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Albert Edwards: "Equity Investors Are In A Vulcan Death Grip And Are About To Fall Unconscious"

Tyler Durden's picture


Sheer poetic brilliance from the world's greatest realist, Soc Gen's Albert Edwards: "The current situation reminds me of mid 2007. Investors then were content to stick their heads into very deep sand and ignore the fact that The Great Unwind had clearly begun. But in August and September 2007, even though the wheels were clearly falling off the global economy, the S&P still managed to rally 15%! The recent reaction to data  suggests the market is in a similar deluded state of mind. Yet again, equity investors refuse to accept they are now locked in a Vulcan death grip and are about to fall unconscious."

In fact, Albert Edwards and Alan Greenspan should get together in a cage match to the death. It is now well known that the former Fed governor was manipulating the stock market on a day to day basis, as his statement that "if the stock market continues higher it will do more to stimulate the economy than any other measure we have discussed here" makes it all too clear that the Fed does not care about inflation or unemployment but merely Dow 10,000 hat sales, and will do everything in its power, even if that means collaborating with Chicago hedge funds in dark pools, to get stocks to go up. Yet how long until investors finally realize that stocks are not only a lagging indicator but a manic-depressive one at that:

The notion that the equity market predicts anything has always struck me as ludicrous. In the 25 years I have been following the markets it seems clear to me that the equity market reacts to events rather than pre-empting them. We know from the Japanese Ice Age and indeed from the US 1930's experience, that in a post-bubble world the equity market merely follows the economic cycle. So to steal a march on the market, one should follow the leading indicators closely. These are variously pointing either to a hard landing or, at best, a decisive slowdown. In my view we are poised to slide back into another global recession: the data is slowing sharply but, just like Japan in its Ice Age, most still touchingly believe we are soft-landing. But before driving off a cliff to a hard (crash?) landing we might feel reassured when we pass a sign that reads Soft Landing and we can kid ourselves all is well.

So yes, the slump is coming and the catalyst will appear loud and clear when the next stage in the analyst downgrade game begins: note - everyone already took down their GDP estimates. Guess what comes next. And yes, those sky high gross profit margins that everyone is touting are a two-edged sword - corporate America has taken advantage of the good side, soon, however, the time to pay will come.

I read an interesting article recently noting the equity market typically does not begin to slump until just AFTER analysts begin to cut their 12m forward EPS estimates (for the life of me I can't remember where I read this, otherwise I would reference it). We have not quite reached this point. But with margins so high, any cyclical slowdown will crush productivity growth. Already in Q2, US productivity growth fell 1.8% - the steepest fall since Q3 2006. Hence, inevitably, unit labour costs have begun to rise QoQ. This trend will be exacerbated by recent more buoyant average hourly earnings seen in the last employment report. Whole economy profits are set for a 2007-like squeeze. And a sharp slide in analysts' optimism confirms we are right on the cusp of falling forward earnings (see chart below).

Edwards get downright hostile when discussing recent economic data out of US. We understand - the ever more acute manipulation of data by the BEA drones is getting infuriating. (bold below is Albert's)

August's rebound in the US manufacturing ISM was an even bigger surprise. This is a truly nonsensical piece of datum as it was totally at variance with the regional ISMs that come out in the weeks before. The ISM is made up of leading, coincident and lagging  indicators. The leading indicators - new orders, unfilled orders and vendor deliveries - all fell and point to further severe weakness in the headline measure ahead (see chart above). It was the coincident and lagging indicators such as production, inventories and employment that drove up the headline number. Some of the regional subcomponents (eg Philadelphia Fed workweek) are SCREAMING that recession is imminent (see left hand chart below).

Lastly, Edwards discusses the feasibility of his S&P 450 target in light of a Fed that is resolute in never ever allowing stocks to fall again.

Indeed we know that a central plank of the unhinged policies being pursued by the Fed and other central banks is to use QE to deliberately target higher asset prices. Ben Bernanke in a recent Jackson Hole speech dressed this up as a "portfolio balance channel", but in reality we know from current and previous Fed Governors (most notably Alan Greenspan), that they view boosting equity and property prices as essential for boosting economic activity. Same old Fed with the same old ruinous policies. And by keeping equity and property prices higher, the US and UK Central Banks are still trying to cover up their contribution towards the ruination of American and British middle classes - (see GSW 21 January 2010, Theft! Were the US and UK central banks complicit in robbing the middle classes? - link). The Fed may indeed prevent equity prices from slumping with any QE2 announcement. But this sounds a familiar refrain at this point in the cycle. For is monetary easing in the form of QE that different from interest rate cuts in its ability to boost equity prices? Indeed announced rate cuts in previous downturns often did generate decent technical rallies. But in the absence of any imminent cyclical recovery, equity prices continue to slide lower (see chart below).  The key for me is whether QE2 can revive the economic cycle, not equity prices temporarily.

And here is the kicker for all those expecting a massive stock surge on the imminet QE2 announcement: 

Many of our clients think QE2 might give a temporary flip to the risk assets but that the subsequent failure to produce any cyclical impact will cause an extremely violent reaction as investors lose faith in QE as a policy tool and Central Banks in general.

Forget our suggestion about the Greenspan-Edwards deathmatch (aside from the obvious outcome) - we cede it to the SocGen dude preemptively:

If we plunge back into recession, do not place too much confidence in the Central Banks having control of events. As my colleague, Dylan Grice, said last week "let them keep pressing their buttons." Ultimately they cannot fool all of the investors, all of the time.



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Wed, 09/08/2010 - 11:30 | 569526 firstdivision
firstdivision's picture

The PPT needs to be eliminated.  They create more harm than good, due to the unsustanability they promote.  The markets would have more of an orderly unwind if these markets were not falely propped up.  They have been the main reason for the rise in volatility in these markets. 

Wed, 09/08/2010 - 12:56 | 569743 Rasna
Rasna's picture

I agree FD, but that will never happen for political, monetary and fiscal reasons... I saw that something was "wrong" with the market action a year-and-a-half ago with the narrow trading range and the rallies out of the blue... This is a struggle to the death for the Fed and the Wall Street/Washington elites to keep the Ponzie going, and as we've seen, they have infinite resources... This is not to say that they will ultimately succeed, I think that they will be overwhelmed by the oncoming financial tsunami, but they will prolong the inevitable as long as possible, and we shouldn't underestimate their resolve.

Mike Pento said the following:

However, because it failed to spark faster GDP growth, most people now agree that Fed’s traditional ordnance, namely purchases of short-duration Treasuries from primary dealers in order to depress the yield curve, has lost effectiveness. But the Fed is never… ever… ever… out of ammo. In fact, according to Mr. Bernanke himself, the central bank may be about to unleash the heavy artillery.

