adrock3215

I know it is not the main problem, but through their myriad of half-assed regulations, the government has actually worsened the problems in credit markets within the last month. For instance, one of the worst things government could do in a period of uncertainty where no one wants to lend to banks, is to ban short selling. Why? Because it will price potential lenders out of the debt markets. It works like so: If I am offering to insure the debt of a Goldman Sachs or Bank of America through credit-default swaps, I hedge my liability exposure by shorting the stock. That way, if Goldman starts to disintegrate, I (the insurer of the debt) make money on my short equity position to offset the increased risk of insuring the debt of said financial firm (not to mention the increased payouts I would have to make if a debt default actually occured by the borrower). Through this hedging strategy, I can keep the prices that I charge lenders to Goldman Sachs for insurance low. However, if I (the insurer) cannot protect myself against a bank failure by shorting the stock of the company I am insuring, my only option is to raise the price of insurance to potential lenders. This price increase hurts the borrower (financial firms) in two ways: 1. It prices many would-be lenders out of the debt market which leaves them unable to obtain capital to fund day-to-day operations, and 2. The skyrocketing costs of insuring a financial firm's debt creates the artificial psychological worry that the firm is headed toward insolvency . Many of these credit-default swaps that protect bank bond investors against default are held by hedge funds who hedge their bets by shorting the stock of the same firm they are insuring. After the short ban the prices of insuring against debt defaults soared, which exaccerbated the already cooling credit markets. I agree with Kendall here sNerd: your scenario is as unlikely as any "private" solution. The fact of the matter is that the government has grown so big and heavy-handed in the financial industry, that there may be no acceptable government-led way out of this at present. My opinion is that what we are seeing is an inevitable product of fiat money. I think that I agree with Mises when he writes in Human Action:

If you are over 10 years away from retirement, then my opinion is that you should be maxing out your allowable contributions at this point. My wife and I changed our plan this week and we are contributing the maximum amount now. We plan to bring our contributions back down once the market positively turns around.

LOL, that provided me with a good laugh for the day.

At this point, the damage seems irrepairable. I picked up the Washington Post this morning and was confronted with this story titled The End of American Capitalism? on the top left of the front page. The current financial crisis is a disaster for free-market advocates. I think that this is at least one convincing reason not to vote for Republicans. Under our current "mixed economy" system, whenever something goes wrong with a Republican in office, it is blamed on "deregulation" and "free markets". Under Democratic leadership, I've noticed that the opposite effect tends to occur.

You're right. They are totally different.

Nice quote find. I was wrong, he does mention the gold standard. Regardless of whether or not he purposefully did so, Greenspan actually performed the role of Francisco and he's brought down the entire fiat system (temporarily at least).

I've read his book, and he does not mention the gold standard at all (although he favorably mentions his Antitrust essay from C:UI). He credits Rand with changing his life intellectually, but he dismisses her political theory. One thing he often mentions in his book is Global Warming. I can remember more than a few references to Global Warming, and he seemed to come out strongly for government intervention to stop it. Since I can't ever really resist posting an interesting quote, here was my favorite from Greenspan's book:

Isn't that what he was and did?

Think about it. His loose money policy is the cause of the current crisis. The entire financial sector is going under because of him, and the debt markets are seized up. Maybe Greenspan is smarter than we thought. Maybe he is still an Objectivist. Some time ago, Ron Paul asked him at a Congressional hearing if he stood by his essay in C:UI, and Greenspan stated that he still upheld the moral superiority of the Gold Standard. Is it possible that Greenspan did this on purpose? That he really is Francisco D'Anconia, and he expanded credit on purpose to cause a fiat money collapse? I don't know, but it's nice to think that he did.

Ever since the fat idiot Barney Frank opened his mouth to speak about the greatness of the bailout bill, the market has been shitting in it.

This market is unbelievable! We got the dead cat bounce off the open, and we sold off all day after that. Check out the last 2 hours--we got smoked. Here come the people saying that short-selling is to blame for today's sell off: http://money.cnn.com/2008/10/09/news/compa...sion=2008100914.

Unbelievable day. Making money. Thank God the short selling ban is gone. I more than compensated for my 3 weeks of inactivity today.

Fair enough. It may be that he is using straight lines in order to emphasize the stability and finality of the achievement. My issue was that, aesthetically, it leads to a boring composition and also emphasizes the relatively "flat" aspects of the painting. It is an amateurish depiction of light. Compare with Vermeer. With the lights Vettriano is painting, there should be more of a "spotlight" aspect on top of the car. Also, I just noticed: what's with the top left window pane? Why is it a different color than the others?

