Top 10 Reasons Why: It Is Different This Time
Mish has some handy graphics to watch the foreign market carnage on his GET blog.
Barry Ritholtz at The Big Picture has a starter list of a few urban myths that we heard over the last few years:
The Yield Curve no longer mattered
Earnings at an unusually high % of GDP are sustainable
The Business Cycle has been defeated
Ignore sentiment readings, the population is upset about Iraq
Real Income gains are irrelevant
Mean reversion no longer works
Supply side tax cuts pay for themselves
Dow Theory is quaint antiquity that no longer works
The (so-called) Fed Model claims equities are vastly undervalued
Despite commodity prices, there is no significant Inflation
"What is rather incredible about the past few years are the number of pinheads who so totally got this wrong.
Not your run of the mill idiots who insisted Housing and Credit would have no broader impact; These hacks were merely blind incompetent cheerleaders.
No, what really stunned me is the number of otherwise intelligent people who, once again, claimed "its different this time."
The Nattering One muses... We agree, but disagree with Barry...
The house of finance's (the money shufflers)ascendancy to ultimate power will lead to ultimate ruin and here are the top ten differences:
1. Unprecedented Central Bank Debauchery (BOJ lowers to ZERO, Fed lowers to 1%, devalues dollar 55%, prints up loose money, creating massive carry trade.)
2. Banks lend loose money with low regard to risk (lowered risk premiums, subprime, 120% LTV, no down, interest only, fog a mirror get a loan.)
3. Financial engineering runs amok creating leveraged financial instruments of mass economic destruction (derivatives, MBS, CDO, ABS, ABCP, etc.)
4. Leveraged speculators inflate all assets beyond economic fundamentals and reason (oil, commodities, real estate, etc.)
5. Real estate spike NOT due to wage driven inflation, supply, demand or savings, but leveraged debt speculation and creative financing.
6. Commodities spike NOT due to real market supply or demand, but leveraged speculation and yield chasing.
7. Remaining old durable economy outsourced through globalization to labor at the margin. (Greenspans productivity miracle.)
8. New economy based on housing construction, leveraged asset speculation and finance (money shuffling).
9. Debt ridden and emasculated service based economy has no economic fallback for when the house of cards or ponzi scheme ultimately collapses.
10. Unprecedented levels of excess in #1 - #9 put so called "experts" controlling the ship, rudderless, without a compass and sinking in uncharted waters.
As stated before in these pages, cut rates, inject stimulus, lie and denie all you want..
NOTHING and NO ONE can stop the trainwreck in progress.
It is an unstoppable financial tidal wave or tsunami, a fait accompli that must be played out to its conclusion.
Barry Ritholtz at The Big Picture has a starter list of a few urban myths that we heard over the last few years:
The Yield Curve no longer mattered
Earnings at an unusually high % of GDP are sustainable
The Business Cycle has been defeated
Ignore sentiment readings, the population is upset about Iraq
Real Income gains are irrelevant
Mean reversion no longer works
Supply side tax cuts pay for themselves
Dow Theory is quaint antiquity that no longer works
The (so-called) Fed Model claims equities are vastly undervalued
Despite commodity prices, there is no significant Inflation
"What is rather incredible about the past few years are the number of pinheads who so totally got this wrong.
Not your run of the mill idiots who insisted Housing and Credit would have no broader impact; These hacks were merely blind incompetent cheerleaders.
No, what really stunned me is the number of otherwise intelligent people who, once again, claimed "its different this time."
The Nattering One muses... We agree, but disagree with Barry...
The house of finance's (the money shufflers)ascendancy to ultimate power will lead to ultimate ruin and here are the top ten differences:
1. Unprecedented Central Bank Debauchery (BOJ lowers to ZERO, Fed lowers to 1%, devalues dollar 55%, prints up loose money, creating massive carry trade.)
2. Banks lend loose money with low regard to risk (lowered risk premiums, subprime, 120% LTV, no down, interest only, fog a mirror get a loan.)
3. Financial engineering runs amok creating leveraged financial instruments of mass economic destruction (derivatives, MBS, CDO, ABS, ABCP, etc.)
4. Leveraged speculators inflate all assets beyond economic fundamentals and reason (oil, commodities, real estate, etc.)
5. Real estate spike NOT due to wage driven inflation, supply, demand or savings, but leveraged debt speculation and creative financing.
6. Commodities spike NOT due to real market supply or demand, but leveraged speculation and yield chasing.
7. Remaining old durable economy outsourced through globalization to labor at the margin. (Greenspans productivity miracle.)
8. New economy based on housing construction, leveraged asset speculation and finance (money shuffling).
9. Debt ridden and emasculated service based economy has no economic fallback for when the house of cards or ponzi scheme ultimately collapses.
10. Unprecedented levels of excess in #1 - #9 put so called "experts" controlling the ship, rudderless, without a compass and sinking in uncharted waters.
As stated before in these pages, cut rates, inject stimulus, lie and denie all you want..
NOTHING and NO ONE can stop the trainwreck in progress.
It is an unstoppable financial tidal wave or tsunami, a fait accompli that must be played out to its conclusion.
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