Go here for the full article if you missed it:

Wed, 09/08/2010 - 13:41 | 569863 VegasBD
VegasBD's picture

Never underestimate the resolve of the people in power to remain in power. They will keep this going longer than we think they can. Im sure of it. But yes, this will end badly. Eventually.

Wed, 09/08/2010 - 13:43 | 569868 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

and as we've seen, they have infinite resources...

They have significant resources, not infinite. The scam will eventually end. The question is how long?

Wed, 09/08/2010 - 15:20 | 570141 Cognitive Dissonance
Cognitive Dissonance's picture

No, they do have infinite resources. That statement is correct.

What you're saying is that their infinite resources have a finite effect. And I agree. What the Fed and the powers hope is that enough people will say "Don't fight the Fed" long enough that they don't need to run down the effectiveness of their infinite resources.

It's already too late. But many won't come to that conclusion until it's too late for them. 

Wed, 09/08/2010 - 17:48 | 570537 Kayman
Kayman's picture

Sorry to dif CD, but the Fed has finite resources.  Money and credit depend on confidence, and everyday confidence is depleted a little more.

The Fed and its puppeteers like the illusion of infinite resources, and the illusion of infinite resources has kept them alive in the past.

Ultimately, they need to fall back on the "full faith and credit" of Uncle Sugar. And the "full faith and credit" of the U.S. is dissolving away like a sugar cube in a hot cup of coffee.


Wed, 09/08/2010 - 11:31 | 569529 bugs_
bugs_'s picture

ah but which hand is on their throat?  The Invisible Hand?

Wed, 09/08/2010 - 11:39 | 569547 firstdivision
firstdivision's picture

The one not giving the reach around to all the banks.

Wed, 09/08/2010 - 11:32 | 569533 liberal sodomy
liberal sodomy's picture

"Live long, and prosper"?

Wed, 09/08/2010 - 12:38 | 569699 curbyourrisk
curbyourrisk's picture

Can someone get in there and give Ben Bernanke a Vulcan Mind meld.....would love to see what is really rolling around inside that pinhead of his....

Wed, 09/08/2010 - 18:07 | 570569 Ripped Chunk
Ripped Chunk's picture






That's all I got

Wed, 09/08/2010 - 11:33 | 569534 Horatio Beanblower
Horatio Beanblower's picture

"On this edition of Peter Lavelle's CrossTalk, he asks his guests about the chances of a double-dip recession" -

Wed, 09/08/2010 - 11:35 | 569537 williambanzai7
williambanzai7's picture

By equity investors does he mean cyborgs?

Wed, 09/08/2010 - 11:36 | 569540 bigdumbnugly
bigdumbnugly's picture
"Equity Investors Are In A Vulcan Death Grip And Are About To Fall Unconscious"

that's because they've been saved in nick of time so often.   they've been conditioned to be dead meat when Scottie isn't there to beam them up anymore.

Wed, 09/08/2010 - 11:58 | 569587 SheepDog-One
SheepDog-One's picture

Yes the 'equity investor' of today has been lulled into complacency by the promise that Q/E is infinite. It is not, and the next one will be a huge flash and crash. 

Wed, 09/08/2010 - 11:36 | 569542 sethco
sethco's picture

I would describe this market as Quixotic.

Wed, 09/08/2010 - 13:59 | 569894 Sancho Ponzi
Sancho Ponzi's picture

Hey, that's my territory;)

OT: Today's gold chart looks like an ecg pic of a myocardial infarction.

Wed, 09/08/2010 - 11:45 | 569557 Bearster
Bearster's picture

The central bankers have power because we, the people, want them to have it.

Go to any group of people, let's say to make my case stronger, a Tea Party group.  Ask them if they think government wastes money.  "Hell Yeah!" they say.

Tell them, OK, we are going to cut off your social security and medicare benefits.  Every one of them over a certain age (around 50 or so) will scream bloody murder.

Tell them OK, we are going to eliminate welfare and replace it with nothing.  Most of them would object on *moral* grounds--what are the poor going to do??  Sure, they would say, cut welfare and make it more "efficient" but government HAS to give to people in "need"!

OK, let's cut off aid to all foreign countries (perhaps with the exception of one or two strategic allies), not fair, what will they do, etc.

OK, let us eliminate the Departments of: Education, Energy, Transportation, Health & Human Services, Interior, and Homeland Security.  Whaa???

OK, how about ...

You get the idea.  People want government to dole out more than it takes in, and that is the problem solved by a central bank!  It can give the illusion (for a while) that this is possible.  But reality will have its revenge...

Wed, 09/08/2010 - 13:04 | 569762 Calmyourself
Calmyourself's picture

Sure, we are all pavlovian dogs trained to support and dispense Government largesse.  None of us Conservatives would call for means testing of benefits or Norplant in repeat babymakers or the completely dismantling of DOE, Education, HHS etal, the cutoff of foreign aid and the closing of 80% of overseas bases..

Are you familiar with the psychological concept of "projection"?

Wed, 09/08/2010 - 14:45 | 570047 Maos Dog
Maos Dog's picture

I am sorry bearster, but this is bullshit. You have ACTUALLY done this, or is this a projection or a thought argument?

I have BEEN to actual tea party rallies, TALKED to REAL people about a lot of these issues, and I can assure you that these would not have been the anwsers.

Regarding this:

Tell them, OK, we are going to cut off your social security and medicare benefits.  Every one of them over a certain age (around 50 or so) will scream bloody murder.

No matter what the reality of SSN and Medicare is, the fact is that wealth has been stolen from the 50+ year old's all of their lives to pay for SSN and Medicare, and YOU may think it's an entitlement, but they don't share that opinion.

Of course WE know it's a scam and we will never see that money, and that it was flat out theft, but tell that to some 70 year old guy who has paid in for 50 years.

Wed, 09/08/2010 - 17:54 | 570547 TBT or not TBT
TBT or not TBT's picture

It sounds to me like you haven't done this experiment yourself, you know, asking around at a Tea Party event, what they think of shrinking government payouts and programs.

Wed, 09/08/2010 - 11:45 | 569558 Young
Young's picture

Bullish flag in treasuries bitchez!

Wed, 09/08/2010 - 11:59 | 569590 SheepDog-One
SheepDog-One's picture

Bullish treasury bubble indicator? Wow got to jump in!

Wed, 09/08/2010 - 11:45 | 569560 RobotTrader
RobotTrader's picture

Meanwhile, any fund manager caught at the end of the year without an outsized position in these stocks will likely be fired immediately.


