The Left Right Paradigm is Over: It’s You vs. Corporations
by ilene - September 28th, 2010 1:46 am
This is an excellent essay by Barry on the state of politics and the petty and even false distinctions between our republican and democrat rulers. – Ilene
The Left Right Paradigm is Over: It’s You vs. Corporations
By Barry Ritholtz, The Big Picture
Excerpt:
For a long time, American politics has been defined by a Left/Right dynamic. It was Liberals versus Conservatives on a variety of issues. Pro-Life versus Pro-Choice, Tax Cuts vs. More Spending, Pro-War vs Peaceniks, Environmental Protections vs. Economic Growth, Pro-Union vs. Union-Free, Gay Marriage vs. Family Values, School Choice vs. Public Schools, Regulation vs. Free Markets.
The new dynamic, however, has moved past the old Left Right paradigm. We now live in an era defined by increasing Corporate influence and authority over the individual. These two “interest groups” – I can barely suppress snorting derisively over that phrase – have been on a headlong collision course for decades, which came to a head with the financial collapse and bailouts. Where there is massive concentrations of wealth and influence, there will be abuse of power. The Individual has been supplanted in the political process nearly entirely by corporate money, legislative influence, campaign contributions, even free speech rights.
This may not be a brilliant insight, but it is surely an overlooked one. It is now an Individual vs. Corporate debate – and the Humans are losing.
Full article here: www.ritholtz.com
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DiggMore Thoughts on Larry Summers’ Goodbye
by ilene - September 22nd, 2010 7:22 pm
Barry Ritholtz discusses Larry Summers’ departure on Fast Money.
The ECRI Weekly Leading Index
by ilene - September 10th, 2010 12:26 pm
The ECRI Weekly Leading Index
Courtesy of Doug Short
The rate of decline from the peak in October 2009 is unprecedented in the Institute’s published data back to 1967. Recently, however, the Institute has disclosed that two earlier decades of data not available to the general public contained comparable declines in WLI growth (in 1951 and 1966) when no recession followed (HT Barry Ritholtz).
The Published Record
The ECRI WLI growth metric has had a respectable (but by no means perfect) record for forecasting recessions. The next chart shows the correlation between the WLI, GDP and recessions.
A significant decline in the WLI has been a leading indicator for six of the seven recessions since the 1960s. It lagged one recession (1981-1982) by nine weeks. The WLI did turn negative 17 times when no recession followed, but 14 of those declines were only slightly negative (-0.1 to -2.4) and most of them reversed after relatively brief periods.
Three of the false negatives were deeper declines. The Crash of 1987 took the Index negative for 68 weeks with a trough of -6.8. The Financial Crisis of 1998, which included the collapse of Long Term Capital Management, took the Index negative for 23 weeks with a trough of -4.5.
The third significant false negative came near the bottom of the bear market of 2000-2002, about nine months after the brief recession of 2001. At the time, the WLI seemed to be signaling a double-dip recession, but the economy and market accelerated in tandem in the spring of 2003, and a recession was avoided.
The Latest WLI Decline
The question, of course, is whether the latest WLI decline is a leading indicator of a recession or a false negative. The published index has never dropped to the current level without the onset of a recession. The deepest decline without a near-term recession was in the…
Grading Financial Regulatory Reform
by ilene - June 26th, 2010 5:15 am
Grading Financial Regulatory Reform
This morning, we learned of a huge compromise in regulatory reform. The expectation was that no one was happy with the bill, but the politicians, who all get to go home to the voters and say “Well, at least we passed something.”
Overall, I give this a C minus: There are simply too many Fs to give them a much higher grade. Let’s look at what was passed and grade each section of reform:
TOO BIG TO FAIL: Grade: F
The new regulation does not directly address either the repeal of Glass Steagall or TBTF. The crisis legacy is a financial services sector that is highly concentrated with dramatically reduced competition. The six largest financial firms — combined assets: $9.4 trillion — will still dominate the industry. Too-Big-to-Fail remains the law of the land.
Another Blown Crisis Triggers a Classic TBP Post
by ilene - June 23rd, 2010 2:38 am
Another Blown Crisis Triggers a Classic TBP Post
Courtesy of Joshua M Brown, The Reformed Broker
Take the 5 to 10 minutes necessary to read Barry Ritholtz’s version of how Obama’s Oval Office address should have gone (link below).
