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From SEC Employee Rick Bookstaber "We All Know Gold Is In A Bubble"

Tyler Durden's picture




 

Former Bridgewater-ite (which we hear is not doing that hot lately) Rick Bookstaber, who was recently appointed at the SEC in some risk management capacity, comes out with a truly amusing rant on why gold is in a bubble, and, not just that, but that "we all know gold is in a bubble." Ignore the fact that all multi-billionaire hedge fund managers have been loading up, all relevant and semi-relevant pundits have been claiming that gold is gradually becoming the one alternative to fiat debasement which has recently become a global phenomenon, and ignore that even with the dollar going up, gold has defended its 1,100 an ounce price quite successfully. Bookstaber compiles vivid imagery upon even more vivid imagery, and goes as far as comparing the quest for gold with the pursuit of hookers "Even if a guy is just after sex, he at least has the decency to act like there is some substance behind his interest. But with gold, no one seems even to
care about giving a justification, other than “gold has been a store of
value throughout 5,000 years of monetary history”. No one? Dear Mr. Bookstaber, feel free to peruse the following thoughts by Eric Sprott, Dylan Grice,
Hugh Hendry, David Rosenberg, Fred Hickey, Jim Grant, David Einhorn and last but not least, Goldman Sachs, on some contrarian opinions to your prevailing dogma. And speaking of unconflicted advance warning vis-a-vis ponzi bubbles, where was your current employer cautioning the general population about the dot com bubble? Or the housing/credit bubble? Or the Madoff ponzi? Or the current Great Currency Deflation Bubble? Perhaps you can expend your time and energy on the real source of soon-to-be unparalleled wealth loss instead of focusing on the fringe "tin foil"-hatted gold community which nobody takes seriously anyway (except India of course which just incidentally bought 200 tons of gold north of $1,000).

From the SEC-member's blog:


The Gold Bubble

This represents my personal opinion, not the views of the SEC or its staff.

I am not going to spend time here talking about how the price of
gold is off-the-wall, that it is not just a bubble in the making, but a
bubble waiting to burst. I don’t want to waste your time on that
point.We all know it is a bubble.

George Soros has said “The ultimate asset bubble is gold”. Many of
the top asset managers, such as Tudor and Paulson, are piling on; Paul
Tudor Jones recently said gold “has its time and place, and now is that
time.” The banks are echoing this view with their research. Goldman has
a research piece that looks for gold to approach $1,400 in the next
year. The more ebullient Charles Morris of HSBC has said, “I absolutely
believe it’s heading into a bubble, but that’s why you buy it. ” He,
along with a number of other professional and otherwise rational
managers, looks for gold to move as high as $5,000 an ounce.

More interesting than this almost universal agreement is what that agreement tells us about the dynamics of the market.

The Naked Bubble

Usually the markets have the
courtesy of giving cover for bubbles. We adorn the bubbles with some
justification. Even if a guy is just after sex, he at least has the
decency to act like there is some substance behind his interest. For
the Internet bubble, it was that fundamental analysis based on the
brick and mortar world did not bear relevance in the New Paradigm. For
the Nikkei bubble, it was that the crazy P/E ratios were not
considering one subtlety or another in the Japanese accounting system.

But with gold, no one seems even
to care about giving a justification, other than “gold has been a store
of value throughout 5,000 years of monetary history”. Which is fine as
far as it goes, but that doesn’t say anything about what the price of
that store of value should be.

Pump and Dump

Given that “hedge fund” and “highly secretive” are usually said in
the same breath, don’t you get suspicious when so many of the top
managers are so vocally out there about their gold investments? And
when their positions are structured in a way that make them open to
view? Paulson and Soros have huge positions in gold ETFs. We know that,
because if you buy ETFs, they show up in your 13-F filing. Granted,
with an equity investment you can’t help putting that information out
into the market, but with an asset there are plenty of ways to take the
position without signaling it.

That they are taking a highly
visible route to their positions suggests the game that is being played
is one of leading the herd. The 13-F reports positions with a big lag,
so no one will notice if they quietly slip out the side door while the
party is still hopping. And how about when the view is backed up by
none other than Goldman Sachs? Will they let everyone know when they
think it has gone too far before they get out. Or before they go short?
Maybe they already have.

Herds, crowds, mobs, and the Top Ten

And yet, we follow the herd, as we have countless times in the
past. Herding is a timeless and universal market behavior, but one that
seems less than rational. It is broader than markets; think of the Top
Ten phenomenon. We feel better if a lot of other people think that our
favorite artist or actor is The Best. We like a song better if we know
a lot of other people are liking it as well. Thus our love affair with
lists. Magazines featuring the Ten Sexiest, the Five Best, the 100
Whatever are all best sellers, even if the list is the product of a
story meeting between an editor and five reporters.

Herding can be explained as an
artifact of what was rational behavior in earlier times, when we were
running around as hunter gatherers. Back then, mob and herding behavior
made sense. Mob behavior if attacking a competitive group or killing a
large animal; herding behavior if protecting against predators or
uprooting to a new location. Whatever it was that got started, you
could be pretty sure there was safety in having a crowd on hand to
finish it.

The very notion of mobs and herds evokes a certain spontaneity. But
with the gold bubble, we are moving on to a concept of herding by
appointment. Everyone seems to be happy in agreeing that this is a
bubble, and we are all going to participate in this bubble in a
rational, genteel way. We have all decided that this is going to be a
number one hit, a Top Ten. Though we might want to ask who is leading
this herd, because my bet is they will be stepping aside and cheering
us over the cliff.

 

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Tue, 03/09/2010 - 17:32 | 259616 Assetman
Assetman's picture

We all know it is a bubble.

The key word isn't "bubble".

The key word is "We".

If he knows that the "we" are the powers that pull all the levers, you might take the statement as a giant word of caution.

Otherwise, we can all take it with a grain of salt.

Tue, 03/09/2010 - 19:03 | 259781 DaveyJones
DaveyJones's picture

the only thing he's not blowing, is a bubble out of gold.

Tue, 03/09/2010 - 22:26 | 260071 Anonymous
Anonymous's picture

A wise man (my father) once told me.

"It's bet to have it and not need it, than to need it and not have it."

I have "it".

Wed, 03/10/2010 - 10:55 | 260488 Anonymous
Anonymous's picture

Or,"... pot will get you through times of no money better than money will get you through times of no pot..."

Tue, 03/09/2010 - 23:02 | 260119 Crime of the Century
Crime of the Century's picture

Tsk tsk - this phenomenon is international in scope. Little Ricky doesn't know a fraction of the "we's" who will determine the final outcome.

Wed, 03/10/2010 - 02:12 | 260290 jeff montanye
jeff montanye's picture

do you?  really?

Wed, 03/10/2010 - 09:01 | 260417 Anonymous
Anonymous's picture

I know better than to mock the desires of the BRICs as if they are still 3rd world stepchildren. China & Russia have both vocalized their desire to see resurrected SDR money have some physical backing. India has moved to "solidify" her asset base, and Brazil seems to be unafraid to thumb her nose northward. Pray tell, what has Bookstaber to offer these commodity countries besides a sneer, the very attitude which only drives the current wedge even deeper. Face it, Jeff. The US-UK axis is all in, and the bet is looking like craps.