Wed, 09/08/2010 - 11:46 | 569561 doomandbloom
doomandbloom's picture

vulcan, bitchez....

( whats happenin with that Hindenberg omens...)

Wed, 09/08/2010 - 11:48 | 569566 RobotTrader
RobotTrader's picture

Short sellers are now unconcious, trying to bet against these recent IPO's.

Wed, 09/08/2010 - 11:58 | 569584 Mongo
Mongo's picture

"if the stock market continues higher it will do more to stimulate the economy than any other measure we have discussed here" makes it all too clear that the Fed does not care about inflation or unemployment but merely Dow 10,000 hat sales


Utter brilliance!


TD, I love you!

Wed, 09/08/2010 - 11:57 | 569585 HelluvaEngineer
HelluvaEngineer's picture

Someone get back on the market pump - it's starting to go limp.

Wed, 09/08/2010 - 12:07 | 569614 Confused Indian
Confused Indian's picture

Its not a limp. Its an act to pretend that markets are natural. When common man has no money, no job, he must not be trading. So, these traders must be banks, funds etc who must be assured of a "bailout" in case they lose all they have in the markets, in this heinous attempt.

Wed, 09/08/2010 - 12:23 | 569642 HelluvaEngineer
HelluvaEngineer's picture

that wasn't quite the metaphor I was going for

Wed, 09/08/2010 - 12:24 | 569650 Confused Indian
Confused Indian's picture

But they did listen to you it seems. ;-)

Now, additionally they are playing, "Its the time to Disco" in White House.

Wed, 09/08/2010 - 13:41 | 569864 sethco
sethco's picture

They're losing it now. Blew their load too early today. There's always viagra though.

Wed, 09/08/2010 - 12:00 | 569594 SheepDog-One
SheepDog-One's picture

'Saddle up, regulators'!!

Wed, 09/08/2010 - 12:02 | 569598 rle1221
rle1221's picture

plenty of ink, plenty of paper .... the fed can do what it wants

Wed, 09/08/2010 - 12:02 | 569601 Confused Indian
Confused Indian's picture

Is there a provision in law to punish such economists or policy makers to be executed when they destroy the whole nation, based on policies they consider "correct", and giving no ear to other possibly valid opinions?

Wed, 09/08/2010 - 18:09 | 570571 Blistering Barnacles
Blistering Barnacles's picture

a most valid,well put and common sense question Sir.  you don't sound confused to me?

Wed, 09/08/2010 - 12:04 | 569604 Gromit
Gromit's picture

You can buy a DEC 11 SPY 50/45 bear spread for .30c - 

that's a 16 to 1 bet on Edwards' S & P 450 prediction.


Wed, 09/08/2010 - 12:04 | 569606 Aghast in Midlothian
Aghast in Midlothian's picture

While I'm no big fan of the Republicans, I hope the midterms give them control of one (or both) of the chambers of congress...I've never seen a time when investigations (into PPT, Fed, SEC, Freddie/Fannie, etc) were needed more. So long as the investigations serve truthfinding, and not political advantage....probably a pipe dream...sigh.

Wed, 09/08/2010 - 12:14 | 569627 Rogerwilco
Rogerwilco's picture


Do you really think there will be meaningful investigations? Politicians know who butters their bread. A few Dems will be marched into the coliseum and fed to the lions for entertainment, otherwise its just business as usual in DC.

Wed, 09/08/2010 - 12:37 | 569692 ZakuKommander
ZakuKommander's picture

Indeed.  If the Republicans wanted to block Benny Boy's recoronation they could have done so.  

Wed, 09/08/2010 - 13:43 | 569865 Rasna
Rasna's picture


What makes you think there will be investigations?

Reagan created the PPT!

Were there investigations under Bush II, with the Repubs in control of both houses?

There is not a dimes worth of difference between the Dem and Repugs...
We have a ONE party system, the Republicrats, who serve the Corporate plutocracy, and are hell bent on destroying the American middleclass and redistributing the wealth UPWARDS... How are those unfunded Bush tax  cuts working out for ya?  My guess is Gates and Buffett are pretty happy along with the Banks and corporations who benefitted from the tax cuts and $Billions in free TARP/TALF that they bought Treasuries with and speculated (cough... Goldman ...cough) with...

Wed, 09/08/2010 - 13:46 | 569872 Cruel Aid
Cruel Aid's picture

Picture a time... when the electorate got completely fed up and voted in, over the course of 6 years, a new group of citizens who were desirous of serving the country and then moving on with their lives. Leaving behind a future free of gainful political career employment, corruption and crony capitalism.

Or an asteroid wipes them out.

One of these could happen!


Wed, 09/08/2010 - 12:06 | 569611 Beard of Zeus
Beard of Zeus's picture

It irritates you that taxpayers would get pissed that they receive nothing for the masses of taxes they have already paid in to SS/medicare system?

The rest of your examples are red herrings. I doubt most people would get upset at stopping welfare, foreign aid, Dep't of Education, etc.

Wed, 09/08/2010 - 12:17 | 569621 Caviar Emptor
Caviar Emptor's picture

Albert Edwards and I agree. Greenspan tipped his hand on several occasions in interviews and speeches since this crisis began revealing that it is Fed doctrine to reflate the stock market in order "reliquify". 

I go even further than Albert Edwards in what I see as the motivation for doing this.

He sees it as a way to cheerlead a recovery, increase "con_fidence", and of course there's the quick wealth effect for stalwart 401K holders who didn't sell out at the bottom.

I think that in this severe economic crisis that paralyzed capital and credit markets that the stock market has been used as an ATM for corporations and banks, a backdoor bailout of the Fed's cronies using taxpayer money. 

Flying under the radar and attracting suspiciously little attention was the record, repeat, record issuance of secondary equity offerings during 2009 and ongoing record junk bond issuance. These were the tools that corporations needed to replenish their cash, fund operations and most importantly roll their maturing debt. Without this method of bailout there would have been large numbers of corporate bankruptcies. Banks received a huge benefit as they both issued the new equity/debt and traded it in the secondary markets using risk free money from the Fed. So they had marching orders: keep the new stock moving up. Usually large dilutive secondaries cause a proportionate plunge in stock price, but not in 2009. 

Perhaps the Fed and Greenspan can pat themselves on the back, thinking that they "saved the world" in 2009. But they're not prepared to face the consequences, the "side-effects" of their massive, bold but ultimately reckless policy. The problem with the world that they re-created is now several fold: First, bailouts and socializing losses create big inefficiencies. The money that corporations and banks received are not being redeployed into the economy productively, nullifying the "multiplier" effect. Massive interventions are also really a form of social engineering: This crisis was not a New Deal, it's a doubling down on the Old Deal! In the 1930s, economic policy by the US government was to bolster the middle class, not take from it. Finally, and most importantly, what the world did Not need now was dollars, more dollars. It's the only thing that there's just too much of! The price to be paid will be inflation right in the middle of a post-bubble depression with lower incomes, employment opportunities and real estate values. Oh the poor middle class.....

