6/24/10

At the end of the day, its possible that no amount of ingenuity, tenacity, or greed can save Wall Street from the demagoguery of politicians. Whatever happened to all those connections Goldman was supposed to have, heh?

Even beyond the regulation, however, it is starting to seem as if much of the last decade in finance - not just Wall Street, all of finance- was built on unfounded optimism and unsteady economics. A bunch of rent-seeking, poorly researched casino gambling to exploit the few truly value added innovations for all they're worth. At the end of the day, I think investors coming to realize that they've been (and continue to be) played might be even more important than anything the government does.

With politics and economics conspiring to hack away at the big money gambling that makes Wall Street the place to be for the young, smart, and greedy, are the big money days gone? Is there enough dumb money out there to feed the beast? When can we bring the party hats out again?

Just read this .

Comments (30)

Best Response
6/24/10

Dude, personally, I don't think the party is over just for Wall Street. The good times are over for everyone. The fiat/fractional reserve currency has failed. Banks won't lend. Borrowers won't pay back. A mix of our cultural attitude (our sense of entitlement) and poor fiscal choices have led us down an unsustainable path. The housing bubble crashes, and the government's response is to prop it up with a synthetic housing bubble. Transfer the bad loans to Fannie, Freddie, and the Fed.

The fact is, at some point, some straw will break the camel's back. We have an entire system built on credit (Latin for Trust). At some point, if one person fails to make payments on their obligations, then the person who trusted them will also default, and the cycle continues.

Take a look at unfunded liabilities. These are the real killers. US Gov won't be able to make Social Security payments, and state pensions will not be able to make the 8% returns each year to keep up with their liabilities. At the end of the day, someone has to get screwed. It may be the worker who slaved his whole life to earn his pension and the fund might not be able to pay it. Or it may be the young worker who is working hard each day who has his tax rate raised to 75% to cover the pension worker. In either scenario, consumption must decrease, since the old worker will have less money (since the pension defaulted) or the young worker will have less money (from high taxes).

Perhaps I'm just a gloom and doom-ist. I just think the party is over for everyone. The system is built on trust, yet we've woven a web of lies to think we are living a life of prosperity. Buying a house with no down payment and no income is not prosperity. Buying a TV from a second mortgage you took out on the expected value of your house is not prosperity. Being levered 30 to 1 so your Bank can take on more risk making markets is not prosperity.

We've gotten to that point in the night (at a good party) where you get a second wind, take a couple extra shots of Jack (or whatever you drink), then fuck some girl with an STD, piss on your friends rug, and drunk text your ex to tell her how much you miss her.

Well tomorrow, we'll all wake up, and realize the mess we've made, and trust me, this hangover/clean up will be brutal.

looking for that pick-me-up to power through an all-nighter?

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6/24/10
6/24/10

I'm glad I'm not the only one who drunk texts her ex (s).

6/24/10

Are you seriously asking if politicians will cease to prostitute themselves?

The party's not over, its just in a lull because the cops came and broke it up and when they came inside they saw a bunch of high school kids drinking and smoking and blowing lines and having all sorts of orgies. The parents of the house were out on a run to restock the quickly dwindling beer and drug and dildo supplies and when they got the phone call from the cops, they played dumb and acted as if they had no idea what was going on at their house. Well now all the neighbors are on alert and Social Services is keeping tabs on them, so the degenerate parents are on their best behavior.

Sooner or later, the neighbors will go back to their oblivion, Social Services will stop paying visits, and Mom and Dad will get that itch to get to host a swarm of drunk and horny high school kids.

In reply to Marcus_Halberstram
6/24/10
Marcus_Halberstram:

Are you seriously asking if politicians will cease to prostitute themselves?

The party's not over, its just in a lull because the cops came and broke it up and when they came inside they saw a bunch of high school kids drinking and smoking and blowing lines and having all sorts of orgies. The parents of the house were out on a run to restock the quickly dwindling beer and drug and dildo supplies and when they got the phone call from the cops, they played dumb and acted as if they had no idea what was going on at their house. Well now all the neighbors are on alert and Social Services is keeping tabs on them, so the degenerate parents are on their best behavior.

Sooner or later, the neighbors will go back to their oblivion, Social Services will stop paying visits, and Mom and Dad will get that itch to get to host a swarm of drunk and horny high school kids.

^^funny, but not exaclty a meaningful analysis.

party isnt over, but it wont be as fun going into the future.

---
man made the money, money never made the man

6/24/10

hopefully, then the rents will fall

In reply to mr1234
6/24/10
mr1234:
Marcus_Halberstram:

Are you seriously asking if politicians will cease to prostitute themselves?