Wed, 03/10/2010 - 01:49 | 260275 jeff montanye
jeff montanye's picture

i'm going out on a limb here, but this blog is getting a little TOO conspiratorial.  nil desperandum mr. copperfield.  fundamentals will out.  play defense.  enlarge positions as the market moves with you.

Wed, 03/10/2010 - 11:57 | 260550 35Pete
35Pete's picture

What would you expect in a culture of universal deceipt and deception? For people to just go along with the official version of events? Secrecy and lying breed mass distrust. As they should.

Wed, 03/10/2010 - 03:07 | 260307 walküre
walküre's picture

Backstabber doesn't get it.

Fiat paper dollars or virtual "credits" somewhere on a bank account are surreal.

Gold is real. When - not if - the shit hits the fan, the trust is gone, the numbers don't matter WE ALL KNOW that only GOLD will be accepted as tradeable currency.

That's why I hold gold.

Wed, 03/10/2010 - 06:58 | 260371 Anonymous
Anonymous's picture

well said

Tue, 03/09/2010 - 17:38 | 259625 AR15AU
AR15AU's picture

How many sheep have been herded into the USD bubble? 

Yawn...  If the government technocrats are speaking out against gold, then gold is precisely what I want.  If the gold bubble bursts, and I have the opportunity to accumulate at $250 / oz again, I will truly be grateful.  I have 40 years of income ahead of me and the thought of keeping USD at JPM makes me want to puke.

Tue, 03/09/2010 - 17:49 | 259647 Whizbang
Whizbang's picture

I will be buying by the dumptruck load if it drops to 250, not at 1200 an oz. This gold rally does remind me a lot of the tech rally. "It can't go down" or "it will never go down" words god looks for when he's bored.

Tue, 03/09/2010 - 17:59 | 259676 Missing_Link
Missing_Link's picture

Well, OK.  I am more or less neutral on gold, but I don't think you can compare it to the tech rally.  Gold is actually something (and something with many productive uses in society) rather than a couple of idiots in a penthouse suite with a Cisco router and a retarded business plan.

Wed, 03/10/2010 - 03:12 | 260310 jeff montanye
jeff montanye's picture

and their friends!

Tue, 03/09/2010 - 19:03 | 259783 Anonymous
Anonymous's picture

i dont hear ANYONE saying "it cant go down".

Wed, 03/10/2010 - 00:40 | 260228 MagicHandPuppet
MagicHandPuppet's picture

I hope "it" does go down... I have some FRNs I need to unload for a bargain!

Wed, 03/10/2010 - 09:58 | 260443 Anonymous
Anonymous's picture

And yet historically it always does. For those who say "gold always goes up", I would counter "And always crashes".

Tue, 03/09/2010 - 17:40 | 259631 BlackBeard
BlackBeard's picture

Uhhh...as a regulator isn't he just a little bit conflicted to be giving commentary on a market?

 

He needs to shut the fuck up and go back to screening for unusual option activity or surfing tranny porn asap.

Tue, 03/09/2010 - 18:09 | 259698 Hansel
Hansel's picture

He's just trying to pump his new book.  From his site:

"I started this blog is to provide commentary in the spirit of my recent book, A Demon of Our Own Design."

I guess the SEC pay doesn't cover the bills.  His pedigree:

worked at Bridgewater Associates, ran the Quantitative Equity Fund at FrontPoint Partners, risk management at Moore Capital Management, risk at Salomon Brothers, ten years at Morgan Stanley.

Tue, 03/09/2010 - 20:28 | 259893 Anonymous
Anonymous's picture

sounds like a fuckin genius to me

Tue, 03/09/2010 - 23:04 | 260124 Crime of the Century
Crime of the Century's picture

ten years at Morgan Stanley

So that's who was in charge of custodial silver accounts.

Wed, 03/10/2010 - 03:16 | 260314 jeff montanye
jeff montanye's picture

no!   i say they must try harder to serve the public interest than surf tranny porn (i would generalize).

Tue, 03/09/2010 - 17:45 | 259639 Anonymous
Anonymous's picture

with idiots like this guy working at the SEC, is it any wonder nobody ever, takes a perp walk?

Tue, 03/09/2010 - 18:33 | 259737 Cistercian
Cistercian's picture

 He works for the SEC.That, and that alone, renders him untrustworthy and corrupt.

 Not to put too fine a point on it, who gives a heaping pile of steaming turds what this jackass says.

 He works for Mary Shapiro.I rest my case.

Wed, 03/10/2010 - 00:47 | 260232 MagicHandPuppet
MagicHandPuppet's picture

+1... all he's doing is trying to sell a book by appealing to all the suckers who "buy and hold" on wall street and do everything else they are told.

Tue, 03/09/2010 - 17:47 | 259640 Whizbang
Whizbang's picture

One of my close friends (when I lived in vegas) back in 2005 was a real estate investor. He always laughed at me for not investing in real estate. "god only made so much land" he would say. I remember watching him do blow on his yaght in l.a. a couple months later claiming that real estate would never go down, and that it wasn't too late for me to get in. Once, in 2006 I told him that I didn't want to invest with him because realestate was a bubble caused by easy lending standards, and almost got my face broken for it. Although I hesitate to say that gold is on the level of real estate back in 2006, Every time I've posted on this site about gold being in a bubble, I get the same "i'll break your f'ing face" reaction from readers here,.

As an update, my buddy mike lost all of his properties, his gold digging wife, filed bankruptcy, and is now a coke head bum living in the inland empire. Just a heads up from someone who's seen it before.

Tue, 03/09/2010 - 18:00 | 259678 trav7777
trav7777's picture

They dug 10% less gold out of the ground last year than the previous.  This trend of declining production has been true every year since 2000.  Ore qualities are getting lower and lower and discoveries are laughable.

Gold's price action is quite easily explained by peak production phenomena, not bubbles. 

People said oil was in a bubble too...it was NOT.  The $145 price was driven by the fact that consumption was exceeding production by as much as 2mbpd, and inventories were being rapidly depleted.  Oil, too, has peaked.  Now here we are back at $80/bbl in the midst of MASSIVE demand collapse. 

Against even level demand for gold, declining supply means a price increase.  All the rest of this goldbug bullshit is just so much noise.

Tue, 03/09/2010 - 21:05 | 259960 Anonymous
Anonymous's picture

Guess what they dug 10% gold out last year then previous? They also made 100% less land then the year previous.

Wed, 03/10/2010 - 10:27 | 260468 hedgeless_horseman
hedgeless_horseman's picture

Not exactly true, unless you rounded up.

http://www.gluckman.com/ArtificialIslands.html

I hear that these investments are not doing so well.

