What evil lurks around the next corner? What horror story scares you the most? Halloween has come to Wall Street and instead of handing out treats, this street has only tricks. CDO’s dressed up as top grade investments. Financial institutions dressed up like unsinkable Titanics. Rigged Casinos dressed up like free markets. >From Darth Paulson “forcing” the Death Stock bailout package, to the Headless Horseman Bernake throwing flaming rate cuts, fear has gripped the world this October. Our politicians, and their bipartisan views, are like Lenny and George, (lacking any real direction) and the US economy and the dollar are like cute little squeezable bunnies. Our media looks like the little man from the monopoly game, and has been renamed Rupert Murdoch.
…and the only economist to get it right is named Dr Doom!
This week’s contribution will be fairly light hearted. It is likely that you will not learn much (economically speaking) from reading this. (I am knee deep in researching and analyzing the Alt-Energy market, but am not prepared to start giving educated opinions. It may be a few weeks? ….we shall see.) Discussed below are some accountability issues, pet peeves and personal advice that I’d like to share. Feel free to join in my chorus as I take a moment to rant.
This crisis is arguably “THE WORST FINANCIAL CRISIS IN THE HISTORY OF MODERN CIVILIZATION!!!” By the time the full effects are felt and the casualties totaled, we will likely have the 20/20 hindsight vision to back that statement up.
With that said… Where were the warnings?
We the people…
At the moment, we all want to blame our politicians. “They failed to do this… they failed to do that…” …but let’s face it, our politicians are just extensions of us (the public). We need to be accountable for our shortcomings of policing our systems. Let’s face it… We’ve grown comfortable/complacent with the behavior of thinking someone else will do it. We hide behind excuses of attaining tough goals because our single voice can only carry so far and the problems we face are too complex.
No! If we wanted lobbyist and special interest groups out of DC, then we just have to demand it. If we want to attain lofty goals and police our politicians we have to go about it the right way! …which leads me to where the BLAME really belongs in this financial crisis.
They are the voice. They are the public’s eyes and ears. They are the police and they are the “experts”. They are the teachers and informers to the public, and they are the influence and leaders of public opinion.
…and they failed us! BIG TIME!
When the media was warned of an economic catastrophe, they scoffed and ridiculed those who warned them. They labeled them Dr Doom or other belittling “chicken little” / “fear monger” titles or they just dismissed them all together.
So I ask the media’s top news agencies, online news providers and publications to hold themselves accountable for their part in this crisis. The fact that you’ve finally caught up to speed does not change the fact that you failed to warn the public in advance! Let me reiterate: This crisis is arguably “THE WORST FINANCIAL CRISIS IN THE HISTORY OF MODERN CIVILIZATION!!!” …and you didn’t see it coming or you chose to ignore it. If you have “experts” on your staff that failed to see this coming, they should’ve already been fired. If you wrote about this crisis, and your editor/producer decided to cut it… then you need to point this out and get that editor/producer held accountable. (Use external media against them)
Now the media has a partial scapegoat. They can claim that they were misled. I agree with this defense to a small degree… but I feel that’s what separates reporting the news from regurgitating the news. Reporting the news requires some degree of research and fact checking, and as evidenced by the accuracy of the “fear mongers” calculations, the media clearly failed to do its proper research.
The Mis“leaders” (In the theater of accountability, the following 2 individuals are the most obvious and the most devious when it comes to not providing the media the proper guidance on what has taken place in the current crisis.)
It pains me to say this since I actually believe Mr Bernake is a good man, but he is the # 1 person that needs to be held accountable for the media’s inability to warn the public in advance of the current crisis. I don’t believe Mr Bernake had malicious intentions, but none the less, he has failed us. He inherited a bad situation. (The government, Greenspan, etc created this mess… but it unfolded under his watch!) As an academic whose expertise was on the great depression I am left with 3 theories on why I feel you should be held accountable for your statements such as “well contained” and should be fired immediately: You believed what you said! If that’s the case, let me reiterate: This crisis is arguably “THE WORST FINANCIAL CRISIS IN THE HISTORY OF MODERN CIVILIZATION!!!” …and you didn’t see it coming or you chose to ignore it.
You understood the size and scope of the problem, and chose to mislead the public because of the fear that: Exposing the truth would have a large negative affect on the market.
You understood the size and scope of the problem, and chose to mislead the public because you though it could be manipulated/fixed. If it’s #1, you are incompetent, and should tender your resignation or be fired.
If it’s #2, you should be fired and prosecuted.
If it’s #3, you should be fired and labeled incompetent.
Either way, you lacked competency or faith in the American people and their resilience/ability to cope with crisis and adjust.
Where do I start with this cheerleader? Public enemy #1 when it comes to helping fan the flames of the real estate bubble. Every time the bubble tried to deflate based on negative facts he yelled out “the bottom of the housing market had been reached” and then would spin statistics to his favor. The press gobbled up his crap and the bubble inflated some more. (myself along with many others railed against his statistical manipulations, and easily pointed out the innaccuracy and flaws, but as head spokesman for the NAR he was always able to yell louder. …thanks to the failed regurgitative media.) Now, this man collects a paycheck down in DC as a real estate advisor for Wall St and beyond, by saying “we are NOT at the bottom.”