I ripped the address to shreds an hour after it aired as I found the President uninspiring, incredibly non-specific and completely unaware of how much power comes to the Chief in times of crisis.
This President has a chance to make sweeping energy, regulatory and campaign finance reforms now. Like, today. His address the other night tells us that he has no such inclinations.
Barry has a list of initiatives that should have been front and center and it’s an instant classic post. Many of them are idealistic, but you gotta aim high if you want to save the democracy.
Me, I’m a bit more cynical. I’d say the downfall of our country can be neatly summed up in the image below and everything it represents…
OK, enough of that. Here’s how The Big Picture would’ve tackled this crisis and moment in time…
Missed Opportunity: BP Gulf of Mexico Disaster (TBP)
Are the Losses of Fannie and Freddie Now “National Policy”?
by ilene - May 27th, 2010 4:25 pm
Are the Losses of Fannie and Freddie Now "National Policy"?
Courtesy of Trader Mark, Fund My Mutual Fund
Barry Ritholtz and Dean Baker discuss a concept I’ve advanced – effectively Fannie and Freddie (or as we call them around here, FanFredron) are being run for loss to create a false housing economy via subsidization. They do put forth an additional point that I have not harped on as much: one added benefit of this ‘policy’ is our financial oligarchs win…. again.
If we ever do get back to a world where the private sector is truly a part of financing the housing market it is going to be mighty interesting to see what true mortgage rates will settle at, now that ‘strategic default’ is part of the American lexicon. The higher risks involved will create an increase in costs to every future mortgage due to this exciting new fad. But with government now supporting some 95%+ of all financing this is an issue that won’t face us for many years. Thankfully the government does not price in any risk and gleefully backs mortgages of almost any kind (still). Until some far in the future reform date, more below market rates offered by the 2 institutions that can gladly lose money forever – ponzi style.
(Amazing fact I heard the other day, Fannie
6 minute video
The Senate on Tuesday rejected a Republican sponsored measure that would effectively cut off support to Fannie Mae and Freddie Mac in two years. The government-sponsored enterprises, now in conservatorship, have already cost the
And there’s no limit to how much more they can ask for for the next two years!
Fannie Mae lost $11.5 billion in the first quarter while Freddie Mac lost more…
The Mainstream Media Doesn’t Know Sh*t About Securities Law or the Goldman Case- with Barry Ritholtz of The Big Picture
by ilene - April 30th, 2010 3:44 pm
The Mainstream Media Doesn’t Know Sh*t About Securities Law or the Goldman Case- with Barry Ritholtz of The Big Picture
Courtesy of Damien Hoffman at Wall St. Cheat Sheet
Last week Barry Ritholtz had an excellent post 10 Things You Don’t Know (or were misinformed) About the GS Case in which Barry noted that 99% of the mainstream media commentary regarding the strength of the SEC’s case is, of course, completely uninformed conjecture.
I sat down with Barry, who is a lawyer with experience in securities law, to get an insightful take on the SEC’s case against Goldman Sachs (GS):
Damien Hoffman: Barry, what annoys you most regarding the media’s commentary on the Goldman case?
Barry: The rule on securities fraud and misrepresentation is straight forward. You cannot make material misrepresentations when selling a security. You can’t say black when it’s white. You can’t say up when it’s down. John Paulson can’t say he’s long 200 million when he’s short 200 million. You just can’t and yet that’s what was done.
It doesn’t matter if Goldman lost money. So what? You can lose money. If I rear-ended a guy with my car and banged up my fender, I lose money. It has nothing to do with fault or guilt. State of mind on all that other stuff is irrelevant. The question is whether Goldman is guilty of committing some form of violation of these rules. It’s either yes or no. It’s amazing people get it so very wrong.
Damien: Which people or publications got it very wrong?
Barry: There are a lot. But, for example, the New York Times got it wrong when they talked about the loss. Market Watch got it wrong when they talked about “Mens Rea” which is mental state. There are just a few who got it wrong and misinformed the public.
You don’t have to be a specialist in this area. You just have to understand that there’s certain specifics of securities rules and litigation. If you are not familiar with that area, then, as I mentioned, pour yourself a big glass of shut-the-fuck-up and sit quietly in the corner.