Tue, 03/09/2010 - 22:12 | 260053 jimmyjames
jimmyjames's picture

by trav7777
on Tue, 03/09/2010 - 16:00
#259678

Against even level demand for gold, declining supply means a price increase.  All the rest of this goldbug bullshit is just so much noise

*********************************

Not the fact that prices deflate against gold in deflation or people pile into it-for a currency short or hedge or because of fear or central banks buying now-instead of selling--

I think there's a bit more to the gold price-then just decling supply--uncertainty is what juices gold-

at least in the short term--

Haven't seen any real hard evidence of shortages--so supply-at this point-is not really the price driver--

Sure-ground supply and demand--peak gold--are important--and has an influence on the price--but--the other drivers--above--are not bullshit--

 

Tue, 03/09/2010 - 18:02 | 259682 Missing_Link
Missing_Link's picture

Good story.

Traders and investors need to be neutral, unemotional, and unbiased, and you're certainly correct that many on these boards are not.

Tue, 03/09/2010 - 18:03 | 259684 AR15AU
AR15AU's picture

To me, gold is like firearms.  It allows me to live my life independent of the consequences of my moronic countrymen. 

Therefore, I don't really care what other people think about it, good or bad.  If its in a bubble, so be it.  Makes sense to me that a lot of people would want it.  If its going to be scorned by the masses and hated on CNBC, again, so be it.  I get to accumulate without all the pesky competing bids. 

Tue, 03/09/2010 - 18:12 | 259703 Whizbang
Whizbang's picture

I agree, I have a small armory in my apartment, and I just ordered a 1000 rd. box for auxillary. That is what I consider preparation for a major usd collapse. You can't eat gold, and if you want to shoot something to eat, lead is a lot cheaper than gold to buy now.

Tue, 03/09/2010 - 19:04 | 259787 Gold...Bitches
Gold...Bitches's picture

funny, i dont recall anyone ever suggesting they eat the gold they bought...

 

you cant eat FRN's either buddy.  well, you CAN, but they make your sheet turn a funny color.

Tue, 03/09/2010 - 20:12 | 259871 swamp
swamp's picture

Thin gold foil is used in certain uncommon desserts and more commonly used in Ayurvedic medicines in India. So it is consumed, although that's not the reason I've been buying it since 2003.

Tue, 03/09/2010 - 20:35 | 259903 Mad About Ewe
Mad About Ewe's picture

Goldshlagger RULZZZ!!

Wed, 03/10/2010 - 00:41 | 260229 Anonymous
Anonymous's picture

there will be plenty of peeps willing and able to bust a cap in your ass and walk away with your gold.. when the time comes.

Tue, 03/09/2010 - 19:11 | 259796 trav7777
trav7777's picture

You need 1000 rounds for hunting?

Got bad news for you, buddy...FRN collapse is the least of your worries.  The greatest is that you are a horrible shot.

No freakin idea what you plan to do with all those guns.  You are but one person and you would get steamrolled by even 2 guys with even a smidgeon of military training in small unit combat, nevermind an organized or even disorganized gang of more than that.

What I marvel at is people who think real life is like SOCOM Strike Team Bravo.  You do NOT want to be in a gunfight.

Tue, 03/09/2010 - 21:11 | 259959 35Pete
35Pete's picture

Trav. Are you a firearms owner? 1,000 rounds is NOT a lot of ammunition. I went through 150 rounds of 9mm and 200 rounds of 7.62x39 at the range last weekend. That's 350 rounds in a few hours. 

Ohh, you're right about avoiding the gunfight but I disagree with the inference that having arms is pointless. A .357 magnum beats a baseball bat anyday of the week. 

For those SOCOM wannabees: Go to an IDPA training session just once. www.idpa.com

You'll get a flavor for what it's like to shoot under pressure. Don't shoot your foot off! Ohh, and though IDPA tries to put a bit of stress into you, it ain't nuttin' like having someone shooting at you. Tunnel vision, clouded thinking, sweaty palms, uncoordinated reflexes. You do NOT want to get into a gunfight. Run away, hide, avoid it at all costs. Only use a firearm in the gravest extreme. 

 

Wed, 03/10/2010 - 10:30 | 260470 hedgeless_horseman
hedgeless_horseman's picture

+ 5.7 x 28

Tue, 03/09/2010 - 22:05 | 260036 Rusty_Shackleford
Rusty_Shackleford's picture

trav777

 

When your campsite is attacked b a hungry bear, you don't have to be the fastest camper to survive.  You only need to be slightly faster than the slowest camper.

Goblins will always seek the easiest target.

However, you'd be surprised how quickly someone's plans change when they see one of their fellow goblins' heads fall back to earth as a fine pink mist. 

It tends to sap their enthusiasm.

 

You will most likely not be up against someone with combat training.  You are most likely going to be up against some dirtbag who spent most of his life on his couch watching TV who wants to steal your food and rape your daughter.

 

Since you don't think having a firearm and ammunition is the way to prevent such a thing, what exactly is your plan son?

 

 

Tue, 03/09/2010 - 22:51 | 260108 35Pete
35Pete's picture

+.30-06

Wed, 03/10/2010 - 05:42 | 260359 docj
docj's picture

+10

Wed, 03/10/2010 - 11:05 | 260496 loki
loki's picture

+ .40 x P239

Tue, 03/09/2010 - 19:16 | 259802 Seer
Seer's picture

In your "apartment?"  City dweller?  You're already dead!  You'll be eating human flesh, that is, until someone hungier, with a bigger gun (and not yet puking on human flesh) figures your a cheap meal...

Geez people, if you run out of food- grow it!  If you have problems there, then the least you can do is eat the rich first! (they likely aren't comprised of the cheap food that they've jammed down our throats)

Tue, 03/09/2010 - 19:40 | 259838 perchprism
perchprism's picture

 

When the Cannibal King of Raleigh goes on the march into the countryside with his terrible cannibal army, I'll be holed up with my 12-gauge and AR15, under my house, quiet as a mouse, eating potato pie.

Tue, 03/09/2010 - 20:31 | 259898 dark pools of soros
dark pools of soros's picture

i have a feeling that you are already there most of the time.....

Tue, 03/09/2010 - 21:00 | 259950 Anonymous
Anonymous's picture

don't knock it 'till you try it!

Tue, 03/09/2010 - 23:12 | 260134 Crime of the Century
Crime of the Century's picture

Come clean my monitor dammit

Tue, 03/09/2010 - 21:23 | 259985 35Pete
35Pete's picture

I'm in the congested burbs but I'm with ya' on that. Thankfully, my fiancee's uncle has a ranch out in the country and a strong local community that he's part of. We have a bugout plan that has a 12 hour schedule to it. Tucked away as insurance. Just in case. Once that was set up I don't fret on it. I'm a news junkie and plugged in. If anything starts to rapidly develop my fiancee and I will call in "a very sick relative" situation (for work) and head out there. Once you have a plan, you stop worrying and get on with living. No sense holing yourself up all bunkered for a 10% chance of all hell breaking loose, right? 

If you're urban and you don't have a plan, and the shit hits the fan, then you're a dead man. LMAO!! (nice rhyme). 

Here's how I see it. In urbania, if you have a 10% chance without a gun, and you double your odds, then your odds still suck. Food will run out, or someone will notice how "healthy" you look. Then your goose is cooked. Hee hee. 

Wed, 03/10/2010 - 08:00 | 260395 theprofromdover
theprofromdover's picture

I used to think that western civilisation had a shelf-life of about 3 weeks.

