If you were president of the US right now??? what do you think would be the best way to remedy this contraction? i know you arent a politician but part of you has to have an opinion. i may actually campaign for you if you ever wanna give it a shot. Joey Dee…He is for MEE 2012
I’m not Joey, but my solution is not to try to avoid a recession at all cost. We did that in 2001, and look where we are today. recessions are healthy for an economy, and reduces bubbles and excesses. The more we delay it, the higher we fall.
I agree with former trader. I would even say that since 2000/2001 we have been in a recession which wa conveniently and artificically disguisd as a booming housing market. People learn to savor pain as well as pleasure. Whenever did anyone tell you growing up that life was a bed of violets.
SkipE99 Wrote: ------------------------------------------------------- > If you were president of the US right now??? Probably the same thing I am going to do while I am not President - lie in bed for awhile watching TV, go to sleep, deal with such questions in the morning.
murray rothbard has this to say on fear of the word ‘recession’ -written circa 1970 We live in a world of euphemism. Undertakers have become “morticians,” press agents are now “public relations counsellors” and janitors have all been transformed into “superintendents.” In every walk of life, plain facts have been wrapped in cloudy camouflage. No less has this been true of economics. In the old days, we used to suffer nearly periodic economic crises, the sudden onset of which was called a “panic,” and the lingering trough period after the panic was called “depression.” After the disaster of 1929, economists and politicians resolved that this must never happen again. The easiest way of succeeding at this resolve was, simply to define “depressions” out of existence. From that point on, America was to suffer no further depressions. For when the next sharp depression came along, in 1937–38, the economists simply refused to use the dreaded name, and came up with a new, much softer-sounding word: “recession.” From that point on, we have been through quite a few recessions, but not a single depression. But pretty soon the word “recession” also became too harsh for the delicate sensibilities of the American public. It now seems that we had our last recession in 1957–58. For since then, we have only had “downturns,” or, even better, “slowdowns,” or “sidewise movements.” So be of good cheer; from now on, depressions and even recessions have been outlawed .
Wow, a whole new meaning to WWJD! When I was in grad school, during the dot com craze, I (half-jokingly) decided to bill myself as a “concept engineer.” What was concept engineering, people asked? You told me what you were doing, and I would try to come up with a 2-4 word description of it. Then you got to go out and market it as some kind of thought leader. Can you give an example… Well, how about “concept engineering.”
former trader Wrote: ------------------------------------------------------- > I’m not Joey, but my solution is not to try to > avoid a recession at all cost. We did that in > 2001, and look where we are today. recessions are > healthy for an economy, and reduces bubbles and > excesses. The more we delay it, the higher we > fall. i have heard conflicting definitions as to what a recession is. from CFP i remember six months of market decline/contractions, but have heard more liberal definitions that are as short as three months. I remember the second quarter having some growth, but lets face it. arent we already in a recession?
Recession is when your neighbor loses his job… Depression is when you lose yours… And recovery is when…
JoeyDVivre Wrote: ------------------------------------------------------- > SkipE99 Wrote: > -------------------------------------------------- > ----- > > If you were president of the US right now??? > > > Probably the same thing I am going to do while I > am not President - lie in bed for awhile watching > TV, go to sleep, deal with such questions in the > morning. Hey i think thats been the presidential approach for the last 8 years. minus the dealing with it in the morning part.
bchadwick Wrote: ------------------------------------------------------- > Recession is when your neighbor loses his job… > > Depression is when you lose yours… > > And recovery is when… tell that to ditchdigger…
Just a couple of days ago during a routing lecture, Dr Anreas Hauskrecht a Global Economics professor at Indiana University defined recession as two or more periods (in our case quarters) of negative GDP growth. This has not happened yet, therefore we aren’t in a recession. I don’t know if this is the universal definition, but it seems sensible, and the source is a professor who has been routinely consulting for many years with central banks of dozens of countries to help them define economic policy. This is the one I go by when arguing with friends :).
I think that is a general definition, but the NBER (National Bureau of Economic Research - did I get that right?) ultimately makes the decision if we are officially in a ‘recession’ by a number of factors (ie. levels of the industries, employment, etc.). Usually they don’t even make it official until it is over.
bchadwick Wrote: ------------------------------------------------------- > Recession is when your neighbor loses his job… > > Depression is when you lose yours… > > And recovery is when… Bruce! I saw you give your little 20 second pep-talk at that seminar with Peter tonight. All in all, I am just jealous you received your charter last week and don’t have to take these exams anymore. . .
Heh heh, I wondered if anyone here would recognize me there. I was actually talking with those guys about maybe teaching some sections and Peter asked if I’d be willing to stand up and say that I’m a Stalla graduate who benefited from the program. I had no problem doing that, especially since I thought Stalla was a big help for me. It IS nice to be done. Unfortunately, I’m not sure the CFA does anything for me now that the industry is blowing up. I was even considering going down to Brazil to scout out funds there, but Brazil looks like it is about to blow up too. But the Charter will look pretty on my wall, I guess. Or at least take up a lot of space.