The party's not over, its just in a lull because the cops came and broke it up and when they came inside they saw a bunch of high school kids drinking and smoking and blowing lines and having all sorts of orgies. The parents of the house were out on a run to restock the quickly dwindling beer and drug and dildo supplies and when they got the phone call from the cops, they played dumb and acted as if they had no idea what was going on at their house. Well now all the neighbors are on alert and Social Services is keeping tabs on them, so the degenerate parents are on their best behavior.

Sooner or later, the neighbors will go back to their oblivion, Social Services will stop paying visits, and Mom and Dad will get that itch to get to host a swarm of drunk and horny high school kids.

^^funny, but not exaclty a meaningful analysis.

party isnt over, but it wont be as fun going into the future.

Um... I thought it was pretty obvious.... any politicians hob-knobbing with Wall Street or accepting their more than generous contributions will be hoisted on a sharpened stick by the media and public... thats why Wall Street connections are currently moot.

And it was an analogy, not an analysis.

6/24/10

I think the party won't be over until completely delibitating and permanent catastrophe strikes while any available government action (low FF rates, easy discount lending, bailouts) is anemic. I think Bernanke has shown us the new doctrine in US Economic Regulation: Everything can and will be done. This means a failure of the economic power/influence of the govenrment must be first.
Plenty of doomsayers talking about the fall of the dollar and chromically unfilled treasury auctions but the reality is still very far away. Maybe not even in our lifetime.

In reply to Marcus_Halberstram
6/24/10
Marcus_Halberstram:
mr1234:
Marcus_Halberstram:

Are you seriously asking if politicians will cease to prostitute themselves?

The party's not over, its just in a lull because the cops came and broke it up and when they came inside they saw a bunch of high school kids drinking and smoking and blowing lines and having all sorts of orgies. The parents of the house were out on a run to restock the quickly dwindling beer and drug and dildo supplies and when they got the phone call from the cops, they played dumb and acted as if they had no idea what was going on at their house. Well now all the neighbors are on alert and Social Services is keeping tabs on them, so the degenerate parents are on their best behavior.

Sooner or later, the neighbors will go back to their oblivion, Social Services will stop paying visits, and Mom and Dad will get that itch to get to host a swarm of drunk and horny high school kids.

^^funny, but not exaclty a meaningful analysis.

party isnt over, but it wont be as fun going into the future.

Um... I thought it was pretty obvious.... any politicians hob-knobbing with Wall Street or accepting their more than generous contributions will be hoisted on a sharpened stick by the media and public... thats why Wall Street connections are currently moot.

And it was an analogy, not an analysis.

i agree. somewhere in between the dildos, the beer, the drugs and orgies was a pretty obvious message.

---
man made the money, money never made the man

In reply to mr1234
6/24/10
mr1234:

i agree. somewhere in between the dildos, the beer, the drugs and orgies was a pretty obvious message.

I was talking about politicians.

There's the problem, I'm sure you get this all the time, but you were entirely too fixated on the dildos.

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6/24/10

there is gonna be another party. aint over...
it will just happen at somebody elses house

In reply to Marcus_Halberstram
6/24/10
Marcus_Halberstram:
mr1234:

i agree. somewhere in between the dildos, the beer, the drugs and orgies was a pretty obvious message.

There's the problem, you were entirely too fixated on the dildos.

pretty sure it was you who brought the dildos into the conversation. youre just a never-ending-funny-internet cock-swallowing monster arent you? well, its a good thing youre funny. otherwise you wouldnt be very interesting. kidding. dont take this seriously.

---
man made the money, money never made the man

In reply to Marcus_Halberstram
6/24/10
Marcus_Halberstram:
mr1234:

i agree. somewhere in between the dildos, the beer, the drugs and orgies was a pretty obvious message.

I was talking about politicians.

There's the problem, I'm sure you get this all the time, but you were entirely too fixated on the dildos.

and whats up with the editing. this is the internet you dont need to prove anything.

---
man made the money, money never made the man

In reply to mr1234
6/24/10
mr1234:

and whats up with the editing. this is the internet you dont need to prove anything.

Is that why you keep coming back to read the post I wrote over and over again?

Get a hobby. Or a friend. Maybe even both.

6/25/10

I hope Batrick Pateman's right b/c some of us were still observing curfews at mommy and daddy's house during the last party and would really really like to be at the next one.

In reply to dazedmonk
6/25/10
dazedmonk:

I hope Batrick Pateman's right b/c some of us were still observing curfews at mommy and daddy's house during the last party and would really really like to be at the next one.