Once TSHTF, community, culture, tolerance, good-neighbourliness would take that long before wholesale looting & mayhem took over.

Looks like I have to re-consider that view, with all you nutcases buying armaments.

The worst that will happen is that we're all gonna be a whole lot poorer, just accept that.

And if we're lucky, the US will just break up back into self-determining states.

Hoard your gold, but no need to stockpile bullets. (It demeans us all)

 

Tue, 03/09/2010 - 18:15 | 259708 SgtShaftoe
SgtShaftoe's picture

Gold is a currency of sorts in the world economy.  It fundamentally does very well during times of soverign stress, that's a fact.  I've heard countless stories from plain old investors and professional investors that have done well for themselves that have found gold (including other precious metals) a compelling asset.  These guys find undervalued assets, they're not married to them, it's just a means.  Look at Soros, and Rogers, from opposite sides of the investment spectrum in a way, but both recognize gold for what it is, and when it isn't anymore they and I will sell it. 

Talk about a bubble... treasuries are the mother of all bubbles... 13 bps for a 3 month Tbill !?!?!?!? That's a bubble.  Gold isn't in a bubble yet, and probably won't be for a while, but it will eventually.  When every non-professional investor Tom, Dick and Harry starts talking about the latest mining stock around the BBQ, that's when to start worrying. 

Investment trends typically follow in tranches of buyers, the early birds, hedge funds, large institutions, soverign wealth funds, then mutual funds, then somewhere way at the end creating the blow-off-top, every idiot on the street will be into it.  I think that will come, and that will be the sign of the bubble and when to start trimming positions, but that, fortunately is years away. 

Tue, 03/09/2010 - 19:14 | 259800 trav7777
trav7777's picture

If it were a bubble, people would be buying it on credit to flip to others.

There is absolutely NO way to bring "more gold" to market in the manner that .coms or houses can be.

They can spend all the money they want and it won't make more gold come out of the earth than is there nor reverse the supply decline trends in fields like Cantarell.

Starting to see a collective recognition out there finally on this.  Even Douchinger is letting Peak Oil threads go now, saying the same things I did in 2007.

Tue, 03/09/2010 - 20:31 | 259897 Anonymous
Anonymous's picture

Wallstreetpro2 maxing out his Citi card to buy PM, then telling Citi to stick it. An early bird?

Tue, 03/09/2010 - 21:25 | 259991 Crodus
Crodus's picture

hmm, I've heard of firms (shams more then likely) that will buy additional orders of gold on a certain down payment, so at least debt is making it into the gold bubble

Tue, 03/09/2010 - 20:01 | 259861 whacked
whacked's picture

Gold is good in deflationary environment as it is a 'store of value'

 

When currencies are at risk, people turn to Gold.

 

Gold is bad in an inflationary environment, as investors prefer riskier assets....

 

Tue, 03/09/2010 - 20:03 | 259866 rubearish10
rubearish10's picture

Ummm, did you forget 1980??

Tue, 03/09/2010 - 20:19 | 259881 swamp
swamp's picture

No, I didn't forget 1980. It's on my charts. In real dollar terms (making some assumptions) gold is inflation adjusted to $2,350. 

This isn't 1980. We have some serious structural problems we didn't have then, moreover, we are printing money in numbers never seen then, and, international confidence in the USD was not an issue like it is now.

Tue, 03/09/2010 - 20:52 | 259938 rubearish10
rubearish10's picture

Cool but even more so we need to find some kind of alternative once the currency midgets leave the room. The currency issue doesn't look like it's going away. With fiscal deficits reaching breakpoint levels etc...I think at some point we'll have the inflation our leaders are looking for. Should that happen, along with excessive money printing (AYS), the relative cost for goods and services will cost more USD's etc.. Okay, now that we can't "print gold", the price for limited supply will rise. Consequently, inflation will raise Gold prices. See my point? yes, deflation is also good for gold given a currency problem in either case. Actually, we may end up w/Stagflation. Then, watch our for much higher commodity prices. Make money bro.

Wed, 03/10/2010 - 01:15 | 260252 swamp
swamp's picture

Inflation is a currency event, not an economic event. Printing more money inflates gold. Deflation inflates gold because deflation so either way you win with gold, which is rising to new levels in all major currencies.

Fri, 03/12/2010 - 02:38 | 262956 Anonymous
Anonymous's picture

"Inflation is a currency event, not an economic event. Printing more money inflates gold. Deflation inflates gold because deflation so either way you win with gold, which is rising to new levels in all major currencies."

can we go over the part again about how deflation inflates gold because deflation?

Tue, 03/09/2010 - 21:14 | 259982 Quantitative Wh...
Quantitative Wheezing's picture

Is it me or is every Tom, Dick and Harry talking about how they are invested in Emerging Markets...

Tue, 03/09/2010 - 21:18 | 259986 Quantitative Wh...
Quantitative Wheezing's picture

That's funny that in this article you bring up the misnomer that "treasuries are the mother of all bubbles" when every other talking head on CNBC says the same thing.  Let's consider that the US Government needs to issue trillions in debt over the next 10 years and the average American taxpayer is sick of losing money in the stock market and ready to keep buying bonds.

Tue, 03/09/2010 - 22:06 | 260039 KevinB
KevinB's picture

Richard Russell constantly makes the point in his letters that the vast majority of Americans have never seen a gold coin. (For that matter, many have never seen a real silver coin either, just those shiny plated zinc monstrosities.)

I have a friend who sells bullion for the Royal Canadian mint. He tells me his biggest problem is getting supply; he could sell a lot more if he could only source it. And every five minutes on TV, there's another ad for someone who wants to buy my "used" gold. Finally, in my little suburb north of Toronto (population about 150,000) there are at least five stores on the main drag all with big signs saying "We buy gold". When the pros are all buying, and the public is selling, I don't think it's a bubble. When people start buying gold coins to give to their kids, that's when I'd get wary.

Tue, 03/09/2010 - 18:40 | 259753 Anonymous
Anonymous's picture

As far as i know folks aren't buying gold on credit. I only know 1 person in my circle that has even a single coin. I'm 35 years old and my circle consists of investment aged upper middle class people earning 100k-$5mill/year.

Tue, 03/09/2010 - 18:40 | 259754 Anonymous
Anonymous's picture

gather 1000 random people in a room and ask them to raise their hand if they own precious metals buillion or coins ... how many hands you think will go up? my guess is 5 max. on a very lucky day... on places like these the ratio is a lot higher of course, but you'd be foolish to take that as a general barometer...

Tue, 03/09/2010 - 18:41 | 259756 Anonymous
Anonymous's picture

gather 1000 random people in a room and ask them to raise their hand if they own precious metals buillion or coins ... how many hands you think will go up? my guess is 5 max. on a very lucky day... on places like these the ratio is a lot higher of course, but you'd be foolish to take that as a general barometer...

Tue, 03/09/2010 - 19:56 | 259857 Anonymous
Anonymous's picture

I once asked 50 people around the city here in Austin (randomly) if they owned any gold and what they thought the current price was.

One guy owned coins (his Swiss parents had instilled this in him as a boy) and one guy owned GLD.

