Nice to see you up on your soap box, Mr. Ritholtz. You wear it well.
You can make money in these markets. You can make money in Las Vegas playing craps, blackjack or roulette. For joe six pack, which has better odds. The financial markets are now completely and totally a shame. You can most certainly make a trade and profit from it. Your profits are going to be someone else's losses. How long do we think a system that is so broken, corrupt and disgusting is going to last? A year, ten years? When this mess comes to a dramatic conclusion I hope that what ever money we "won" is enough to protect us from the screaming starving hordes.
If we are not part of the solution we are part of the problem. Just because you can do something, just because everyone else is doing it and just because there is no law against it - Does Not Make It Right. Pay back is a bitch and pay back is always just around the next corner.
When the French had their revolution it was not pretty. This 30 year old massive explosion of "greed is good" mind set and philosophy which has a strangle hold on our society will need to be put to rest. In my opinion when the inevitable happens, it too will not be a very pretty sight to see.
Barry Ritholtz says:
The bankruptcy report on Lehman is both revealing and damning. Once again, the investing public learns — after the fact — the basic truisms of modern markets:
-Major accounting firms are worthless to investors. They were either unable or unwilling to detect fraud amounting to 50 billion dollars. The incompetents at Ernst & Young deserve the same fiery death as Arthur Anderson; Whether they are hired guns or paid whores, they — like the rating agencies — are worthless to investors.
-Corporate management engages in fraud all too regularly: Am I reading this correctly — that Dick Fuld’s defense will be “I didn’t know that Lehman was a giant Ponzi scheme, and I was unaware we were hiding billions in bad debt and leverage off balance sheet?”
Based on the release of the bankruptcy court report, LEH was technically insolvent perhaps years before it collapsed;
-The Shortsellers turn out to be the good guys. Consider the absurdity fraud of “protecting” the bankster frauds — fromt he truth, as revelaed by Einhorn et. al.
-The SEC is utterly incapable of comprehending how markets function. They believe the criminals who commit the fraud, and ignore the whistleblowers who uncover it;
-The ban on short selling is an indictment of the inability of the SEC to understand WTF is going on, and a reward tot he criminal corporate management teams;
-The Media did a terrible job uncovering the fraud as well. Some media folk were used by CEOs. Some of the TV press who relied on access to their subjects, actually rallied to the defense of these CEOs, including Fuld, and trashed the short sellers. Most notably Charlie Gasparino from his CNBC days, but their were others as well.
-The Analyst community, for the most part, failed as well. The few who publicly acknowledged the debacle were notable for being so far outside of the herd. 95% of them were wrong.
All in all, the entire system failed. The situation is utterly disgusting, and if the investing public pulls its money out of the completely corrupt public markets for a generation or more, it would not surprise me . . .
You forget the most important bullet:
Armani wearing crime does pay! None of these people will be ever charge with any thing or lose any of their fraudulent gotten money. So my advice to thugs out there is join an IB to get away with it
dead hobo Says:
Who exactly is the “Analyst Community?” At one point many years ago I respected the idea of them as people who were smarter than me and it probably was good to at least pay attention to what ‘The Analysts” said.
Today, the word “analysts” makes me think of sell side shills who always always undershoot on their predictions so that the sell siders can shout “IT BEAT EXPECTATIONS!!!!”. Has there ever been a time when “analysts” weren’t optimistic or has there ever been a quarter where their expectations weren’t beat?
I suppose it ads credibility to an incompetent business reporter’s work when they can write “Analysts Said” to the headline the story being concocted,
Does anyone anymore actually think the phrase “analysts Said” has credibility with anyone anymore? People I talk to don’t believe government statistics any more. Is the phrase “Analysts Said” becoming an automatic dis-qualifier for anything that follows that phrase?
Julia Chestnut Says:
I’ve been out of the market for more than a year. I looked at the market then and the fundamentals were lacking – and the rally was being led by financials that I knew to be insolvent. I got out, and I haven’t looked back.