Wed, 09/08/2010 - 12:19 | 569634 Spalding_Smailes
Spalding_Smailes's picture


The Time for Bearishness Has Passed By Kevin Depew Sep 07, 2010 10:50 am





As you may be aware, some market forecasters are viewing the actions of the past couple of days as something akin to "The Last Days of Pompeii." All of the DeMark qualifications still read like a foreign language to me, but it feels like your DeMark indicator readings are in contradiction to that. Am I reading you right?

Using monthly range projections, the probabilities are right now that we close above the monthly projected highs for INDU, SPX, UKX, NDX and RTY.

The Nikkei has recorded a TD Sequential 13 buy signal on the monthly chart.

The S&P 500 cash index daily chart is coming off a DeMark TD Sequential buy signal.

In general, the weekly charts have all held critical TDST Down levels (a measure of trend) with the one exception being the Nasdaq Composite. One interpretation is that this index is a canary in a coalmine of sorts, but another way to look at it is that the sheer number of stocks in that index are making it look weaker than the rest of the market as breadth remains fairly weak, typical of the end of a secular bear market.

Meanwhile, the range has tightened for SPX. We're now in a range of 1165 to 1095 and have been very volatile trading through those upper and lower levels so far without qualifying breaks of that range. Because of the consecutive up closes we cannot break the top of that range today or next week until we have a down close. But we're getting closer to possibly making a decisive move.

The probabilities, based on my interpretation of the DeMark indicators, are that the move will be to the upside.

As mentioned on the Buzz and Banter (subscription required), I'm more optimistic right now than I've been in 10 years based on a combination of things: DeMark indicators, sentiment, general apathy and cynicism, etc.

A friend of mine on Friday, after the jobs report, said he couldn't remember a time when he was more right about the macroeconomic data and more wrong about stocks. I wanted to point out to him that you can't buy or sell stocks based on the economy. In the real economy things are very bad and will get worse for the foreseeable future. In the early 1980s, I remember my father, an independent pharmacist, struggling to make ends meet as the economy

took a toll. It was tough. My mother even went back to school at that time so she could find work. But the stock market was booming. Stocks are not the economy.

Let's look at it another way. What if in 1999, with the Nasdaq at 3500 or so, I told people that over the next few years we'll see the following:

1. The dot-com bubble will burst;

2. Stocks of companies that didn't go out of business will cut in half;

3. The first wave of a credit collapse will begin with the bankruptcy filing of a major telecom provider;

4. Terrorists will destroy the World Trade Center and try to destroy the Pentagon;

5. The US will wage a war on multiple fronts in both Afghanistan and Iraq;

6. Iran will develop nuclear weapons;

7. Oil will triple in price;

8. Real estate will collapse causing home prices to decline nationally by 20% or more;

9. At least three major banks that among them have been around more than 300 years and which employ 100,000 people worldwide will collapse;

10. Fannie Mae and Freddie Mac will be placed in conservatorship;

11. General Motors will be purchased by the US government; and

12. Gold will rise from $200/oz to more than $1,200.

I could go on, but the point is that all of that has already happened. My opinion is that the time to be bearish has passed. It's time to move on and prepare for something different.

It's now universally accepted that a "black swan" trigger event will cause things to collapse even further. Perhaps. But I have my doubts. I believe a "black swan" at this point is more likely to be an unforeseen positive catalyst. Remember, a "black swan" is not by definition a bearish event, just an unforeseen event.

The reality is I don't know what will cause companies to hire again, or profits to improve, or stocks to go higher. But having endured all that we have for 12-13 years now, and being unable to find any positive content about financial markets in either the media or even among hedge funds and strategists (sell side excluded), I think we've seen a pretty good bear market.

Make no mistake, I'm early in this and we probably still have further downside to go, but people are already protected and shielded
against that. Most people are either out of stocks and in bonds, or just out of financial markets altogether.

If I thought we were going to see a societal collapse of the magnitude some forecast, I wouldn't be writing this content, but actively looking to move my family somewhere safe. I may wrong, but I'm putting my money where my mouth is, literally, by staying here. Only time will tell, but the pessimism right now is deep and entrenched. This is the polar opposite of the entrenched bullishness in place prior to the debt crisis and real estate crash.

In 2004, at Minyans in the Mountains in Crested Butte, after my presentation a number of people were polite in saying they appreciated it but that they thought I was wrong to be so bearish.

In 2007 Todd Harrison and I attended a CNBC banquet at the Mandarin Oriental hotel where Maria Bartiromo presented Alan Greenspan with a Lifetime Achievement Award. Yes, just let me repeat that so it sinks in: In 2007 Todd Harrison and I attended a CNBC banquet at the Mandarin Oriental hotel where Maria Bartiromo presented Alan Greenspan with a Lifetime Achievement Award. Barely a half hour later, we're standing in the reception area where we strike up a conversation about real estate with senior economics reporter Steve Leisman. I told him I thought home prices would eventually fall by 20% or more on a national level. He disagreed. But I don't mean he just said, "I disagree." He said, "You're crazy." And he meant it. The point is not that Steve Leisman was wrong. For all I know he changed his mind the next day. The point is that entrenched bullishness produces responses such as "you're crazy." Entrenched bearishness works the same way, only from the other extreme.

If the end of this bear market is typical (and I believe it really will one day end), then after the mean reversion bounce that took all stocks higher in 2009, there will be individual stock advances that occur beneath the major indices, and those who are selective will outperform the broad market while the Greenspan years of capital misallocations get sorted out. Apple (AAPL) and Goldman Sachs (GS), for example, strike me as poster children for the kind of stocks most likely to underperform in the coming years.

My strategy is to be selective in stocks, and over the next couple of years, slowly reduce cash holdings in case I'm horribly misguided
in my burgeoning optimism. I have no need to use leverage because I've been well-protected over the past decade.

I may be wrong about all of this, but the only people who need to seriously worry about being wrong are people who make all-or-nothing bets. The market doesn't have to be all or nothing. I'm less concerned about the S&P 500 going to 400 than I am with how long it will stay there if it does go to 400. A week? Two months? A year? Then what?

People love to predict them some crashes, boy. They just love it. I know I do. It's exciting! Capital loss is so psychologically damaging, even if the loss is only temporary and for a few days, that those who call for crashes are like rock stars. But no one likes to talk about what happens after the crash. Why? Because it's so boring.