NOBODY else owned a single ounce of gold.

At least half of the people had no fucking clue what the price of an ounce of gold was. One chick guessed $50. Most guesses were off by at least $300. Maybe 5 guys were within $100 of the true price.

No bubble here.

Tue, 03/09/2010 - 20:40 | 259917 Hulk
Hulk's picture

Keep in mind anon, that anyone with any serious Gold holdings is not going to admit
it, if they have half a clue.
I am not even 100% comfortable doing it in this forum, knowning full well that it wouldn't be too much trouble for the cyber folks to find out our true identities....

Tue, 03/09/2010 - 21:46 | 260008 Frank Owen
Frank Owen's picture

Don't worry.... You foiled my plan by demonstrating you know what a good safe is about. ;)

Tue, 03/09/2010 - 22:09 | 260048 Hulk
Hulk's picture

The safes can be opened even faster than 1
minute too. Two well placed rounds from a 50
cal and that safe is open.....can't wait for that video!

Wed, 03/10/2010 - 08:45 | 260410 Anonymous
Anonymous's picture

I'm pretty sure the "cyber folks" prefer thermite over 50 cal when breaking safes. Thermite is used to by them to destroy digital content from their computers.

Sun, 03/14/2010 - 02:43 | 264868 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

...and buildings....

Wed, 03/10/2010 - 01:29 | 260263 Anonymous
Anonymous's picture

Its the "cyber folks" who run this "forum". Tyler Durden indeed.

lloyd

Tue, 03/09/2010 - 19:02 | 259780 Anonymous
Anonymous's picture

"As an update, my buddy mike lost all of his properties, his gold digging wife, filed bankruptcy, and is now a coke head bum living in the inland empire."

So you're saying it was all worth it in the end, right?

Tue, 03/09/2010 - 19:55 | 259851 Anonymous
Anonymous's picture

How many people do you know personally that own gold? Or better yet, how to buy it?

Pathetic.

Tue, 03/09/2010 - 21:58 | 260025 Anonymous
Anonymous's picture

Weak analogy to real estate. People lost on real estate because of leverage.

You were allowed to buy real estate with zero percent down; and even today it's considered great if you put 20% down.

People buy gold with 100% down.

Tue, 03/09/2010 - 23:14 | 260136 Anonymous
Anonymous's picture

"Man mistakes bull market for genius".

Tue, 03/09/2010 - 23:58 | 260190 Anonymous
Anonymous's picture

I can't see how it's a bubble when so few people are involved with it. Can you explain?

Wed, 03/10/2010 - 03:47 | 260322 jeff montanye
jeff montanye's picture

personally i think that's a positive.  when they mention it on american idol, sell.

Wed, 03/10/2010 - 00:55 | 260237 MagicHandPuppet
MagicHandPuppet's picture

Right... with all that "easy money" going into gold... gold-backed loans guaranteed by the goobermint, tax breaks given by the goobermint on capital gains from the sell of gold, socialist scum in congress whining about how everyone should be able to get loans so they can buy some gold, everyone you know all of a sudden has a license to sell gold or broker loans to buy gold... all the shows on t.v. of how to "flip that gold!"... of course gold is in a bouble.  Just like real estate.

 

Right.  Good luck with that line of thinking.

Wed, 03/10/2010 - 01:35 | 260268 Cistercian
Cistercian's picture

 Not to sound harsh or anything, but you don't suppose his business acumen may have been adversely affected by his coke habit do you?

 If he was a cokehead, I would rather expect him to fail...and fail hard.

Wed, 03/10/2010 - 06:42 | 260369 Anonymous
Anonymous's picture

Bare land with nothing built is a good investment, but houses and buildings are assets that requires upkeep cost. If buildings are left idle, you'd have negative cash flow.

People who think real estate is about the house on the land instead of about the land itself are real estate traders and real estate speculators and should not be considered as real estate investors.

Without proper upkeep all buildings will decay. Things that decay overtime is not an investment and certainly not a store of value.

Wed, 03/10/2010 - 17:25 | 261019 snakeboat
snakeboat's picture

I'd like to see how the underwriting standards have been relaxed on gold... is that the introduction of Tungsten to the purity mix?  

 

There is no array of forces easing access to gold outside of CB interference.  And we know Ben fears it.

Sun, 03/14/2010 - 02:37 | 264865 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

EVERYBODY said "Houses are good investments".  Key word 'investment'.  Note; 'everybody'.  NOBODY owns gold.  NOBODY.  Also, nobody is saying "buy gold", cept for here at ZH.

I have so many friends that are buying houses it is gross!  Why?  Because "it is an investment in the future."  Look around, tell me how many houses there are?  There are houses everywhere!  Still, people buy them.  Where is the gold?  Where?  In rich people's pants, and only rich people's pants (unless informed and understanding).  Once again, NOBODY OWNS GOLD!  Cept for us here at ZH.

Interestingly, all of my friends buying houses are women.  This in part because women have kept their jobs into the depression.

Tue, 03/09/2010 - 17:48 | 259645 THE DORK OF CORK
THE DORK OF CORK's picture

If this SEC employee was doing his job along with the rest of his colleagues then some of us may believe that dollars are money

Gold is money period -  debt money needs to have a credible government if they want to compete with the barbaric metal.

Tue, 03/09/2010 - 18:22 | 259720 SgtShaftoe
SgtShaftoe's picture

...doing his job"

Agreed.  He is in a "risk management capacity".  From where he sits, gold is a BIG risk.  Unfortunately, he's trying to stop a freight train with a lawn chair.

Tue, 03/09/2010 - 19:42 | 259840 Anonymous
Anonymous's picture

So...
Don't bring dollars to a precious metals fight.

Tue, 03/09/2010 - 22:18 | 260060 Rusty_Shackleford
Rusty_Shackleford's picture

Classic.

 

Well played.

Tue, 03/09/2010 - 22:39 | 260094 Anonymous
Anonymous's picture

+ 100

Wed, 03/10/2010 - 01:15 | 260253 RockyRacoon
RockyRacoon's picture

You made my day!  Thank you.

Rocky

Wed, 03/10/2010 - 02:12 | 260289 hidingfromhelis
hidingfromhelis's picture

Clever.  Can't...stop...laughing.

Wed, 03/10/2010 - 03:51 | 260324 jeff montanye
jeff montanye's picture

that is a lovely turn of phrase.  make sure you're copyrighted.

Tue, 03/09/2010 - 17:49 | 259648 DoctoRx
DoctoRx's picture

Bookstaber's post is idiotic.  To imply that the Japanese and tech bubbles had more justification than gold is tres strange.  Gold has traded under 2X the Dow in the 1930s and 1980s.  Now it's 10:1 Dow:gold.  Bubble?  Hardly.  Did India lose its mind recently and buy half IMF's gold in a bubble?  Hardly.

Anyone who didn't read Soros' comments on gold may not know that what he said was that an asset that is going into a bubble is the place to be.  Think buying the NAZZ 1997, 1998 or whenever . . .