How this man has not been tarred and feathered is beyond me. There should be some chargable crime that can be linked to his part in the current economic crisis. His statistic manipulations mislead the public in much the same way Wall Streets CEO’s did. He now pleads of ignorance. Yet he was constantly badgered by economist whom he called: “chicken littles”. You can’t have both Mr Lareah! If you notably/publically called these people “Chicken Littles”, then that’s proof of the fact that you were warned, and your pleas of ignorance are invalid. Instead, we all know he chose to willingly ingnore and distort the pending housing bust, for paycheck. How this is not a crime is beyond me since his status as spokesman put him in a position to affect the worldwide markets.
If you watch the TV show “Heroes”, you might know this quote: “Save the cheerleader, save the world.” Well, I have muttering an alteration of that quote for quite some time now: “jail the cheerleader, save the world”. Kudos to the man who started the “David Lareah Watch” website in 2005, for making a stand the media should have done years ago.
I am so tired of seeing and hearing from today’s “experts” on what to expect from the market now, and what they believe the public should do with their finances. Rarely do I hear them offer the proper “warning/risks” that need to be stated, and likewise, it is rare to hear them lay out parametors of whom their advice should apply to. Instead their broad generalizations are misleading, especially with the confidence they exude, as they wear their monikors of “experts” like crowns, with an air of entitlement.
At a personal level, I find myself tortured by being surrounded by the “Johnny come lately’s” to the financial crisis. (I’m talking about my immediate circle of people that I spent the last 2 years warning.) I am glad they have finally opened their eyes to what has been allowed to take place, but anguish having to hear their takes on what “really” happened. (“no, what really happened is people bought houses they couldn’t afford, and Wall Street helped finance it. ….what’s a CDO?”)
It sounds silly, but I wish there was a RGE T-shirt that we could wear, that would somehow allow us to get out of those conversations. An “expert tag” that we could wear that shows the world that we saw it coming and tried to warn the world. How about these tag lines:
RGE subscriber since mm/dd/yyyy
Fantastic 4sight – Dr Doom fan club
Don’t belittle, chicken little, I warned you the DOW was falling
Trick or treats? (both can be good or bad)
Oil – Trick. Dollar strength and deflation pressure has driven the price down. The true supply and demand pricing will be adjusted as production is slowed/manipulated to meet the corporate goals of these mega companies that spend large amounts of capitol on research, discovery and extraction. The cost/price of every aspect of your life has been factored into the equation when pricing oil, and its fall has likely gone slightly too far. Depreciated rate cut dollars will bump the price of oil, until the rest of the world adjusts equally. (If foreign markets don’t deflate their currencies, oil will see modest sustained gains regardless of production) Long and short, I see less recession pricing risk (which some say would force the price even lower) then I do demand adjustments. Thus, I see higher equal or higher price to be most likely. (I see $80 becoming the new mean price of the not too distant future, and prices under $70 as buying opportunities.) This commodity remains a “trick” because of the rollercoaster is much more easily manipulated then broad markets.
Oil companies – Trick. Many oil companies have rode the market’s rollercoaster and felt the full effects of the downside overall market. (Even though I suspect the “experts” have probably factored in the profits from the oil run into their upside equations???) I am left wondering why these oil companies did not buck the trend??? Something is suspicious here. Profits and paying dividends have been tempered by some greater forces.
Gold – Treat. As much as I HATE this commodity and its dogmatic value, I can’t help but see the “Johnny comes lately” public’s fear, spill into this arena for another run. Likewise its overall fall has probably exceeded it technical demand. Even if you bought at peak, your current losses would be less the overall market. (Even I begrudgingly admit that… so at current prices, I see this being a decent hedge right now at prices under $800 with better upside then downside.)
Auto Industry – TREAT!I hate the US auto industry. I have serious issues with their unions and general corporate vision. They are priced where they are for a reason. …and should be priced lower. In fact, they shouldn’t even exist based on how poorly they have been managed… They are at a BOTTOM with little room for downside risk that is short of extinction. With that said… They will be paramount to the eventual recovery of the US economy. No place, can the Alt Energy revolution take more immediate effect on an industry. IMO – their survival’s importance will be on par with the big banks, and restructure, R&D, and corporate welfare will create greater upside opportunities in this broken down industry.
At this moment, with all investments, I would only invest your gravy. If you do not have money to lose, then I seriously suggest not taking any risks. Even if I had money to burn, I would be very cautious with following my own direction/advice. All of my opinions at this moment do not amount to much more then educated guesses. (I believe my success and accuracy has been heavily influence by my impartial viewpoints, but my overall market knowledge is significantly short of being “expert” advice.) With that said, I leave you with this…
Times are tough! People will be forced to cut back on expenses. …but please do not fail to properly evaluate financial caution against personal safety. I say this because, on a personal level, I made a horrible mistake that could’ve cost me everything. My wife and I recently noticed that one of our car’s tires was low. We filled it, and days later it was low again. (Buzzing in the back of my head was the CO$T of replacing the tires in my car against the tempering of spending money) Well yesterday, my wife and daughter were on the highway as the tire blew out. They went sliding across 3 lanes of traffic and wound up backwards against the guard rail. No one was hurt, but they were shaken. …as was I. I like to believe that their salvation was good karma at work. I hope sharing this will serve as a reminder to pay forward the advice of caution, safety and good health.
Be safe and be smart, and have a Happy Halloween!
Miss America – Rich Hartmann