If I was Prez- 1) Design and implement a far-reaching plan for fixing up bad loans. I posted about some elements of this plan before, but it means telling people that gov’t expects you to honor your commitments, will help you when you can’t, but will prod you with a sharpened stick if need be. 2) Try to do my best Ronald Reagan-esque reassurances that we have leadership in this spot and that everything is going to be okay. Fear is a huge problem here and the Administration has done nothing to deal with it. 3) Bring whatever pressure I can to get a very public meeting together amongst central bankers of the world and have Bernanke issue some statement about coordinated blah, blah and nobody should worry about their bank deposits or money market deposits. 4) Fix the rating agencies. If we have oracles that can cause us this much trouble, the oracles require some oversight and accountability. I would need to huddle with my advisors (like DarienHacker) and work out details of this. 5) Endow a research organization whose only mission was to study the effect of policy decisions on the economy and make recommendations to Treasury. This would be cheap and would raise bchadwick’s chances of having a job. The director of this agency would be the Chief Risk Officer of the country and would be responsible for drawing up plans with Treasury and the Fed for dealing with possible emergencies like the CDS crisis coming soon (when GM defaults). 6) Do lots more public disclosure of the problem. If this requires trading halts or something, then I’m fine with that. Putting taxpayers on the line for money like $700B without explaining the problem (Henry Reid says “We have a major insurance company about to go bankrupt so we need $700B” and that’s the most direct info?!) 7) Drop a daisycutter somewhere I can watch. This has nothing to do with the bailout but I would like to check that out. 8) Regulate hedge funds in some cheap ways. Most hedge funds I know don’t mind the idea of gov’t supervision except that gov’t doesn’t seem to be able to regulate anything without ponderous procedures that just don’t work. I would be monitoring hedge funds for de-stabilizing trades without regard for issues like investor fraud or compliance. The hedge fund chapter of this debacle is coming.
- I see that you’re starting to see the light on why a run on MMF would be quite bad
Joey, I notice you seem to have a mental framework as to how you envision the progression of the crisis, mainly based on which companies or which markets are going to be whacked next. For instance, you mentioned the possibly-looming CDS crisis, as well as “the hedge fund chapter of this debacle” that is coming. Clearly, I think we can all agree that both HFs and the CDS crisis are at grave risk, but which do you see being up to the chopping block next? More generally, what other types of companies and/or markets do you foresee a looming crisis for? I would like to know what you think the dominoes are, and what order they are standing in.
did you see the reports from last night that BAC is “restructuring” the bad countrywide loans? If we can get the private sector to do it (and do it right), then that is less that the gov’t would have to do when they buy the MBS’s. (point 1)
Are you crazy? Go down during Carnival to scout some funds. Make sure you conduct a lot of cultural due diligence, because when you buy a HF, you’re really buying the team and the work ethic. And make sure you hit the beach. Bring camera.
Aspiring Analyst Wrote: ------------------------------------------------------- > Joey, > > I notice you seem to have a mental framework as to > how you envision the progression of the crisis, > mainly based on which companies or which markets > are going to be whacked next. For instance, you > mentioned the possibly-looming CDS crisis, as well > as “the hedge fund chapter of this debacle” that > is coming. Clearly, I think we can all agree that > both HFs and the CDS crisis are at grave risk, but > which do you see being up to the chopping block > next? > > More generally, what other types of companies > and/or markets do you foresee a looming crisis > for? I would like to know what you think the > dominoes are, and what order they are standing in. This is very hard to get the order right and, of course, gov’ts have an interest in propping up dominoes. But dominoes I think are ready to fall are: a) Corporate defaults - This hits before CDS problems (obviously). I’ve got to believe there are a bunch of big corporations on the verge of default. The Fed can only help with this for a short while. I think GM, in particular, is a serious issue upcoming but there are surely others closer. b) Hedge funds - Hedge funds don’t need to follow GAAP accounting rules and surely do not need to mark anything to market. At a hedge fund, you value things however you tell clients that you value them. At a multi-billion $ hedge fund I am very familiar with, illiquid positions were valued using valuation memos. The trader who established the position would write a short memo explaining that the security was worth [blah] and then have his reasons. If you posted these valuation memos on AF, Virgin would make fun of them, Etienne would make fun of Virgin and then make fun of the memo, and spierce would say shocking things about the person who wrote the memo. How long do you think that they can keep marking illiquid securities to valuation memos when they get redemption requests and there is no liquidity? Valuation memos rarely undervalue a position. c) CDS problems including counterparty and settlement problems. d) Munis - There are a bunch of reasons why we should worry about munis. The reasons kinda go through me like Chinese food because I find the asset class to be boring (and I know that is like my wife finding baseball boring). Whenever munis get woofed, there are always lots of retired folks who thought they were doing their civic duty buying them. e) Pension funds - We haven’t heard about any of these getting stomped, but someone out there is going to have serious trouble funding pension payments and the gov’t will need to bail them out.