Tag Archives: wall street bailouts

who cares what christine lagarde thinks about interest rates?

Another week has brought yet another much-publicized call for the Federal Reserve to delay raising interest rates. Yesterday, the International Monetary Fund opined that the Fed should hold off on a rate hike until 2016.

Give me a break.

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growth? what growth?

Yesterday the Commerce Department reported that the US economy shrank one percent in 2014’s first quarter, surprisingly worse than its initial estimate in late April of .1 percent growth. Most people blame the brutal “polar vortex” winter weather for this decline. All morning, the talking heads on CNBC have been excitedly predicting that, with the weather improving, second quarter growth will rebound to two or even possibly three to four percent. The recovery, they say, is accelerating. To which I would reply: you call this a recovery?

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talking about how we talk about the wall street bailouts

Recently, I was subjected to the unpleasant experience of watching the press fawn over a bunch of self-satisfied celebrities who contribute little or nothing to society. No, I’m not talking about the interminable Oscars coverage this past week. I’m talking about the reaction to the Federal Reserve meeting minutes from the 2008 financial crisis, which were released two weeks ago.

In the popular press–even at the reliably liberal New York Times–it has become conventional wisdom that the biggest mistake of that era wasn’t bailing out the most corrupt and incompetent firms on Wall Street with billions of dollars in taxpayer money. The biggest mistake was not making the bailouts big enough.

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golden years

Something very weird has happened to me recently. To my surprise, I have caught the gold bug.

For most of my career, I could never understand why anyone would listen to the wacky newsletter writers that promoted gold. They were almost all rabid conspiracy mongers–people who believed 9/11 was an inside job or that a sinister cabal of Illuminati secretly controlled our government.

And yet, I now think that anyone who doesn’t have gold in their portfolio should buy some, and those that already do own gold should buy some more.*

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bondage

There’s been no shortage of criticism of “Helicopter” Ben Bernanke’s aggressive quantitative easing policies. But you have to hand it to the man. He’s nothing if not determined. Against all odds and even the laws of financial physics, he’s accomplished his primary goal—juicing stock prices.

The problem is, as usual, most average investors are behind the curve.

Year-to-date, as the NY Times pointed out Sunday, more than $85 billion has been put into bond mutual funds compared to only $73 billion for stock funds. But buying bonds is not a wise strategy going forward. Thanks to Uncle Ben’s interventions and other factors, stocks are almost surely going to outperform bonds for the next three, five, maybe even ten years.

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psst! wanna know a secret? we were never in danger of another great depression.

Welcome to my new blog. I’ve been managing money successfully for three decades now and I’ll be posting regularly about investing and finance. I’ll probably spend a good amount of time complaining about my industry, too. What can I say? I’m kind of an odd bird–I’m an investment manager who despises just about everything about the investment business and Wall Street in general. With that in mind, I’ll start things off with a post on what you might call an “oldie but a goodie”—the infamous Wall Street bailouts of 2008, and something almost nobody understands about them.

David Stockman wrote something very true and yet very taboo recently. In a New York Times piece published last week, the former congressman and Reagan budget director argues persuasively that, despite what just about every pundit and politician has been saying for five solid years now, those bailouts did NOT “save us from the next Great Depression”:

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