The problem is you have speak Hindi, Mandarin, Zulu Warrior dance to get into the next one

6/25/10

Party is not over. Things move in cycles, whatever legislation the government puts in place will just cause an opportunity to be exploited. Rather than let market forces take care of things the ever so wise politicians think they can come in and mess with stuff. They wanted to promote minority ownership of housing and look at the tidal wave that set off (yes, I know there is more to it, but this is just a tiny example).

I have now lived through a handful of booms and busts and nothing changes. I don't think this will be any different.

6/25/10

The Party will never be over until the Fall of the Republic !

Don't hold you breath

In reply to TNA
6/25/10
AnthonyD1982:

Party is not over. Things move in cycles, whatever legislation the government puts in place will just cause an opportunity to be exploited. Rather than let market forces take care of things the ever so wise politicians think they can come in and mess with stuff. They wanted to promote minority ownership of housing and look at the tidal wave that set off (yes, I know there is more to it, but this is just a tiny example).

I have now lived through a handful of booms and busts and nothing changes. I don't think this will be any different.

Exactly. Notice that the majority of posters here are young. I talked to a partner at a fund who has worked at places like DLJ and ML and also has made money off previous commercial real estate booms, and he said we're just in another cycle.

Just like during the boom, when people think it will go on forever, during the bust people don't see the recovery coming.

6/25/10

exactly the mentality of a stupid investor. Buy high during boom period and sell low when bust has actually happened.

In reply to Gate_Crasher
6/25/10
Gate_Crasher:

The Party will never be over until the Fall of the Republic !

So you mean around ten or fifteen years?

In reply to Marcus_Halberstram
6/25/10
Marcus_Halberstram:
mr1234:

and whats up with the editing. this is the internet you dont need to prove anything.

Is that why you keep coming back to read the post I wrote over and over again?

Get a hobby. Or a friend. Maybe even both.

so says the guy with 2000 posts. you realize this is an internet circle jerk? i am done, you win, you can go ahead and pat yourself on the back now.

---
man made the money, money never made the man

6/25/10

This beggars the question, which party are we referring to? The finance party? The Western dominated finance party? High wages party?

There's always a partying going on. But the days of Anglo-Saxon debt driven model heyday definitely seems to have gone out of vogue. It's become the party of has-been. The previous popular high-schoolers that hasn't or can't move on.

Economist: A special report on debt
http://www.economist.com/node/16397110?story_id=16...

Not basing all my assumption on an article and others from Economist. But a very interesting read nonetheless. I just don't understand how we can still be reaping the "ridiculously" high returns and bonuses without finding another "client/buyer" which inevitably seem to be moving Eastward. The covenant of Trust of smart Western style financiers and business leaders seem to have been broken. The debt level, as seen in Europe has finally reached almost unsustainable levels.

Yet, all around I seem Joe Blow entitlements and demanding ever greater services while bemoaning more taxes. Please someone more on the inside and wiser than me, explain how this is to be "handled" and where's the next party is, because I'm always done.

-----------------------------------------------------------------
Hug It Out

In reply to TNA
6/25/10
AnthonyD1982:

Rather than let market forces take care of things the ever so wise politicians think they can come in and mess with stuff. They wanted to promote minority ownership of housing and look at the tidal wave that set off (yes, I know there is more to it, but this is just a tiny example).

this is just a rant, but i cant help getting irratated when i see comments like this.

that legilslation you're referring to is the Community Reinvestment Act of 1977. that was a long time ago and it had very little negative consequense...until Glass-Steagall was repaeled in 1999. it took less than a decade for the financial crisis to manifest after that.

i agree that the gov shouldnt be doing anything. but you guys tend to focus on the wrong side of that concept. when the gov passes legislation FOR the deregulation of financial institutions, the shit hits the fan. i think that's what the history is telling us.

---
man made the money, money never made the man

In reply to TNA
6/25/10
AnthonyD1982:

Party is not over. Things move in cycles, whatever legislation the government puts in place will just cause an opportunity to be exploited. Rather than let market forces take care of things the ever so wise politicians think they can come in and mess with stuff. They wanted to promote minority ownership of housing and look at the tidal wave that set off (yes, I know there is more to it, but this is just a tiny example).

I have now lived through a handful of booms and busts and nothing changes. I don't think this will be any different.

IDK Anthony, we're breathing very rarified air right now. Obama & crew is bafoonishly proving JM Keyens wrong. With dollar value where it is and housing pricing so low, classically retained monies should be bringing volume of sales and home prices up. But it's not, for whatever reason (there's a littany of them); which economically points to one big bad shitstorm....deflation. People who do have money to spend/invest have no reason to put money into anything while it's prices are tumbling ONTOP of a rouge government whose actions inject plenty of doubt as to whether their property rights are going to be observed. Stimulus is suppossed to correct externalities not take the fall for internal faggotry; and because of it, it's fucked data so bad the best we can do is guess. Which is scary.

