Wednesday, May 27, 2009
to stay ahead
And you didn't
your Wharton interns
But it seems
on the edge.
the second liquidation
of the Pequot
(With apologies to PrivateEye and EJ Thribb and posthumous ackowledgement to Greg Newton)
Tuesday, May 26, 2009
I must admit that I am actually a bit sad to see it come unravelled (not having had a short in VW) since there was brilliance in shafting may of the self-professed smartest guys in the world (?!?!?) by suckering them in with a trail of seemingly free bank notes, before giving them the P&L wedgie of their lives and hanging them-up in public view by their short and curlies. But it appears that The Street may have the last laugh.
Wednesday, May 20, 2009
Tuesday, May 19, 2009
Richard Werner said...
I believe I am the originator of the phrase 'Quantitative easing'. The original Japanese expression is 'ryoteki kinyu kanwa' or 'ryoteki kanwa' for short. Both are, literally translated, 'quantitative easing'. Thank you Cassandra for your most wonderful description of the English translation.
I used the expression prominently in my articles in the Japanese press in 1995, 1996, 1997, 1998 (Nikkei, Japanese Economist, Toyo Keizai, Japanese Newsweek, etc.) to suggest the necessary and sufficient policy response to end the recession (I had predicted the Japanese banking collapse in 1991; in print see Discussion Paper 129, Oxford Institute of Economics and Statistics). I had already argued then that interest rate reductions, even to zero, won't help. What was needed was to stimulate the economy through the quantity, not the price of money - correctly done. I wanted to avoid expressions such as the figurative 'printing money' and the common 'expanding the money supply', not only because they would unnecessarily alarm Japanese lay readers, but also because these are traditional monetarist prescriptions, which I argued would not work (as the monetarists argued for an expansion of bank reserves). At the time I was chief economist at Jardine Fleming Securities (Asia) Ltd. and Assistant Professor at Tokyo's Sophia University and known as the BoJ's fiercest critic. The Bank of Japan adopted my expression in 2001 as its official policy. The BoJ used exactly my Japanese phrase, and in its English-language press statement literally translated it.
However, and this is a predictable irony of central bank behaviour, they used it is a cover, because they did not adopt true quantitative easing, and instead implemented simple monetarist expansion of bank reserves. As I had predicted, this could not work. Next year Japan will basically be in its 20th year of recession. One further comment: In my English-language articles and interviews that I gave I used the expressions 'credit expansion', 'liquidity expansion' or 'credit creation' (the latter being the most accurate description) instead of 'ryoteki kanwa', as the audience in the financial markets would then understand me more or less correctly. Anyway, shame I'm not getting license fees each time a central bank talks about 'QE'.
Professor Richard A. Werner, D.Phil. (Oxon), Chair in International Banking, Director of the Center for Banking, Finance and Sustainable Development, School of Management, University of Southampton. firstname.lastname@example.org
9:00 AM, May 14, 2009
Monday, May 18, 2009
Monday, May 11, 2009
Financial Psalm 16
16:1 Preserve me, Gold, for in you do I take refuge.
16:2 My portfolio, you have saveth, and it sayeth: “You are my Saviour.
Apart from you, I have no good thing.”
16:3 As for the silver and oil which is in the earth,
they are also excellent ones in whom is my delight.
16:4 Their sorrows shall be multiplied who diversifyeth into other assets.
Their offerings of bonds I will not accept,
nor hold such paper on my lists.
16:5 Gold well-assayed is my preference and made-eth my cup.
You made my lot secure.
16:6 Your prices have risen making pleasant our faces.
Yes, our offspring will have a good inheritance.
16:6.1 Beware the false prophet, paper gold, promising false profits.
My heart instructs me to stay long during the right seasons.
16:8 I have set Gold always before other assets. Because It is is heavy in my right hand, and shall not be moved from its Swiss vault without countersigned instructions.
16:9 Therefore my heart is glad, and my relative purchasing power rejoices.
My portfolio shall also dwelleth in safety so long as Bernanke ruleth.
neither will you allow my portfolio to become holey due to political corruption, or crony capitalism.
16:11 You, Gold, will show me the path of wealth preservation during times of inflationary woe and political uncertainty.
In your presence, I feel the joy of your security.
So that my hand can exchangeth you for pleasures forevermore.
(with apologies to Private Eye)
Reg FD: I am not a goldbug and still believe it has one more big puke before the rocket-ride (not the "gee, I printed a price and stayed there for 5 mins puke)
Wednesday, May 06, 2009
Yet, I don't. Paradoxically, despite my predisposition towards free speech, and general tolerance of most weird, eccentric, iconoclastic, ludicrous, subversive, even lunatic ideas, I am quite confident that Britain is better without the inciting bigotry and facist, racist, homophobic, hyperbolic rantings of Mr Savage-Wiener. Mrs.Smith's solution was simple and clinical. Probably not optimal, but effective. And so in one small way, (FTSE short-squeeze andincreasing risk appetites asides) the people of Great Britain are better off today than they were but a few days ago, save the elimination of Mr Savage-Wiener 's entertainment-value of which they will now be deprived.
Sunday, May 03, 2009
Deeply oversold markets can rally for all manner of reasons: simple sellers' fatigue; government intervention, whether directly in markets (PKO anyone?) or indirectly through moral suasion, jawboning, or policy response, inciting the feedback loop to short-covering, which, causing higher prices fuels positive momentum and the optimism that the worst is maybe, possibly, hopefully over. The Strategist weatherwanes (like Abbey Cohen or Alex Kimmont) chortle which way the wind is blowing rather than where it will blow tomorrow. Professionals get squeezed-in to further penalize their (and their customer's) less than prescient capitulation at or near the prior lows. These episodes typically last longer than most bears can tolerate, both in time, though more acutely in P&L. They decry the move and point to fundamentals (and they are of course right, though it matters not). They conjure conspiracy and highlight manipulation (and may be right) but it gets no traction for the bullish side has more constituents than the bears. Their confidence wanes with their P&L, each higher intermediate-term low pushing them one step to closer to covering. The trend-followers have long-since bailed - even the longer-term programmes are turning bullish. Markets do, after-all, lead, don't they? Finally, like the interrogated, the short is broken and confession to anything and everything is achieved. And like a false confession, this capitulation is a hollow victory for the bulls and the market, since it is likely to be an intermediate-term top - NOT an early whistle-stop along the New Prosperity Line, particularly where The De-leveraging is The Big One.
So hearing Mobius, Cohen, and other pundits speak of bull-markets and greenshoots is predictable. But I reckon that Mssrs Schilling,and Roubini, will in time - once again - more likely be correct insofar as I believe continued recession and mild deflation will predominate longer than optimists (and inflationists)- and in particularly longs, can bear once the shorts have sufficiently covered and the intermediate term optimism rolls over with the continued bleak news flow. Then, the trend-followers will mechanically bail, and reverse positions, prescient programmes and specs, too, will re-establish their shorts, until finally the squeezed-in will, once again get squeezed-out, and those amongst us with weak constitutions will be forced to hide the pills and sharp objects to avoid .... tragedy.