Wed, 09/08/2010 - 12:48 | 569728 Rogerwilco
Rogerwilco's picture


Equity values still correlate with income streams. Unless your black swan has found a way to lay golden eggs, I see no rational way to maintain what is now illusory income growth in many sectors. The pencil, for now, is balanced on its point. That is not its lowest energy state.

Wed, 09/08/2010 - 13:10 | 569779 Spalding_Smailes
Spalding_Smailes's picture

Kevin Depew has made many good calls over the years(early) hes not always bullish ...


Yes, it's here. Welcome to the Depression. No, don't drop whatever it is you're doing. Don't get up. It's not going anywhere. It will wait. It's just going to sit over here in the corner and read a magazine while you do whatever it is you need to do.

A Depression doesn't run hot and fierce like some crazed meth burner. A Depression is methodical, purposeful, patient. It will build a shelter out of tree branches and newspaper, light a small, well-contained campfire and wait you out, brother. While you feed on the empty calories of denial and popcorn, it will quietly gather shards of broken dreams and fashion them into a terrible weapon of blunt force reality.

     By Kevin Depew Jul 16, 2008

Wed, 09/08/2010 - 13:00 | 569754 Ben Graham Redux
Ben Graham Redux's picture

He's wrong, very wrong.  Everything he writes makes sense for a different time but not now.  This isn't the 1980's where we had an asset base just waiting to be revitalized.  Today we don't have an asset base, only miles of houses and supercenters.  Depew is guilty of what a lot of market participants are guilty of - choosing the wrong analog.

Wed, 09/08/2010 - 13:26 | 569817 Turd Ferguson
Turd Ferguson's picture

This is exactly right, BGR. Depew has fallen into the same trap for which he criticizes Liesman...the belief that the basic fundamentals of the global economy haven't changed. But they have and that is where he fails.

There can be no Keynesian rescue this time. There is no further room to inflate and borrow our way back. The S&P is indeed headed to 450 but not overnight. It will be a long, slow torturous decline. There may be some hidden opportunities along the way to purchase undervalued equities but, on balance, "investors" in stocks are going to get crushed.

The end of The Great Keynesian Experiment is upon us. Prepare accordingly. 

Wed, 09/08/2010 - 13:58 | 569890 Rasna
Rasna's picture

Agree Turd...

Fundamentals have NO meaning within this master planned alternative universe... It's a Jedi Mind Trick...

Wed, 09/08/2010 - 14:10 | 569899 Spalding_Smailes
Spalding_Smailes's picture

If we decide to bring manufacturing home over the next 5-10 years as we ramp up tariffs on China this would be the type of "Black Swan" positive story most do not anticipate. What is really stopping this from taking place ? The lobby from nike,caterpillar, or hasbro .... We need fucking jobs and everyone from from the top down too joe six pack understand this.

IMHO we have many options before Dow 450.

The amount of work it would take to rebuild 60% of our manufacturing that has been lost over the last 20 years would create many,many jobs for a long time no?

And this annoucement the second it was made would propell our nation out of your mad max senerio ...

Wed, 09/08/2010 - 14:14 | 569943 Sancho Ponzi
Sancho Ponzi's picture

There's a dirty little secret the Gov't doesn't want you to know: They NEED us to continue  buying cheap goods from China, Vietnam, Korea, etc. in order to keep the CPI in check. If we return manufacturing to America, the CPI ratchets up, and all entitlement programs tied to the CPI balloon accordingly.  

Wed, 09/08/2010 - 14:28 | 569995 Ben Graham Redux
Ben Graham Redux's picture

Sancho is right on the money!  Not only do we keep cpi in check with cheap goods, we're actually paying people not to accept lower wages.  I was at a meeting last night with small manufacturers and a big complaint is that people are taking unemployment plus working under the table because it pays better than prevailing wages.

Another factor is the decline in profitability that we'll experience when we move the capital intensive industries back to these shores.  Corporate profit margins will fall from already high levels. 

Ultimately, you have to do a better job of thinking through the ramifications of changes in our economy.  Clearly Kevin Depew hasn't.

Wed, 09/08/2010 - 14:36 | 570004 Spalding_Smailes
Spalding_Smailes's picture

Agree 100%

But as turd said that model is heading to hell in a handbasket. If the USA goes mad max everything is going down with it, China,Europe so we are all in bed together. At that point who cares about CPI?

The world needs the US consumer or they are all fuck'd. The only way the consumer comes off the mat is with a large influx of jobs. The ponzi will fall without the us consumer ...

Wed, 09/08/2010 - 15:27 | 570152 Sancho Ponzi
Sancho Ponzi's picture

I'm not saying it's a bad idea to bring industry back to the US. What I'm saying is that by providing government incentives (tax breaks, etc.) and disincentives (tariffs, embargoes, etc.) to bring industries back home, the O Team and Congress Critters would be kicking the can back up the road, and that's something these 50+ year old eyes have yet to see.

Wed, 09/08/2010 - 14:38 | 570022 Rasna
Rasna's picture


Manufacturing jobs will NEVER return to the US... Bush I and Clinton saw to that with WTO/NAFTA/GATT and all of the other bull shit/ridiculous trade agreements that sold American manufacturing down the river... America's trade policy has been turned on it's head as a result of decades of mismanagement bordering on criminal... At this point the corporations won't allow changes that will bring jobs back to the US...


Jack Welsh, former GE CEO's attitude toward GE employees might best be summed up by one of his more famous quotes, which state that:

In the perfect business world, companies would have their manufacturing plans on barges, so they could move them around the world looking for the cheapest labor.

From the book “At Any Cost”:

Companies move jobs all the time. But seldom do they move them with as little consideration given to the human and societal consequences as does GE. Consider Welch’s announcement in January 1998 of another year of record profit. Buried in that proclamation was a $2.3 billion charge to cover, among other things, the cost of eliminating more than 4,000 manufacturing jobs.” In many of the cities affected by the job loss, “...union and government officials had engaged in months of negotiations, offering wage concessions, tax breaks, anything, so that their locals and communities would be allowed to keep the jobs.

Yes, we need jobs, but with most if not all corporations looking at the world as Welsh/GE does, don't count on them coming back from overseas any time soon... Our President and most of our Congress People are corporatists.


Wed, 09/08/2010 - 14:43 | 570046 Spalding_Smailes
Spalding_Smailes's picture

What future are they looking at Sep. 8, 2010?

What kind of future does Cat, Nike, Intel, Google have if we hit do 4,000 let alone 450, if this does happen the rest of the world goes up in flames, so much for CPI....

