October 24, 2008
The Maestro: Neither Infallible Nor Omniscient
Greenspan Concedes to `Flaw’ in His Market Ideology
“Firms that bundle loans into securities for sale should be required to keep part of those securities, Greenspan said in prepared testimony. Other rules should address fraud and settlement of trades, he said. Greenspan opposed increasing financial supervision as Fed chairman from August 1987 to January 2006.”
I always found people’s reverence for Alan Greenspan a little weird and misplaced. Anyway, back in the real world, we see the Baltic Dry Index down 90%+ off the high it hit earlier this year. That’s a scary chart.
Related:
Oh Ship! No Financing Available, May 13, 2008
Baltic Exchange Capesize Index Moves to New High, April 27, 2007
Cat: | Time: 9:57 am (utc+8)
October 24th, 2008 at 10:25 am
Agreed I’ve always thought that greenie was a whore who sold his soul (sound money policies he advocated http://www.lewrockwell.com/north/north204.html in 1966) to the establishment. Now Paul Volcker there’s a real central banker.
October 24th, 2008 at 10:30 am
“Volcker’s Fed is widely credited with ending the United States’ stagflation crisis of the 1970s by limiting the growth of the money supply, abandoning the previous policy of targeting interest rates. Inflation, which peaked at 13.5% in 1981, was successfully lowered to 3.2% by 1983.” from wikipedia.
October 24th, 2008 at 10:38 am
@camabron: I don’t understand economics, credit creation and destruction, the role of (or rhyme or reason for) the central bank, the banking system in general, etc. I’m completely ignorant and as a result just watch the squiggles on the charts.
October 24th, 2008 at 4:21 pm
wow that was a great short. I pity the people short gamma on that move
October 24th, 2008 at 4:44 pm
ah the rare Holy Crap! chart.
Greenspan and Bernanke should be made to enter the Thunderdome- 2 man enter, 1 Fed Chairman leave.
October 24th, 2008 at 5:33 pm
@robert: I recall your comment on the Oh Ship! post, but it looks like it broke much faster and harder than even a prescient person like you foresaw? And I agree that people who short Grandma should be pitied. :)
@pete: It now costs less to ship 20,000 tons of coal from Brazil to China than it does to Fedex the order to RIO. :)
October 24th, 2008 at 5:43 pm
Black Friday?
October 24th, 2008 at 6:29 pm
Brian
We’ve already had a few Black Fridays this year.
Maybe they’ll call this “Blackest Friday.”
October 24th, 2008 at 8:39 pm
The plunge in this index shows how much the “permagrowth” globalization model is being discounted as dead in the water. This will force other countries to develop their internal market which is what they always should’ve done instead of simply settling for exporting stuff to the US and the US buying the stuff on credit. A big portion of the economy is based on this model and it will shrink in size to accurately reflect it’s true size. Watch for big reductions in GDP to come.
October 24th, 2008 at 10:53 pm
That is some chart. The VIX chart is equally impressive, as you know. If you have a moment, read “An Unexpected Tale” at www.financialtales.com
Thanks, keep your head up, and keep up the good work.
October 25th, 2008 at 8:19 am
damn, won’t it ever actually fall hard?
October 25th, 2008 at 8:38 pm
That is one Wild, Wild chart.
Why does Greenie think that lending institutions should be required to hold a piece of what they lend? To make them subjet to the risk? Newsflash to Greenie! Even w/o being “subject to the risk” they went down! Why would being subject to the risk be different.
October 25th, 2008 at 9:32 pm
@yo: Yeah, it’s stupid, because they happily held huge pieces of the absolute worst crap they were creating.
October 26th, 2008 at 10:03 pm
wow..been so long since i see this chart..truly heart wrenching..
October 26th, 2008 at 10:11 pm
Maoxian, hope you dont mind i copy this chart and post in my blog as a reminder of myself,on how this chart can be used to determine how “good” the economy was. During the bull market, the shippers had problems delivering goods on time due to the high market demands. They even went on to order the construction of new ships that will most likely be finished during this bear market. This shows how optimistic the market was during the bull market. And now, is all hellish for them.
October 26th, 2008 at 10:29 pm
@Kris: sure, steal the chart as long as you link back and don’t hotlink it. It is a nice chart to remind one how quickly everything can fall apart.
October 31st, 2008 at 12:50 am
TD sequential is now looking pretty interesting on this chart, be careful accessing through equities though, a lot of them may struggle when settlement comes around for this months ffa exposure