The first one is not so bad in terms of technique; it's just boring. There is no motion in the painting, which gives the beholder the "flat" impression. Compositionally, the use of diagonals gives a painting the feeling of "motion" and "realness". Rather than diagonals, he chooses straight horizontals and verticals. The car is a straight horizontal. The beholder looks straight out the back "window" in the painting. The artist may have held a level to the top of the painting to make sure all the lights are on the same horizontal. Same with the wheels of the car and the top line of the wrenches on the wall. Although he may be trying to portray a sense of stability in the painting with all these straight lines, the end result is just blah. Lastly, I can't really tell what is outside of the window. I suppose it is a reflection of the light from inside the garage. It doesn't really look right, although I can't put my finger on exactly why yet. The second painting: He demonstrates his inability to accurately depict the human figure in the legs of this woman. Her leg 'muscles' have no "mass" so to speak. Also (and it may be one in the same observation) the light that falls on this woman's legs is totally unconvincing. One reason is that it makes a straight line up the leg. One side of the line is dark, and the other is light. In reality, light is much more complex than this oversimplification. Check out Vermeer's work to see the complexities of light and its subtle effects. The third painting: Take a look at this woman's right shoulder. Maybe it's just me, but something strikes me as a bit ridiculous here... I like this one as well, especially compositionally. This is the best one I have seen.

I agree with the two above posters. I'm not impressed. His technique is amateur, and he seems to have a poor grasp of how to portray the human figure in all its intricacies (his idea of what a leg looks like is, for lack of a better word, silly). Moreover, as someone above said, his paintings appear flat. On first glance, this is partly due to poor composition, and other times due to inability to accurately model a three-dimensional object on a two-dimensional surface.

Is anyone else tired of the photos of traders on the floor in the press? This page is hilarious. It makes fun of the practice by displaying the correct facial expressions according to how much the market drops.

I'm not so sure about that Brian. With the shorts on the sidelines, many of these stocks have had overexaggerated drops. I think that, with things back in order, we may return to a more normal market. I wouldn't be surprised if we go up tomorrow. We seem to be in for a dead cat bounce anyway. But, one can never know for sure. That's the thrill of trading. Right now (10 PM EST) the DOW and S&P futures are about even. I'd hate to be holding positions overnight in this environment. At any second some government bureaucrat may come out and try to prop up the markets, and if you're on the wrong side of a trade, you could get smoked at the open.

If anyone is at all interested, there is some data compiled on this page about how the short sale ban hurt the options market. It's definitely a different perspective on the intervention, and I failed to realize just how much this ban affected all different types of markets. It is astounding to see that transaction volume in options fell by as much as 50% after the ban was enacted.

There are really no more "true" Keynesians in the original sense of the term. Keynes' theories have been wildly discredited since their utter failure to explain the 70's oil crisis. All we have today is neo-Keynesians, which (from what I can tell) are a mix of a little bit of classical, Keynesian, and Monetarist economics. Nevertheless, the notion that the government can "stimulate" is a particularly Keynesian idea, and it seems to not want to go away. But I see it as a bit disingenuous to say that what is going on right now is Keynesian. While I see his influence, I also believe that the main school being put into practice today is Friedman's Chicago School (Monetarism). While Friedman did some work to prove that the federal government's response to the Great Depression prolonged it, his stubborn insistence that monetary policy could have averted the Depression is his lasting legacy. I think that Friedman's thought on this subject is the main motivator behind Bernanke's current actions. Bernanke sees this situation as potentially parallel to the Great Depression, and he is following Friedman's recommendations here exactly.

Shell out a few grand and get a Bloomberg. Then you'll get the real headlines, and you'll get them at the same time traders at major investment banks get them (which is usually at least 10 minutes before you see them anywhere else).

I agree. The hardest part of the whole thing for me to wrap my mind around is that the government is doing everything wrong from not only a moral perspective, but also a practical perspective. The interventions of the government are simply wrong on every measurable account. It's stunning.

I'm wondering if the Pope turning bearish is the signal of a bottom in the markets and a possible bull run....

The SEC is going to lift this ban at 11:59 PM EST on Oct 8. You can see details here. Interestingly enough, this article provides some good points:

My vote goes to Andrew Carnegie. I was completely enthralled while reading his autobiography and I recommend it to everyone. If we are including financial titans in the vote, then I would pick Jesse Livermore and JP Morgan.

Does anyone still listen to this nut? His recent claim is that the turmoil in financial markets is "proof" that the pursuit of money and success is "pointless". Since when did "proof" become a valuable commodity in Vatican City?