The wheels blow off everything game over...


Wed, 09/08/2010 - 15:16 | 570130 Ben Graham Redux
Ben Graham Redux's picture

450 is on the S&P, not the Dow.  We've been suriving crashes since we've had exchanges.  The better question to ask in regards to Cat, Nike, Google is how do people finance their services?  Does it come from income or from debt.  They'll all get hurt but to varying degrees.

Wed, 09/08/2010 - 16:00 | 570233 Spalding_Smailes
Spalding_Smailes's picture

450 S&P ....ok its not mad max but it still blows :-)


I'm just trying to work all this out in my head. I do not think we can service our debt as a nation unless we produce some jobs. Krugman, Uncle Ben all the stimulus pimp's must know we can not have 20% unemployment in this ..."new normal" going forward.

The credit/debt bubble that kicked into high gear with Reagan helped prop up the USA as all the jobs left out the back door. So everyone leveraging up still lived the good old middle class dream. This is all gone, never coming back, the securitization market will never ever produce the high velocity credit again.The rating agencies ... my god, who would trust those clowns.

The people will not accept this new normal 20% unemployment and its going to start come nov... Obama is a one and done. If the next set of clowns come into office and do not change this,produce some jobs, the people will, the people were sold a lie with globalization, the easy credit over the last 30 years have hidden the true destruction of globalization. Not any more ...


Wed, 09/08/2010 - 16:21 | 570324 Ben Graham Redux
Ben Graham Redux's picture

Even if we produce jobs, there is no way we can service our debt.  Think of it as a headwind.  We can service our debt but we all have to take a 30% reduction in our possible standard of living for the next 50 years. Or we can default on our debt and start over.  We've been starting over in this country for our whole history, why should today be any different?


Wed, 09/08/2010 - 15:32 | 570168 traderjoe
traderjoe's picture

I like the alternative thinking. I try to imagine what could happen that would be positive that would stop the slow-moving collapse. 

Yes, it would be possible to onshore manufacturing jobs. I think the real rub is two-fold - (1) entitlements across the country; and (2) bloated government expenditures. 

You can't simply lower government spending without triggering another leg down in the economy. Government spending is one person's income. If the government were to balance it's budget, that would 'take' $1.5 trillion out of the economy - at the Federal level alone. Of course, tariffs on China would require us to be self-funding. 

Entitlements are looming. We can't meet them. At any level of government. 

The advantage of a crash is it allows for a reset. We need the reset. There will be no gradual changes that turn the Titanic. See the speeches today. Nothing but arguing. Fiddling while Rome burns. 

Here's an example I use sometimes: Illinois has $5 billion in unpaid bills. Just hasn't paid them. Their deficit is 50% of their budget. How can that possibly be fixed without massive dislocation and likely civil unrest? 

ZIRP is a trap. Neo-Keynesianism is a trap. You are watching a slow-motion train wreck. 

Wed, 09/08/2010 - 19:00 | 570655 Kayman
Kayman's picture

I hope you're wrong Rasna;

The reason our amoral, anti-american corporations were able to "outsource" american jobs to (mainly) China, is that they were able to retain the American middle class consumer market.

Short term thinking for the Welches of the world, and long term cancer for the U.S. For this patient to survive we are going to have to chop off the gangrene of TBTF and the traitors espousing "world trade". 

We are living in hyper-inflation now.  How long does the piece of junk from China last ?

What does it cost to go back to the store to replace it ?  What about the labor costs of dealing again and again with the no quality,  no longevity crap?

So, the U.S. can (if there were any intestinal fortitude available) subsidize land, wages and investment to build factories to service the American market. 

I am not against free trade, but that is an academic concept, it does not exist in the real world.  The U.S. has to put on the Yankee trader hat and get back to managed trade.

Unless that happens there will be no foundation for the economy, further shrinking of the private (tax paying) job base, and ultimately we will have what China fears- jobless people burning down the edifices of our elites.

Perversely, John Maynard Keynes is often credited with saving capitalism, but now we have had such a dose of Keynesian debt administered that it is the medicine that is killing the patient.

Like I said above, I hope you are wrong.



Wed, 09/08/2010 - 21:15 | 570832 anony
anony's picture

I despise what corporatocratic management has done to this country as much as anyone, but those who ignore or intentionally downplay the role of Unions are being disingenous.

Why did americans begin to buy Japanese autos after the advent of them in this country with the first Datsuns?  Yugos? And one of the most prolific statements, as I read the history in late in the late 60s and 70s, was "don't buy it, it was made in japan" and would fall apart in minutes. It was an epithet that every american must have understood.

And then what happened?  Unions got everything they demanded and more and year by year the quality descended, the workman got more for putting out pathetic products. They didn't vow to increase quality, they vowed to strike for more money and benefits. That was their only mantra. They held back workers who found better ways to do things, threatening and perpetrating violence on the out-performers.  They threw Demming out of the country and he happily found an ear in the Datsun motor company that instituted his quality control programs, machining standards and other technological innovations that turned Datsun into a standard bearers, copied by Honda, Mazda, and Toyota.

The american worker just stood by and instead of demanding product improvements, demanded ever more money to do less, resorting to sabotage even after their demands were met. And in the process with the able assistance of cowardly workers in management, bankrupted a $250,000,000,000 company.



Wed, 09/08/2010 - 22:45 | 570936 StychoKiller
StychoKiller's picture

Beyond Bear country "there be monsters!"

Wed, 09/08/2010 - 12:19 | 569637 TradingJoe
TradingJoe's picture

Don't care when IT happens, I know it WILL! Anything in-between is just filling the BLANKS for the ULTIMATE SUCKERS! This thing called Market will go down and stay down and there will be a lot of PAIN for MANY, SUGAR for the FEW who still have a BRAIN! In the meantime, TRADE, don't be a smart ass politician, we are TRADERS, we don't make politics, we TRADE IT! Someone said the other day on Nic's analysis that charts are no good, well since the entire market is manipulation, aren't charts the expression there of!? Ergo..we trade of the charts, it just takes some skill "you know"! Be ahead of the HFT by few days or even weeks, otherwise you stand no chance! Trade well, Live better! Go Short!

Wed, 09/08/2010 - 13:14 | 569794 TooBearish
TooBearish's picture

Well said - but I 'm a better buyer simply beacuse the FED views equity prices as a policy directive and they want prices higher, and so it shall be - thanks Ben!

Wed, 09/08/2010 - 12:28 | 569662 augmister
augmister's picture

The Death Spiral continuuuuuuueeeesssssss......