The problem is, we’re all stuck in 401(k)s that we can’t really control. I have a money market option in mine, and that is what I’m in. At what – zero interest? But government employees who have TSP? Their options are extremely limited – treasuries is the only out. Granted, when the US government defaults on its debt, you have bigger fish to fry than whether your TSP account just evaporated. Indeed, government employees are probably the least diversified for government default/crisis risk in the whole country: after ENRON, nobody else can have their entire pension fund in the company’s bonds/stock. But in effect, that is what government employees have their money in! TSP participants can either get into bonds, stocks, or treasuries. If all three of those markets are rigged/staring into the abyss? I find it depressing.
The penalties for pulling our money out of tax-deferred retirement plans and sitting in cash make it incredibly difficult to get safely away from the fraud being perpetrated with our money. And the people pulling the strings know that all too well. There are ways, but it is difficult and interest rates are at zero. Try convincing people that losing money on a zero interest rate is the only way to staunch that huge, flowing wound on their leg. . . .while they float in the middle of the Pacific Ocean surrounded by sharks. Lots of them can’t distinguish the bleeding from the surrounding water. Talking to my parents about this goes better when they don’t turn on their hearing aids, if that tells you anything.
Chief Tomahawk Says:
Charlie F-ing Gaspardrino strikes again!
And to think he was “rewarded” by FOX Business for his crap.
I hope he melts down and delivers a mea culpa which brings down (clawbacks anyone?!?) and cleans up the Street! Capitalism should’ve been protected by those who hold it most dear; they should’ve self-regulated to preserve the golden cow instead of whoreing it out in a Ponzi scheme.
I wonder what those who are buried in Arlington National Cemetary and died in service to their country would feel about the behavior by those who “inherited the flame”? Would the vets who charged up the beach on D-Day done so knowing there’d be such an ungrateful bunch of b*tch-ass punks in charge someday presiding over the lives of their children???
I started my career with PricewaterhouseCoopers in North Carolina, across the street from then Nationsbank, later to be Bank of America. we did their taxes until they hired away all the tax folks and paid them in-house. No real point to that except to say that I could easily see the conflict of interest back when I was 22-23-24, a new CPA and college grad. Think we wanted to do anything to lose that account? Millions that they paid us to do their taxes? Wine and cheese tasting events just because the Nasdaq was up that day?
The common denominator to all of this is greed. It was prevalent in 1999 and 2000 when I worked at PWC, and common in 2002 when my wife lost her job at Arthur Andersen, as Enron brought them to their knees. And “greed is still good” today. Nothing has changed.
My full faith in capitalism as an economic philosophy is not blind to the constant grab for money and power that is taking place as I write this. The bigger question is “What am I doing to make myself more wealthy at anyone’s expense?” Why am I on a message board vilifying people for their greed and stupidity, even though they will be laughing all the way to or from the bank, to or from the prison, while I get up and shill away every day, with “honor”?
I don’t think the system failed at all. The system was corrupted to achieve pretty much exactly the ends which we are seeing.
Huge bonuses and salaries for Ponzi schemes.
Wall Street jobs for government employees who toe the line while working for the Fed, Sec, etc.
Bribes and kickbacks for politicians in the form of campaign contributions and lobbyist payments.
Fees and insider tips for analysts who lie and cheat for their clients.
Ditto for accounting firms that structure the schemes, hide the debt, and confuscate the books.
CNBC and Bloomberg are “media” in the sense that Gilligan’s Island is media. If the producers of Gilligan were engineers or ex-SAS, the show would have lasted two episodes, the time needed to repair a very small hole in the Minnow. CNBC made money because they sold “money sex” and “credit dreams”.
The system was a stunning success for everyone, even individual investors who have seen their bacon (house prices and stock prices) saved by the same mechanisms which bailed out the bankers.
So, who pays? Well, we all do a bit now and a lot later…except for the rich and powerful who will not suffer…ever. At least until we storm the palace gates and start sticking heads on pikes.
Twenty years of trading speaking here.