Posts Tagged ‘Uri Landesman’
Notebook, 7 November 2010: My view of markets
At some point in the near future, a “good job” may be defined as whether or not someone asks: “How do you want that cooked?”
“But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?”
Alan Greenspan, 5 December, 1996, Francis Boyer Lecture at The American Enterprise Institute. Accessed 6 November 2010.
There is certainly enough well documented history by now to reach some substantial conclusions about the worth and efficiency of the free market system. When Fed Chairman Alan Greenspan gave the speech at a black-tie event within the friendly confines of the American Enterprise Institute, the Nikkei index dropped 3.2%, the Hang Seng fell by 2.9%, the Dax dropped 4%, and when trade resumed the next morning, the Dow shed 2.3%[1]. The one man charged and believed to have the best overview of the actual state of the economy had just told the world that stocks weren’t worth the prices they were being traded at, and traders heeded those words for less than 48 hours.
Finance and the GOP in bed together…
Crossposted comment on Dkos:
about 8% of the US GDP, somewhere around $1.2 to $1.8 trillion is sitting idle on the sidelines right now.
Idle. Uninvested. Useless.
Bloomberg is rent collecting here (see the diary). There’s plenty of money out there for R&D, expansion into new markets, plant and process improvement, efficiencies. But nobody in control of this captal is doing anything with it.
Why?
Partly because of a structural weakness on Wall Street, who insists on placing bean counters in control of companies, who are concerned with investor ROI, rather than those with an intimate knowledge of the products, processes and the markets these products serve. Their real expertise is in rent collection, not business (two different skill sets). Chrysler was almost done in by these people. Dennison, some company whose name I can’t remember, but who fabricated engine gaskets, etc, etc, etc . . . all driven to the brink by the archtypical Harvard MBA who knows nothing more than how to work a spreadsheet.
This is nothing new.
Another reason is political. Traders Uri Landesman and Jack Reutermann came right out and said it on CNBC: traders were waiting for the GOP to take back Congress this November. They are ensuring that there will be no job growth to help along a republican victory. Call it CT if you want, ban me if you want, but we’ve all seen worse business climates than this in which companies were still fighting for market edge and investing in growth. I cannot think of another valid reason for this – real businessmen know that you do whatever it takes to survive and prosper, but then bankers and traders are not businessmen at all and they’re holding all the cards.
