably because he wants to avoid Citibank being nationalized. What I’ve gathered from the financial press is that Citibank made an operating ‘profit’ if you don’t include a boatload of ‘losses’ in the reckoning.

    It is not news that Citibank can get some income from its retail banking. If we left it alone for five or ten years, and nothing else bad happened, and it concentrated on making money and getting rid of its bad assets, it would probably be solvent.

    You have to look for the Time or Newsweek (or other mainstream weekly) cover that says something like, "Stocks: Down Forever?" At that point, the last, most foolish bull will have capitulated, and it will be time to buy.

  71. 71.

    TheWesson

    March 16, 2009 at 1:59 pm

    Reasons to not believe the crisis is over:

    There are further big waves of mortgage resets and recasts coming in 2009 and 2010 (for jumbo and Alt-A, large numbers of them being option ARM’s.)

    The housing market has not bottomed (gotten to the rental parity baseline) – but it is typically residential investment that leads the way out of a recession.

    Since either of these is easy to foresee, you would think they would be factored into the market.

    I think they are not, in the same way the popping of the housing bubble was not factored into the market in August 2008.

  72. 72.

    Ash Can

    March 16, 2009 at 2:16 pm

    @Miriam: And my snark-o-meter is obviously on the fritz. Apologies for getting a little overly wonky there. :)

  73. 73.

    Adrienne

    March 16, 2009 at 2:36 pm

    The problem is that just because they’re profitable, doesn’t take away from the huge holes in their balance sheets.

    You won’t get an argument from me there.

    in short, the banks are fucked. for a while

    We know that and that very fact is factored into the market right now. HOWEVER, it was factored into the market that we wouldn’t be seeing ANY positive signs of life from nearly ANY bank at all (re operating costs or anything else), particularly not a bank as large and deep into this mess as Citi. Now, since the market usually moves up and down based on how reality matches up with prior expectations, the fact that reality MAY be even a little bit better than the doomsday expectations required a correction, hence the "rally".

    memo. who knows if it’s actually true or not? who cares! buy citi!

    It wasn’t just ppl buying Citi, it was a buying rally period which indicated a little bit more confidence in our economy. People buying indicates that they are buying "IN" to the market which implies that they believe it will go up. That’s a good sign is all I’m saying.

    I’m NOT saying take it as gospel, I’m NOT saying that this "correction" is correct in either size, depth, or scope, and I’m NOT saying that it means everything is o.k. now and the show’s over, I’m also NOT saying that Citi couldn’t/wouldn’t exaggerate. All I’m saying exactly what I said, no more and no less.

  74. 74.

    Mister Colorful Analogy

    March 16, 2009 at 2:49 pm

    @cleek:

    put your faith in the market. in the market you must trust, to receive the invisible hand job.

    Win.

    Consider this line stolen. I have some economist friends who will love it.

  75. 75.

    Gemina13

    March 16, 2009 at 3:29 pm

    Taken from a friend’s blog, where she posts regularly about economics and wrote about this ongoing rally last week:

    "The usual notes apply: 1. Don’t stand in the way of this. 2. A sustained bear market rally would have some legs, enough to get you confident that the bear is dead and then whipsaw around and eat. your. brains, but 3. They’re very good opportunities if you’re lucky and careful. (Me, I don’t play this game. But I know people who do.) Good luck. "

    Rough translation: There are a lot of people who are going to lose their asses, and before you throw money into this market, you need to make sure you’re going to claw some back.

  76. 76.

    Chuck Butcher

    March 16, 2009 at 4:11 pm

    Any rally is going to get hit by profit taking and as I was typing this, this one just stopped. People doing the short term game will duck in and out fairly quickly when they think they’re getting close to topping. It just doesn’t pay to get invested in these numbers if you aren’t playing this short term game. On a positive note the day was pretty much a wash.

  77. 77.

    Dr.BDH

    March 16, 2009 at 4:19 pm

    A CNN analyst (not "the Market") thinks like your ex-girlfriend. Didn’t you learn anything from Jon Stewart last week?

Comments are closed.

Trackbacks

  1. Donklephant » Blog Archive » Quote Of The Day - Market Madness says:
    March 16, 2009 at 11:06 am

    […] “Really. No wonder we are in this mess. That is how my ex-girlfriend picked restaurants- “Let’s go here. I liked the look of their greeter.” If this is how the market really operates, I would not be surprised if this is just another short-term rally before the next plunge to the bottom.” – John Cole of Balloon Juice […]

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