 

 

Tue, 03/09/2010 - 18:03 | 259685 RhoRhoRhoBoat
RhoRhoRhoBoat's picture

Your math is doltish.  You reference two extreme points: one where the Dow went essentially to 0 (the numerator is ultra low), and the 80's when inflation was 15% and projected to be for a lifetime to come (gold ultra ultra high).  To suggest that some arbitrary ratio, Dow:Gold, should be at one of those extreme points, needs some justification.  Just because a baseball card (or beanie babie, or seashell) traded for $200, is it a "bargin" at $100 today?

Tue, 03/09/2010 - 18:42 | 259757 Jean Valjean
Jean Valjean's picture

I don't think he was saying it "should" be.  Just saying it appears to be headed that way.

Besides, the reason to own gold is for exactly those times when the math goes crazy.

Tue, 03/09/2010 - 17:51 | 259652 Anonymous
Anonymous's picture

Ignore the fact that all multi-billionaire hedge fund managers have been loading up...

Previous multi-B hedge funds have been loading up on subordinate trances of sub-prime.

Tue, 03/09/2010 - 18:22 | 259719 Whizbang
Whizbang's picture

A lot of those multi-billion dollar hedgies lost 70-80% during the blowup too. They are after short term gains to up their fees, not investing for the long term.

Tue, 03/09/2010 - 17:51 | 259653 SgtShaftoe
SgtShaftoe's picture

I remember hearing a few months ago on Jim Puplava's Financial Sense Newshour (during the gold week I think) a comment about during a round table discussion of gold during the SFO Gold Show, that there was a guy from Treasury there (only found out later) listening to them record the round table discussion at a table in the hotel lounge.  Aparrently the guy just sat there nervously sipping his drink till they were done, then confronted one of them in the hallway saying something like, "I'm from the Treasury department, and just so you know, I disagree with everything you guys just said"... 

I think these guys know exactly what is going on, they're just trying to delay as long as possible in the hopes they'll figure out some new magicical option to painlessly get us out of this mess.  I think that's probably what Jeff Skilling was trying to finish before he ran out of time.  maybe they can get a copy of his notes. 

 

Disclosure: long gold, and paper shredding machines / companies

 

 

 

Tue, 03/09/2010 - 20:15 | 259874 35Pete
35Pete's picture

That was a great interview. I really like FSN. 

Fantastic lineup on KingWorldNews this week, includes Gerald Celente, Jim Sinclair, and Harry Markopolos. 

Check out this site.. www.kingworldnews.com

Every week Ted Butler does his "Metals Report" interview where he discusses the COMEX and the COT report. 

Wed, 03/10/2010 - 03:57 | 260325 jeff montanye
jeff montanye's picture

maybe they can get a copy of his notes.  priceless.

Tue, 03/09/2010 - 17:51 | 259656 faustian bargain
faustian bargain's picture

His rant is way more irrational than the vast majority of "gold bug" screeds I've read.

And yeah, wtf SEC dude, get out of the blogosphere. You work for us, so quit dicking around, even in your spare time.

Tue, 03/09/2010 - 18:06 | 259695 Missing_Link
Missing_Link's picture

Considering that when today's SEC acts (on those very rare occasions when it does act) it only causes harm, I'd rather he keep writing rants on his blog.  Better to distract the SEC incompetents; otherwise, they'll just cause more trouble.

Tue, 03/09/2010 - 18:12 | 259704 faustian bargain
faustian bargain's picture

good point.

"Get back to dicking around, Backstabber!"

Tue, 03/09/2010 - 17:52 | 259657 Anonymous
Anonymous's picture

Maybe if the US gov, other gov's, and all the Western Central banks had not leased out all their gold for sale, thus ranking gold as the most stable fiat debt based currency of all time, he might have at least one leg to stand on. But the reality is, gold loans from central banks and ETF's that have been sold on the open market need to be paid back in gold. Therefore gold is a fiat debt based currency now, as well as being a store of value in its own right. Loans were made in gold and have to be paid in gold. The sad fact is that gold suppression through leasing and sales for 30 years has added value to gold as a currency that is now needed to pay off gold based debts.

Oh the irony!

Tue, 03/09/2010 - 18:27 | 259730 Ragnarok
Ragnarok's picture

Reading FOFOA I see.  I wish I were able to watch what happens, from the vantage point of a person completely removed from the system, when someone finally says they want to settle out. 

 

Kinda like being a fly on the wall in the oval office in the fall of 2008 when GB's switchboard lit up with calls from HP and BB. GB: What's a money market fund?

Tue, 03/09/2010 - 17:54 | 259661 trav7777
trav7777's picture

I'm unclear how gold can be in a bubble...you can't MAKE MORE OF IT.

The shit went into TERMINAL SUPPLY DECLINE (iow, passed peak) in 2000!  YoY production fell 10% just last freaking year.

It isn't like housing or .com stocks where you can clear trees and make more supply.

These idiots who have never ONCE been able to spot a bubble, even when they ran on fucking hairdresses "owning" 3 residential properties, now suddenly have the perspicacity of vision and wit to spot THIS ONE?

What a bunch of fucking morons.

Let them HAVE their freaking beloved FRNs.

Tue, 03/09/2010 - 18:00 | 259677 THE DORK OF CORK
THE DORK OF CORK's picture

I would not believe those production figures - China may be secretly increasing its stock of Gold and may be under reporting its production.

Tue, 03/09/2010 - 18:04 | 259691 trav7777
trav7777's picture

You can believe what you wanna believe, man...it don't really matter to me.

China is not a significant enough producer to make up for the declines out of the other majors.  Nevermind the steadily diminishing quality of the reserves discoveries.

This is like saying Saudi Arabia has enough extra production to make up for the supply declines out of #2-#5 world oil producers. 

Maybe we don't know how much China produced, but they did NOT increase production by 10% of WORLD production, and we do know how South Africa is faring, along with most other nations on earth.

Gold peaked in 2000; accept that.

Tue, 03/09/2010 - 18:19 | 259713 THE DORK OF CORK
THE DORK OF CORK's picture

Trav I hold the majority of my wealth in Gold as I have lost faith in the ability of my government to govern

I am just making the point that the data could be incorrect - it would not be the first time that institutions lie about results.

 

Tue, 03/09/2010 - 19:08 | 259793 trav7777
trav7777's picture

Good for you on the first.

But on the second, I mean production figures aren't that easy to fudge.  The gold production market isn't as opaque as, for example, Aramco's production sheet, and even still, there are any number of analysts who can use refining, tanker, or terminal data to come up with fairly clear production figures, even in oil.

If anything, production and reserves are almost always OVERstated.  KSA has overclaimed oil production, both in actual and potential, for so long.  OPEC has always cheated to avoid quotas.  There are no gold quotas and the production decline YoY was too steep to be made up by China.

Wed, 03/10/2010 - 04:11 | 260335 jeff montanye
jeff montanye's picture

let's not beat around the bush.  the reason gold miners outperform in a bear market is their product is going up in value because governments are attempting to overpower the deflationary depression with monetary/fiscal expansion (or are suspected of contemplating it).  as the gold price rises, the miners hire engineers and etc., large machines and compiant governments at cheaper rates and profits expand.