At first, Jim Cramer, who’s usually smarter than this, lost his objectivity and said, “Goldman lost $90 million, how can there be a crime.” Are these people trying to put forth the legal standard that anyone…
Rally in 6th Inning or Top of the 12th?
by ilene - September 17th, 2009 10:28 pm
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Rally in 6th Inning or Top of the 12th?
Courtesy of Mish
Without a doubt, the strength and duration of the rally from the March low has surprised many people, me included. Inquiring minds are wondering "Is there still 1/3 more to come?"
Barry Ritholtz makes the case the Rally May Only Be in 6th or 7th Inning.
Noted bear Barry Ritholtz of Fusion IQ has been bullish on the market since March. Stocks have clawed their way back above 1,000 for the S&P 500 and the question remains: How much more to go?
"There’s nothing in the technicals that we look at that tell us we’re done," says Ritholtz, who authors the popular blog, The Big Picture. "Based on history, which is no guarantee, we could be in the sixth or seventh inning of this rally, which means there still could be a ways to go."
But there are caveats including stubbornly cautious investor sentiment. Let’s face it: A lot of us are on the sidelines (in cash), waiting for a shoe to drop.
Two Sides To The Coin
Actually it’s somewhat of a mistake to call Ritholtz a "noted bear" given that he is not perpetually bearish. He is a trader willing to play on both sides of the fence. Moreover, Ritholtz is certainly correct that there are many chart patterns that technically look good.
However, the opinion that the market can and will continue to rise is becoming ever more widespread, and ironically the bulls ALL say the same thing, namely "everybody else is bearish".
Mutual fund (MuFu) managers are not bearish, that much is certain. At 4.2%, the the MuFu cash-to-assets ratio is one of the lowest in history, in fact lower than at the 2000 top, and only a hair above the 2007 low. Those stats (from a friend) are from July. Given the continued rally, MuFu cash on hand has probably decreased even more in August.
The Dow’s dividend yield is now at the level of the the 1968 top and the September 1929 top. Good luck with that!
Even if the bearish case suffers from residual skepticism and a few ‘underinvested’ hedge funds, it can not be said that the bullish case rests on any solid ground either. The rally is based
…
Chart Junkie: Gold from Several Perspectives and Unemployment
by Chart School - September 4th, 2009 2:31 pm
Chart Junkie: Gold from Several Perspectives and Unemployment
Courtesy of Damien Hoffman at Wall St. Cheat Sheet
“The Professor” Corey Rosenbloom at Afraid to Trade offers us a longer term look at Gold. Although it’s breaking out on the shorter-term charts, the chart above clearly indicates there exists resistance above which must be cleared for the next bull rally to run. (Source: Afraid to Trade)
Gold Priced in Multiple Currencies
Precision Capital Management offers a very interesting look at Gold priced in multiple currencies. They state: “Gold is one of the leading indicators we follow at our website. Everyone seems to have noticed the spike up this week in gold, but how do we determine if the move is real, or merely a fakeout? To confirm that gold is advancing on its own merits as part of a longer term move, which is not the result solely of US Dollar weakness, we want to see confirmation of an up move in gold priced in other currencies. Above shows gold priced in the Canadian Dollar (CAD), Australian Dollar (AUD), Japanese Yen (JPY), and the Euro (EUR). When gold began its last advance in November 2008, the move was confirmed by higher lows in the commodity currencies of the CAD and AUD, as well as the EUR (even though there were lower lows in the JPY and USD gold). Eventually, there were higher lows in the JPY and USD gold at the beginning of December 2008. Accordingly, for the gold bull case, early confirmation would be to see current lows in AUD, CAD and EUR gold respected on the first pullback (especially in the former two as they are commodity currencies), preferably accompanied with a break through overhead resistance.” (Source: Precision Capital Management)
Gold with Fibonacci Indicators
Our partners over at RatioTrading bring us yet our third and final perspective on Gold: “As demonstrated in this chart, Gold has historically respected key Fibonacci Ratio levels and with Gold retesting all time highs, where could it be headed? Well as we look historically over the past year or so we see that in many instances when the GLD broke out and made a new low, it went right to either a 1.272 Fibonacci extension ($73)…
Is Barry Ritholtz’s Thesis For The Origins Of “Bailout Nation” Plausible?
by ilene - September 3rd, 2009 1:06 pm
Is Barry Ritholtz’s Thesis For The Origins Of "Bailout Nation" Plausible?
Courtesy of John Carney at Clusterstock
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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coordinator for PSW. She manages the Favorites backup site
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