Wed, 09/08/2010 - 12:34 | 569678 Caviar Emptor
Caviar Emptor's picture

To wit : Further adventures of the misguided Fed policy that "reflates" the stock market:

Food prices hit a 13 month high

Lumber hits a limit up at the CME

Wed, 09/08/2010 - 19:07 | 570669 Kayman
Kayman's picture


Tell me about the lumber cash market in October. China is buying all the low-grade they can get their paws on, but unless you sell the good stuff to the U.S. nobody can break-even.  

And consider that something like 30-40% of production is off-market.

Wed, 09/08/2010 - 12:37 | 569691 FranSix
FranSix's picture

This guy should get his facts straight.  Its called:  'The Vulcan Nerve Pinch'

Thu, 09/09/2010 - 07:32 | 571348 Praetor
Praetor's picture

Unless the author thinks we are all stupid Romulans.

Wed, 09/08/2010 - 12:44 | 569715 sbenard
sbenard's picture

I didn't know that Vulcans had a "death grip". And I consider myself a Star Trek fan!

That said, thanks EVERYONE here for the insights, both in the articles and the comments. This is THE best finance blog -- PERIOD!

Wed, 09/08/2010 - 22:47 | 570939 StychoKiller
StychoKiller's picture

There is no such thing as a Vulcan death grip, but it was used to fool the Romulan commander into believing that Spock was going to defect from the federation...

Wed, 09/08/2010 - 12:46 | 569720 ZakuKommander
ZakuKommander's picture

Let's agree that the Fed really, really wants the DOW to go to 36,000, baby.  

And let's agree that Ben wants to destroy the dollar.

And let's agree that the non-manipulators have "fled" the equity markets.

So what, pray tell, is going to keep the Fed from having its way, Mr. Edwards?


Wed, 09/08/2010 - 15:33 | 570173 ElvisDog
ElvisDog's picture

For the last time (well, probably not) the Fed does not want to destroy the dollar. The Fed is a collection of privately-held banks. The thing they have to "sell" is money and debt. Why would they want to destroy the value of the thing they want to sell???

Wed, 09/08/2010 - 22:48 | 570942 StychoKiller
StychoKiller's picture

Perhaps, but I don't want to die either!  Guess what's gonna happen...

Wed, 09/08/2010 - 15:39 | 570189 Hephasteus
Hephasteus's picture

The overwhelming realization that it doesn't lead anywhere. That winning while losing gets you nothing.

Wed, 09/08/2010 - 19:20 | 570686 Kayman
Kayman's picture


So let's see, 2 years of ZIRP resulting in ZIP (thanks JR), 2 years of financing directly and indirectly the U.S. deficit through treasury purchases, 2 years of swapping (used only once) toilet paper for treasuries (thereby closing the gap in the value of each) and no results.

So, either the damage to the TBTF balance sheets from past transgressions are so large that it takes continuing money and credit creation just to stand still or they have created a financial Gordian Knot that only the sharp sword of an executioner will dismantle.

That the Fed has infinite resources is a myth perpetuated to salve the gullible. By dropping rates to zero the Fed has castrated itself. 

Wed, 09/08/2010 - 12:53 | 569739 Miles Kendig
Miles Kendig's picture

Ultimately they cannot fool all of the investors, all of the time.

Unfortunately this matters not to central bankers.  What matters most to central bankers is the ability to continue to fool themselves.

Wed, 09/08/2010 - 13:28 | 569749 sbenard
sbenard's picture

Wow! Don't hold back, Albert! A rarity to see some integrity! Amen and Amen!

Wed, 09/08/2010 - 13:08 | 569770 HarryWanger
HarryWanger's picture

Headline from Job Outlook for Executives Is "Strong" as Firms Seek Growth

Headline from Marketwatch: Lockheed Martin to cut executive workforce by 25%


Wed, 09/08/2010 - 22:50 | 570943 StychoKiller
StychoKiller's picture

Based on my time working for Martin Marietta, there's a lot of dead wood that can and should be pruned there.  They will not be missed.

Wed, 09/08/2010 - 13:14 | 569791 tahoebumsmith
tahoebumsmith's picture

"Investors then were content to stick their heads into very deep sand and ignore the fact that The Great Unwind had clearly begun." This time the unwind is going to unwind all the way because we have fired all our bullets in target practice and now the enemy is approaching....

And what do we have to show for it? This debt can never be paid back. The FED has become more toxic then AIG,Fannie,Freddie and GM put together with no end in sight. They are losing their own game and unfortunately now it looks like they will stop at nothing to hide their incompetence.


Wed, 09/08/2010 - 13:25 | 569818 Bankster T Cubed
Bankster T Cubed's picture

"let them keep pressing their buttons"

yeah sure.....

sorta like letting a wild kid keep stabbing you in the head with his fork



Wed, 09/08/2010 - 13:27 | 569819 lsbumblebee
lsbumblebee's picture

I like it here on Omicron Ceti III, Jim.

Wed, 09/08/2010 - 13:33 | 569820 dvsteenk
dvsteenk's picture

What's going on? I suppose many here know the market became all fake, but are wondering what's the sense of it?

To the utter disbelief of many mortals, including me, the S&P has been ramped up again in merely four days from 1037 to 1107, followed by a fake sell-off to 1090 yesterday, and today back above the 1100. Already an irrelevant question, but on what "good" news? There is only good news, remember? Or blame it on the stupid shorters? Almost identical pumping happened between June 8th and 15th, and between July 6th and 10th (continued into 13th). Allowing "unexpected" revisiting of hopium highs, seemingly irrespective of macro-data releases.

I pondered what could be the strategy behind all this (forget the "keeping up appearances" manipulation by the PPT for a while...). Could this be actively planned using multiple-asset arbitrage relying on the strong cross-correlations reported by ZH, and facilitated by relatively small volume trading? At intraday level, the main ramp-ups occur in relatively short time-stretches, often conveniently surfing on some "better-than-expected" number, during which the insiders are probably buying and selling to themselves (i.e. fake trading), squeezing-out shorters on the way up, and requiring only low volume if there are little or no sellers in the market. Makes sense. But, if "real" market participation in equities trading has been dwindling, I suppose this does not produce large profits for the manipulators. The only way insiders can still make money must be from derivatives (options, futures and ETF's, or other?) or large arbitrage bets on negatively correlating asset classes. As the potential gains from the leveraged derivatives "bets" largely outweigh the costs of bidding up stocks, profits are almost guaranteed, especially at moments when outsiders expect it to happen the least (i.e. preferably after bad=good macro-data) and because the insiders know the "scenario" that will be followed. 

But who are the losers then on the other end of the game who keep on enabling this obvious scheme?