Tue, 03/09/2010 - 18:03 | 259679 economessed
economessed's picture

Dear Mr. Bookstabber,

Could you please comment on the bubble in ammunition prices?  We can all see how ridiculous prices have become recently, and at about a buck a shell for my favorite loads, I am forced to purchase fewer consumer goods in order to maintain my love for the bang (thereby impeding the nacent retail recovery).

I appreciate your deep concern for my economic well being.  Please bring a swift end to the ammunition speculators, as they are ruining the natural balance of supply and demand.

 

Tue, 03/09/2010 - 18:04 | 259690 lizzy36
lizzy36's picture

Why doesn't he spend his time investigating the moves in bubble stocks today like AIG, FNM, FRE (opps forgot they went up, and investigation only happens when speculators cause a stock to go down - one wonders why the term speculator only applies to those selling or shorting equity and all players in the cds market, but i digress).

Sprott physical gold trust was massively oversubscribed (as one could take delivery in gold), over-allotment exercised and has tended to trade above NAV since inception (granted about 10 trading days).

He should go back to watching tranny pornon porn hub, until such time as the next ponzi scheme comes to light 20 years after the fact.

How does one short the SEC? 

 

Tue, 03/09/2010 - 18:10 | 259699 Crummy
Crummy's picture

Notice the last name isn't "Bookreader".

They must have a fine family tradition.

Tue, 03/09/2010 - 18:11 | 259701 Meridian
Meridian's picture

Another paper twat, tool of the establishment attacks gold - back up the trucks.

Tue, 03/09/2010 - 18:11 | 259702 Anonymous
Anonymous's picture

What is silly about this argument is that it isn't gold that is in a bubble. Gold reflects the fiat currency bubble. So does oil, copper, uranium, zinc, pretty much anything that cannot be synthetically replicated. They all are up 4, 5, even 6 times their 2000 price. This is not a gold issue. Gold (platinum too) are just much more rare and easier to store than say, a hundred thousand barrels of oil or a million pounds of copper.

This guy is not only a bad brain, but a bad debater. Weak points made weaker by silly arguments.

Tue, 03/09/2010 - 20:17 | 259877 Anonymous
Anonymous's picture

Yeah...prices of these assets reflects the debasement of the currency. If you expect the currency to continue to be debased, and continued deficit spending, buy gold. If you expect responsible fiscal policies from the Fed and US Government, and budget surpluses, then don't buy gold. I know which one of those I'm expecting.

Wed, 03/10/2010 - 06:56 | 259919 35Pete
35Pete's picture

Not to mention that precious metals are fungible AND durable whereas most commodities are not. 

Tue, 03/09/2010 - 18:12 | 259705 no cnbc cretin
no cnbc cretin's picture

Everything can be a bubble. Gold should be part of your portfolio. Never put all your eggs in one basket.

Tue, 03/09/2010 - 18:14 | 259706 no cnbc cretin
no cnbc cretin's picture

Everything can be a bubble. Gold should be part of your portfolio. Never put all your eggs in one basket.

Tue, 03/09/2010 - 18:21 | 259707 Millivanilli
Millivanilli's picture

A few musings...  Is this the same SEC that claimed 'incompetence, when it came to catching Madoff- a guy that never even entered a TRADE?!   Or the Sec that just can't seem to catch any securites fraud related to GS and JPM?  Given Fannie, Freddie, Fha, Fdic, Commercial & Residential real estate, ARMS, public and private pensions debauchery,  trillion + dollar deficits, and wholesale corruption at the Fed,  it seems highly unlikely that gold/silver/platinum/palladium will fall out of favor any time soon.

Personally, I'm a big fan of silver and wouldn't be surprised to see it at 50bucks within a year.  I also strongly suspect QE 2.0 being launced within the next 6 months....

 

One last thing, 43 states are basically bankrupt.  It'll be interesting to see what happens to the muni bond market over the next year. 

 

Tue, 03/09/2010 - 20:46 | 259928 35Pete
35Pete's picture

Just posted this a page or so above you. Great website. 

Ohh, +10^9 for the comment above on silver. Yeah, I think argentum's upside is incredible. In electronics (I work for a multinational electronics giant) the lead-free push has really entrenched itself. Solder that is lead-free typically contains a decent fraction of silver. But recycling it is a non-starter. This disposable silver dwarfs the losses of past that used to be associated with photography. 

I'm long-term bullish on Argentum both as a store of value, and it's industrial uses. 

Tue, 03/09/2010 - 18:23 | 259717 DavosSherman
DavosSherman's picture

There are morons and then there are MORONS!

First, part of Soros's bubblespeak was doubling his position.

Second, the Treasury just released it's deficit for fiscal 2009 using GAAP. GAAP now stands for Geithner Acceptable Accounting Practices, our deficit is listed as 4.3 trillion not the actual 9 trillion of Generally Acceptable Accounting Practices. We are insolvent, our currency is dead, the only bubble is is the bond market.

Tue, 03/09/2010 - 18:23 | 259722 dleddy14
dleddy14's picture

Gold is a bubble, a bubble trapped 1,000 feet below the surface of the ocean, and its about to become untrapped.

Tue, 03/09/2010 - 20:14 | 259873 Cistercian
Cistercian's picture

 I heard it was trapped in the Marianas trench, over 30,000 feet down.

 

Tue, 03/09/2010 - 18:26 | 259729 Anonymous
Anonymous's picture

Gold is not in a bubble.

Paper money is in a bubble.

When the writeoffs start, they won't end.

Someday only gold will be accepted for value.

Someday the world will end.

Not necessarily in that order.

Tue, 03/09/2010 - 18:27 | 259732 SteveNYC
SteveNYC's picture

OK, the SEC "knows" something, I'm going to do the exact fuckin opposite. Long with 2x leverage gold, tomorrow.

Tue, 03/09/2010 - 18:32 | 259735 Anonymous
Anonymous's picture

Gold has held up awfully well during the Recovery Rally... if we aren't out of the woods as far as the financial crisis/depression/etc. then gold should indeed go higher.

Tue, 03/09/2010 - 18:34 | 259739 Anonymous
Anonymous's picture

Yeah lets all go gold mining so we can get some more heavy metals in our drinking water.

Go Dementia, uh mean Gold!

Tue, 03/09/2010 - 18:35 | 259741 Anonymous
Anonymous's picture

If we got a gold bubble, I would be expecting the traditional suckers to be buying. Since the stupid are excitedly selling gold at a discount at house parties rather than buying it at a premium at these events, I suspect it has a way to go...

Tue, 03/09/2010 - 21:05 | 259962 Anonymous
Anonymous's picture

Uh, isn't that what people were doing when silver went nuts?

Tue, 03/09/2010 - 22:58 | 260115 Anonymous
Anonymous's picture

+ 1000, maybe one of the best posts here.

Tue, 03/09/2010 - 18:36 | 259742 johngaltfla
johngaltfla's picture

Hilarious. This assmunch assumes that India, Saudi Arabia and China actually believe bullcrap like this. Of course it is in a bubble, hell, "we" all know that.

 

Just like "WE" know that Treasuries are not in a bubble.

 

What a maroon.

Tue, 03/09/2010 - 18:38 | 259745 Anonymous
Anonymous's picture

Maybe this time the big bad wolf will blow the house down.

