Posted on 10/25/2009 9:24:25 AM PDT by TigerLikesRooster
Saturday, October 24, 2009
Gillian Tett: “Was October 2008 just a dress rehearsal?”
/snip
Second, she indicates that most observers recognize the rally is not the result of fundamentals (duh!) but the result of excessive liquidity chasing assets.
/snip
From Tett:
Earlier this month, I received a sobering e-mail from a senior, recently-retired banker. This particular man, a veteran of the credit world, had just chatted with ex-colleagues who are still in the markets – and was feeling deeply shocked.
“Forget about the events of the past 12 months … the punters are back punting as aggressively as ever,” he wrote. “Highly leveraged short-term trades are back in vogue as players … jostle to load up on everything from Reits [real estate investment trusts] and commercial property, commodities, emerging markets and regular stocks and bonds.
“Oh, I am sure the banks’ public relations people will talk about the subdued atmosphere in banking, but don’t you believe it,” he continued bitterly, noting that when money is virtually free – or, at least, at 0.5 per cent – traders feel stupid if they don’t leverage up.
“Any sense of control is being chucked out of the window. After the dotcom boom and bust it took a good few years for the market to get its collective mojo back [but] this time it has taken just a few months,” he added. He finished with a despairing question: “Was October 2008 just a dress rehearsal for the crash when this latest bubble bursts?”
/snip
(Excerpt) Read more at nakedcapitalism.com ...
Ping!
During late November through now, America just went out and ran up that ole plastic till it’s startin’ to melt on the economic equivalent of non-durable goods: e.g. trips to Vegas, a few hookers and a whiskey binge, cruises, expensive hotel and car rentals, manicures, pedicures, facials, spas -—basically anything that doesn’t have any lasting tangible value. The real ass-kicker is that Visa bill is coming due very soon. Watch the market then.
When we stopped producing things on a massive scale, all that was left to do is repeatedly blow ‘bubbles’.
When they go bust, just inflate another one....
Can you provide a statistic for that? Every one I have seen shows the use of credit is declining dramatically. Especially for the items you have listed.
Revolving credit debt, mostly through credit cards with balances that are not paid off immediately, dropped by an annual rate of 13.1 percent in August
I don’t need no stinkin’ statistics, I got me a keyboard!
I’m not talking about individual credit - it was a personally relatable metaphor - whatever. The “credit” binge is being executed by our drunken government and Democratic masters. They don’t give a rats ass that they are enslaving our children and grandchildren to a life of government servitude to maintain a worthless binge-debt that cannot be services (e.g., interest payments) much less paid.
I got it. He was using our stimulus package and creating an equivalency with it. The concept was really not that hard to grasp. When he was talking about America. He wasn’t talking about your personal card. He was talking about the national card with most of the stimulus bill going to graft and pay back to Democratic supporters instead of real, lasting jobs and infrastructure. I think we had all better have a second cup of coffee so we can read with comprehension a bit better today.
Now that is a great point. The government could fix a lot of their problems if they wold just cut spending.
Seems to me the deal is this:
You’ve got free money. You’ve also got traders afraid to get leveraged and make a profit in case they become targets of the press OR democrats in congress OR the president’s czars.
bttt
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