Inflated equities for the sole purpose of keeping up appearances? Perhaps. Or are some still making money too? Undoubtedly (remember those perfect quarters...).

Is this done legally? Probably not entirely.

Does anyone still care?

Wed, 09/08/2010 - 13:51 | 569881 Pining for the ...
Pining for the Fjords's picture

"what could be the strategy behind all this..."      Great question, and begs two more questions:  1. What is the specific intended endgame for all of these machinations, and 2. Can TPTB pull it off.  How you answer these will determine your strategy for surviving (let alone trading) this insanity. 

My own 2-cents, I think the intent is simply a soft-landing- to paper over the evident decay and degeneration of the financial and asset class edifice long enough for that rare beast "authentic growth" to reemerge from its cave.  The intent of people in power is to stay in power.

The second, more pertinent question- Can they pull it off?  They have the printing press, the real press, corporate America, the government, and a total disregard for legality on their side, so maybe.  Yet my gut says the answer is no-  too many balls in the air, too many unknowable bumps in the road, and too damn much arrogance.  Crashing into a mountainside at 500 mph is as close to a soft landing as we will get.   

Wed, 09/08/2010 - 19:38 | 570709 liberal sodomy
liberal sodomy's picture

gs vs morgan stanley


2 men enter, 1 man leaves

Wed, 09/08/2010 - 13:29 | 569829 ex VRWC
ex VRWC's picture

Common wisdom says that easing does three things - keeps government borrowing costs low, encourages lending, and drives asset prices up. The reasons 'investors' (ie, traders) lose faith in QE is because it does not produce cyclical impact.  I argue here that, in fact, the real problem is that easy money creates a feedback loop that destroys credit, not just fails to stimulate it, and has the effect of balkanizing the economy into speculators and everyone else.  This dynamic works in insidious ways to undermine economic activity at all strata.

Therefore, the default answer to the question the author poses (whether QE2 can revive the economy rather than just asset prices), is no, absolutely not.  It will by default destroy the economy further.  


Wed, 09/08/2010 - 13:39 | 569856 sbenard
sbenard's picture

Thanks! Insightful observation!

Last week, John Hussman (Hussman Funds) wrote an article on QE and why it will inevitably result in certain Dollar collapse. I think you just said something similar in a succinct synopsis. Hussman's article is here:

Wed, 09/08/2010 - 13:58 | 569892 Turd Ferguson
Turd Ferguson's picture

Good stuff. As is this, from our old buddy Egon:

Wed, 09/08/2010 - 13:35 | 569839 sbenard
sbenard's picture

The cliff diving and Soft Landing sign remind me of one of my favorite lines from a Steve McQueen movie, The Magnificent Seven.

McQueen and Yul Brynner are talking to the village sage and McQueen tells of a man who jumps out of a seven-story building. As the man is falling toward his inevitable fate, the occupants of the building hear him saying all the way down:

"So far, so good!"

That's where we're headed. So far, so good! It's the crushing conclusion I'm dreading!

Wed, 09/08/2010 - 14:28 | 569997 anony
anony's picture

Little problem there, since a jumper never knows the pain, or suffers any loss. It's simply over.

Not so with a market play-uh who gambles on markets losing, perhaps, everything.

Wed, 09/08/2010 - 14:20 | 569968 FranSix
Wed, 09/08/2010 - 14:26 | 569988 anony
anony's picture

Mr. Edwards should specify what "the market" means.

Dark pools, and other such 'market makers' manipulated by a few semite investment bank robbers embodied in the cue ball, Lord Blankfein in the United States and Diamond at Barclay's in London, are one market that ALWAYS wins.

Then there is the other market which I presume he is referring to, reacting in Newtonian fashion to the purposeful misinformation, lies, outright planted fiction that passes for financial news.



Wed, 09/08/2010 - 14:32 | 570010 rle1221
rle1221's picture


Wed, 09/08/2010 - 15:56 | 570236 Pope Clement
Pope Clement's picture

Yeah I remember reading somewhere that the Ashkenazim DNA is Turkish - Koestler's 13th tribe? 

Wed, 09/08/2010 - 20:28 | 570777 Kayman
Kayman's picture

Koestler- always a good read. 

Wed, 09/08/2010 - 14:29 | 570001 topshelfstuff
topshelfstuff's picture

a good thread to insert this, and keep in mind that while the PPT and QE2 are rightfully a topic and been posted on, isn't $XXXBillions, or just Blank Checks, going to the very banksters that got us to where we are today, so we have a PPT on super steroids, when will this end---this youtube says it all, please listen in

"this is deliberately engineered...if you were honest you got blacklisted"...'Regulators Let Banks Report Criminal Fraud '

William K. Black on The Keiser Report
Wed, 09/08/2010 - 14:37 | 570030 antidisestablis...
antidisestablishmentarianismishness's picture

So if the S&P doesn't go to 450 will anyone here call this guy out ala the Dow 36k clowns?  Or will it simply be attributed to manipulation.

Wed, 09/08/2010 - 14:46 | 570061 Ben Graham Redux
Ben Graham Redux's picture

Why do we need to call people out on wrong predictions?  What's wrong with beinig wrong sometimes?  The key to making predictions is the way you set up your portfolios because there is always a chance that you're wrong.  I agree with Edwards that 450 is likely but I'm still largely invested because I own stuff that I believe will maintain its value despite the impact of change on the economy. 

Wed, 09/08/2010 - 14:51 | 570076 antidisestablis...
antidisestablishmentarianismishness's picture

Ok, that sounds reasonable, but ZH might go out of business if it stops calling people out for making calls it disagrees with.

Wed, 09/08/2010 - 15:13 | 570121 Ben Graham Redux
Ben Graham Redux's picture

I disagree with everyone for one reason or another but I don't harbor unreasonable expectations for humans.  I reserve omniscience for the divine.

Wed, 09/08/2010 - 15:31 | 570166 Cognitive Dissonance
Cognitive Dissonance's picture

I follow your point but I seriously doubt ZH is a profitable business to begin with since the only thing they sell is ads. I hope you don't think ZH is one person in their basement typing away on an old 486DX2 and a 10" B&W monitor. Hard to go out of business when you're not "in" business. They are barely paying the bills, including a retained lawyer and staff. 

Wed, 09/08/2010 - 16:00 | 570252 Pope Clement
Pope Clement's picture

Damn, I'm sending in this month's donation early - Don't want the fun to stop...

Wed, 09/08/2010 - 23:18 | 570965 glenlloyd
glenlloyd's picture

You know at some point we're going to have to start talking about QE3...just sayin.

Tue, 09/28/2010 - 03:52 | 609378 Herry12
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