Tue, 03/09/2010 - 18:40 | 259752 Anonymous
Anonymous's picture

Gold is in a BUBBLE?? Are you phuckking kidding me?

OUR WORTHLESS FIAT CURRENCY is in a damn bubble, and the public is either too stupid or too trusting to believe the corruption they see daily with their own eyes!

One of these days, I am convinced, there will be little warning. The whole system will collapse--you have been WARNED.

http://www.marketwatch.com/story/the-rise-and-certain-fall-of-the-americ...

Tue, 03/09/2010 - 19:35 | 259830 rubearish10
rubearish10's picture

Say it loud bud, say it LOUD!

Wed, 03/10/2010 - 06:58 | 260373 35Pete
35Pete's picture

Bang that drum. 

Tue, 03/09/2010 - 18:46 | 259762 MikeNYC
MikeNYC's picture

This guy shouldn't be allowed anywhere near the capital markets, especially in risk management. He's a serial failure and doesn't really seem to see any problem in his completely failing to manage risk in the face of excessive leverage.

The fact that he's in a risk management capacity at the SEC fits perfectly. He's probably perfected his risk non-management to the degree that even Wall Street doesn't want him.

My earlier comment from another Bookstaber related post:

 

Bookstabers last book, Clif Notes(2) version:

"Boy we really blew the risk management on that one! BOOM! Wow - man you shoulda seen that sucker blow. Hooo-WEEEE!

And then a couple a years later, well, buddy...let's just say we missed ANOTHER ticking time bomb! Ssshhhhhheeeeeeee-BOOM!!!! Damn. Heh-heh. Who woulda thought?

But then this other one time (at band camp) we really dialed up the risk, like, super high? And sheeeooot if that thing didn't blow sky high, just like the water heater on Mythbusters!!!! (and I mean the myth revisited one - right thru the roof!!)"

I swear to friggin god, this guy shouldn't be allowed within 1000 yards of an IB. He seems to have been ringside for every calamity of the past 30 years (often with a risk management role.) And amazingly, offers no personal mea culpas, and seems to laugh at his own dancing from bomb site to bomb site.

It's not just the major characters, the ones making the headlines, that got us to where we are. It's also minor malevolent malfeasants like Bookstaber. I feel like I need to take a shower after just looking at that unctuous bastard. Blech.

hey, RB, before you take another fuckin job somewhere, how about you do a little refresher. Start here. I'm sure it'll be an eye opener:

http://en.wikipedia.org/wiki/Risk_management

Tue, 03/09/2010 - 18:48 | 259763 SgtShaftoe
SgtShaftoe's picture

Anyone Read Ranger Rick's Book? 

 

From Ricky: "If you are a risk manager, all you care about is the risk to your institution. If all the world is self-destructing, but we're making money, I've done my job. Now if there were sort of a United States government risk manager, that would be a different matter."

Indeed it is Ricky, indeed it is...

 

http://www.amazon.com/s?ie=UTF8&rh=i%3Astripbooks%2Cp_27%3ARichard%20Boo...

 

http://www.salon.com/books/int/2007/12/20/bookstaber/

Tue, 03/09/2010 - 18:51 | 259768 DavosSherman
DavosSherman's picture

PS If you want to realize what a collective group of morons the SEC is then listen to this Markopolos interview on King World News. http://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/3/2_Harry_M._Markopolos.html

Tue, 03/09/2010 - 20:21 | 259884 velobabe
velobabe's picture

markopolos on jon stewart Daily show monday 8, 2009. watch it harry is ruthless towards the sec and government. stewart was speechless a lot of the conversation.

http://www.thedailyshow.com/full-episodes/mon-march-8-2010-harry-markopolos

Tue, 03/09/2010 - 21:21 | 259990 Hulk
Hulk's picture

Today's WSJ, in the opinions section,is a book review of "No one would listen"
Towards the end of the review, it turns into a Markopolos hit piece. Shame on the journal
for allowing this.
As a federal whistleblower myself, serial in fact, I can tell everyone that the process is
painful. My last case, which took a year, was nothing compared to Marko's 10 year experience.I don't know how he did it.
I suggest the reviewer, a Mr Tofel, give the process a try himself.
But for the Journal, who didn't cover Madoff
prior to his confession, despite numerous meetings with Markopolos, to turn around and
try to make Marko look like a nut is very
dissappointing to me.Had they covered the story, perhaps lives and billions could have been saved. But the journal, just like the SEC,
couldn't understand the differential equations
and nonnormal stats presented by Markopolos
Mr Markopolos, where ignorance is bliss, tis folly to be wise...

Tue, 03/09/2010 - 22:58 | 260116 velobabe
velobabe's picture

thank you hulk. yeah i am sure rupert murdoch WSJ isn't going along with anything harry says. the WSJ is such a conspiracy spin.

Had they covered the story, perhaps lives and billions could have been saved.

not a chance. stewart's interview reveals Mr. M being very afraid, he was very afraid. they try and accuse him of booking selling. they always do if not in agreement.

mr. m was just on npr on point with tom ashbrook and very well delivered and things were explained well so usa citizens can comprehend the crime and the cover up by the sec, which is really at the heart of this.

i don't understand why no ones hears this and notes it like you did.

Tue, 03/09/2010 - 23:39 | 260169 DavosSherman
DavosSherman's picture

i don't understand why no ones hears this and notes it like you did.

+1 

Wed, 03/10/2010 - 14:43 | 260791 Hulk
Hulk's picture

Markopolos was interviewed by Brinker last weekend and stated that
he was prepared to kill Madoff himself, before Madoff killed him and
his Family. Stunning to hear those words on a nationwide talk show.

The federal whistleblower program, being corrupt and inept, leaves
us WB's vulnerable, to say the least. My own case involved this:
http://coburn.senate.gov/public/index.cfm?FuseAction=LatestNews.PressRel...

Part of my case was 3 Fed workers , making from $120k to $150K a year,(costing tax payers exactly twice that amount), not showing
up to work . Unbelievable! It took 8 months to investigate this.
8 months! Being from private industry myself, I just assumed this would take a day and on we go. Thats how long it should take to count empty chairs, right?
Tyler, I'd like to see the Coburn study placed in the ZH crosshairs! It would make my day..... I think folks will be
interested to know that we have lost almost 30 million man hours
from Federal workers who simply do not show up for work.
(this isn't sicktime)

Wed, 03/10/2010 - 07:03 | 260375 35Pete
35Pete's picture

The Wall Street Journal is establishment media, part and parcel. What would anyone expect? 

Tue, 03/09/2010 - 18:53 | 259772 MikeNYC
MikeNYC's picture

"...other than “gold has been a store of value throughout 5,000 years of monetary history”."

 

Yeah, because a 5,000 year history of being a store of value is just pure shit.

 

Only a Wall Street vet who had a non-feasant role in creating or enabling or at a minimum just watching and whistling, as one after another of serial bubbles blew up in people's faces, the very bubbles he was supposed to manage risk against and failed to, could make a statement like that as if it were a disparagement.

 

Holy crap this guy is a friggin idiotic piece of work.

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