Comments on: Market Jitters: Are We About to See the End of the Risk Rally and Bear Market Bubble?

By: alsters

alsters — Mon, 25 Jan 2010 09:51:16 +0000

I’m a bit surprised that it’s had this much effect on markets already. I was in the mortgage business until the end of 2008, and what we saw in the 15 years prior to that was a progressive loosening of guidelines until practically none existed.

By: Chad

Chad — Sat, 23 Jan 2010 01:30:16 +0000

True, I probably jumped on your statement a little harder than it deserved.

From my point of view, as someone who supported Obama, but is a true conservative (Republicans certainly aren’t), it seems like the Mass. vote was not for the Republicans, but against the Democrats. There isn’t anyone who truly likes any of these candidates unless you are a psychotic Republican or Democrat and only vote one way.

By: Kevin@OutOfYourRut

Kevin@OutOfYourRut — Sat, 23 Jan 2010 01:13:52 +0000

Chad – the operative word in my statement about Bernanke and Geithner was “trying”–I didn’t say they were succeeding. It’s a let ‘em eat cake approach that at best has kept the economy from falling farther than it has. The long term is what will be the key here, and that hasn’t played out yet.

By: MoneyEnergy

MoneyEnergy — Sat, 23 Jan 2010 00:36:50 +0000

Interesting that Volcker is in support of the regulations, this seems to lend more weight to Obama’s reform. I’m a bit surprised that it’s had this much effect on markets already. When I wrote this article, markets were going up due to the Mass. win. We’ll have to see what happens on Monday (and/or if anything is announced over the weekend) and if Obama introduces another round of regulation on it, too. This will be a good test of the rally, though.

By: Chad

Chad — Fri, 22 Jan 2010 17:46:28 +0000

I completely disagree with you. For one your assumption is far to simplistic and definitely not the main driving force behind Volker.

If Bernanke and Geithner are trying to save the economy they are doing a rather terrible job. Copying the Japanese was foolishness. One of the best analysts agrees with me.

http://www.ritholtz.com/blog/2010/01/who-bears-the-costs-of-post-crisis-recovery/

http://www.ritholtz.com/blog/2009/09/volcker-reinstate-glass-steagall/

There are plenty more from a guy who has been dead-on since before the downturn.

By: Kevin@OutOfYourRut

Kevin@OutOfYourRut — Fri, 22 Jan 2010 15:23:05 +0000

Volcker’s trying to save the $, Bernanke and Geithner are trying to save the economy. Both need to be done but it’s a tense balancing act. This feels a lot like the 1970s, but the stakes are higher.

I would not want to be in any of their shoes right now, no matter whether public opinion holds that they’re doing either a good or bad job.

By: Chad

Chad — Fri, 22 Jan 2010 14:30:59 +0000

Hopefully Obama starts listening to his best economic advisor, Paul Volker, and not the two morons at the Fed and US Treasury.

By: MoneyEnergy

MoneyEnergy — Fri, 22 Jan 2010 04:09:15 +0000

@Kevin – well said. What do you think of Obama’s new regulations? His speech today sounded awfully clear and logical. I understand the arguments from “free-markets” against all regulations, but it seems regulation needs to step in wherever basic ethics steps out. If you want capitalism without ethics in the picture too, well, do your business on the black market, I guess – it’s no prescription for a society.

By: Kevin@OutOfYourRut

Kevin@OutOfYourRut — Thu, 21 Jan 2010 19:19:44 +0000

MoneyEnergy – I agree, it will be harder to increase spending. In order for that to happen, the banks will have to go back to the credit standards they had in 2006, which is to say close to no standards.

I was in the mortgage business until the end of 2008, and what we saw in the 15 years prior to that was a progressive loosening of guidelines until practically none existed. Downpayments were nearly eliminated as “barriers” to homeownership–and here we are.

We have to hope that we don’t ever get back to that give away mentality in the area of loans. A loan is, after all, someone else’s asset, and shouldn’t be issued without due consideration as to how it will be paid back even and especially in less than favorable circumstances.

By: MoneyEnergy

MoneyEnergy — Thu, 21 Jan 2010 19:04:12 +0000

@Chad – exactly, and the job losses keep showing that. Since the US economy is purportedly 70-75% consumer–driven, how can it possibly recover if at least 10% of those consumers have no income, or not enough income? Spending more than one had used to be possible in 2006, but it will be increasingly harder to do so.