Personally I think un-employment isn't going to fluctuate very much which is key to any type of housing rebound. Companies have already been running high and tight for the last year and last years equities bounce wasn't any type of green light for a hiring frenzy. Two things could happen IMHO: 1) Houses become as valuable as German currency post WWI and every dickhead with 5k in cash can buy a home 70% LTV 2) Either the consumer stops throwing dildo infested high school orgies and starts finding a way to pay down their debts consistently & restort some validity for credit or the epicurian foster parents go to bat for the consumer and start extending more credit to the consumer. Those are very hand wavy but it's probably as good as anyone else's guess right now.

Also keep in mind our economy and the government that observe it are man made. All it takes is one half baked piece of liberal legislation with 2 grader quality handwriting all over it to kick the can down the road. Keep in mind the stimulus wasn't "tax payer" money; it was monopoly money printed out by the Fed. They can keep this dance going as long as they want.

In reply to Stringer Bell
6/25/10
westfald:
AnthonyD1982:

Party is not over. Things move in cycles, whatever legislation the government puts in place will just cause an opportunity to be exploited. Rather than let market forces take care of things the ever so wise politicians think they can come in and mess with stuff. They wanted to promote minority ownership of housing and look at the tidal wave that set off (yes, I know there is more to it, but this is just a tiny example).

I have now lived through a handful of booms and busts and nothing changes. I don't think this will be any different.

Obama & crew is bafoonishly proving JM Keyens wrong.

also very irritating. the president doesnt control the economy.

---
man made the money, money never made the man

In reply to TNA
6/25/10
AnthonyD1982:

Party is not over. Things move in cycles, whatever legislation the government puts in place will just cause an opportunity to be exploited. Rather than let market forces take care of things the ever so wise politicians think they can come in and mess with stuff. They wanted to promote minority ownership of housing and look at the tidal wave that set off (yes, I know there is more to it, but this is just a tiny example).

I have now lived through a handful of booms and busts and nothing changes. I don't think this will be any different.

i would like to think this recession is just another business cycle. but with the amount of debt outstanding in virtually every level - both public and private - its hard not to be concerned. i see one of 3 things happeneing:

*the US goes through a period of anemic growth. couple of yrs (or a decade) down the line, bad debt flushes out of the system. banks go back to lending, everybody is happy, all is well, business as usual.

*financial apocalypse. losses oin real estate are realized on bank balance sheets, state and local govs default, consumer spends less, taxes go up, federal gov refuses bail out. prolonged depression. probably unlikely, but i think the possibilty exists.

*or maybe something in between. or something totally different. there are a lot of moving parts.

for the past couple of yrs or so, the main driver for growth has been easy financing. for better or for worse, the US economy is based on credit. there might be something wrong with that.

---
man made the money, money never made the man

In reply to mr1234
6/25/10
mr1234:
AnthonyD1982:

Rather than let market forces take care of things the ever so wise politicians think they can come in and mess with stuff. They wanted to promote minority ownership of housing and look at the tidal wave that set off (yes, I know there is more to it, but this is just a tiny example).

this is just a rant, but i cant help getting irratated when i see comments like this.

that legilslation you're referring to is the Community Reinvestment Act of 1977. that was a long time ago and it had very little negative consequense...until Glass-Steagall was repaeled in 1999. it took less than a decade for the financial crisis to manifest after that.

i agree that the gov shouldnt be doing anything. but you guys tend to focus on the wrong side of that concept. when the gov passes legislation FOR the deregulation of financial institutions, the shit hits the fan. i think that's what the history is telling us.

I know what legislation I am referring to and the CRA is not what I meant. During Clinton's years banks were pressured to relax their lending standards. Minorities tend to have lower incomes, lower credit and a hard time verifying employment ( used to actually have to do this in addition to putting a down payment ).
http://www.google.com/search?hl=en&source=hp&q=min...

This was seen as a form of discrimination. Now instead of investing money in cleaning up slums, fixing schools to teach these underprivileged kids, help the parents find jobs so their credit wouldn't suck, etc what does the Fed do? Let's just force the banks to lower their standards. Poof. Genius. Freddie and Fannie will back whatever.

This is just the start and we all know the end. This is what I am referring to when I say the government likes to screw with things.

6/25/10

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looking for that pick-me-up to power through an all-nighter?
In reply to TNA
6/25/10

---
man made the money, money never made the man

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