Archive for March, 2009

  • Sesame Street on Ponzi Schemes
    , March 15th, 2009 at 6:19 pm


    (H/T: Barry.)

  • The Roubini Portfolio
    , March 14th, 2009 at 11:38 pm

    The FT uncovers Roubini’s investment strategy:

    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.

    Update: Felix went to the source and finds that Roubini’s 401k is in equities but he has substantial holdings of cash, plus his interest in his own firm.

  • Blaming the Victim
    , March 14th, 2009 at 9:45 pm

    Joe Nocera has a good article in the New York Times where he points out an unpleasant truth—many of Madoff’s victims should have known better.

    “These were people with a fair amount of money, and most of them sought no professional advice,” said Bruce C. Greenwald, who teaches value investing at the Graduate School of Business at Columbia University. “It’s like trying to do your own dentistry.” Mr. Hedges said, “It is a real lesson that people cannot abdicate personal responsibility when it comes to their personal finances.”
    And that’s the point. People did abdicate responsibility — and now, rather than face that fact, many of them are blaming the government for not, in effect, saving them from themselves. Indeed, what you discover when you talk to victims is that they harbor an anger toward the S.E.C. that is as deep or deeper than the anger they feel toward Mr. Madoff. There is a powerful sense that because the agency was asleep at the switch, they have been doubly victimized. And they want the government to do something about it.

    Also, don’t forget to blame Jim Cramer and CNBC.

  • A Short-Selling Conspiracy
    , March 14th, 2009 at 11:42 am

    A totally unhinged article from the Daily Kos:

    This rabbit hole involves the thugs surrounding Jim Cramer and some of the top financial “journalists” from the New York Times, WSJ, Fortune magazine and BusinessWeek, top hedge funds, the Mafia, and the DTCC. It also includes “blackmail, smear campaigns, espionage, fraud, harassment, extortion, bribery, rumor-mongering, sabotage, off-shore money laundering, political cronyism, frivolous lawsuits, witness tampering, biased financial research, false identities, bogus credit ratings, bribery, libelous blogs, bad science, forgery, wiretapping, counterfeiting, collusion, lying, cheating, threats and theft.”
    And if that wasn’t fun enough, it may be the underlying story of what collapsed the entire, global banking system or at least served as the catalyst for the collapse.

    What, no JFK assassination?

    Unfortunately, this story is so rich and multi-dimensional that I cannot possibly hope to do it justice here.

    Well, he’s right about that.

  • Mississippi Fred McDowell
    , March 13th, 2009 at 6:48 pm

  • My Last Post on Cramer Versus Stewart
    , March 13th, 2009 at 3:18 pm

    Jim Cramer went on Jon Stewart’s show last night. Frankly, I have no interest in watching it. I’ve grown sick and tired of Jon Stewart and his act. His reputation is a bubble and I hope someone takes it down. As usual, Megan sums up the issue nicely.
    I’ll add in a few points. Jim Cramer isn’t a reporter, he’s a stock-picker and he has an after-hours show on stock-picking. The beginning of the show clearly states what it is. I do the same thing, just for a much, much smaller audience.
    I don’t think there are many people who have criticized Cramer as long as I have, but he’s not responsible for predicting the house of cards that we built up. I don’t see why how Jon Stewart blames Cramer for this.
    The news isn’t the agency that’s supposed to prevent crime. Sometimes they do, but that’s not their role. In the Madoff case, the SEC failed us, not CNBC. It’s the job of CNBC to ask the SEC what went wrong and hold their bosses accountable. I don’t blame local muggings on the local news either.
    Finally, and most importantly, the credit crisis was by its nature extremely difficult to predict by anyone person, let alone a news organization. Let me state this carefully because this is a nice little lie that needs to end. Some people got parts of it right, like Roubini and housing. But no one could have gotten the whole thing right. If you think they could have, then you don’t understand what happened. For example, you would have had to have known that the government would come to the aid of Bear Stearns, but not to Lehman Brothers.
    CNBC does have very good reporters (Faber, Griffith, Herera, and many others). I didn’t even see what was wrong with some of the clips Stewart played in his original piece. Faber merely had an executive go on record. That’s exactly what he should have done. Of all the people to make fun of at CNBC, Stewart went after David Faber?
    Later on that same show, Stewart interviewed Joe Nocera, a very good report at the NYT. Ironically, Stewart could have used his exact same tactics against the Times to make it appear that they caused the mess we’re in. Andrew Ross Sorkin (a great reporter) said that the Feds wouldn’t let Lehman fail. Ben Stein says something absurd nearly every week. And Gretchen Morgenson…well, I’ll stop here.
    If you want a cheap laugh, fine, watch Jon Stewart. But don’t think he’s offering a serious critique of financial journalism.

  • Madoff: A Real Criminal
    , March 13th, 2009 at 9:25 am

    I want to amplify Larry Ribstein’s point that Bernie Madoff is a real criminal.
    Over the last few years, we’re seen trumped-up criminals, like people who didn’t properly account for their pay, get treated as if they were crooks. Well, Bernie’s the real deal. He knew that what he was doing was wrong, and he lied about it for years. He’s a thief pure and simple. I hope our government learns to understand the difference.

  • Bloomberg Gets the A for the Day
    , March 12th, 2009 at 10:43 pm

    Glad to see that someone in the media still knows how to moralize:

    Madoff, in a dark blue suit and minus the baseball cap he’d favored when roaming the streets of his Upper East Side neighborhood, began speaking about his guilt. He started bilking his clients during the recession of the early 1990s, he said. Once he had a taste of it — by neglecting to buy securities his clients paid him for, for example — he just couldn’t stop himself.
    “I cannot adequately express how sorry I am for what I have done,” he said. “I am deeply sorry and ashamed.”
    His voice uninflected, his tone flat, he sounded about as ashamed and sorry as Hannibal Lecter.

    The person who wrote that works for Mike Bloomberg. Irony!!

  • It Could Be Worse
    , March 12th, 2009 at 10:39 pm

    November 24, 2008
    Russian analyst predicts decline and breakup of U.S.
    March 12, 2009
    Chuck Norris: “I May Run For President of Texas”

  • Bernie Goes Down, Market Goes Up
    , March 12th, 2009 at 11:47 am

    So we’re rallying on Bernie’s plea? Or maybe it’s one of those correlation/causation things I’ve read about.
    I guess Bernie should have pleaded guilty several thousand points ago. If only someone had informed the Feds.
    Esquire gives us a preview of Bernie’s new digs.