txlaw

The latter, I believe. At some point, I think it will come out in the history books that the Fed understood that there was risk of blow up, and that they didn't want to create a catalyst for that blow up. But we won't know for sure until some time passes. the all knowing Fed right? the same fed that never saw a developing bubble in housing? And the same fed that got the crisis anyway! maybe even a worse one because markets saw the fed doing unprecedented things. the fed funds rate basically Followed the stock indexes lower. Nobody thinks the Fed is all knowing. Nor does Ben Bernanke, who expressed a healthy dose of skepticism of what the Fed can actually do in that Lowenstein article. He's also expressed this skepticism in his testimony to Congress, noting that it is up to them to get the economy going and reduce the national debt to a more sustainable level. There was nothing wrong with Bernanke lowering rates in 2007. What was messed up was the fact that, as a bank regulator, the Fed prior to and after Bernanke did nothing about derivatives, structured products, problems associated with disintermediation, and rampant fraud. In other words, the Fed should have been more interventionary -- a stronger regulator.

The latter, I believe. At some point, I think it will come out in the history books that the Fed understood that there was risk of blow up, and that they didn't want to create a catalyst for that blow up. But we won't know for sure until some time passes.

Ben Bernanke assumed his office in Feb. 2006, at which point the fed funds rate continued to go up. It peaked at 5.25% and then went down as the subprime debacle started to show its face. except it wasn't a crisis in 2007. I recall it was wall street's best year ever. the crisis began late summer of 2008. Sure. But the Fed typically lowers rates in a preventative manner to prevent crisis from occurring. Right after Sep. 11, for example, Greenspan lowered interest rates. It's not as though Bernanke was purposefully lowering interest rates so that Wall Street could have its best year ever.

Ben Bernanke assumed his office in Feb. 2006, at which point the fed funds rate continued to go up. It peaked at 5.25% and then went down as the subprime debacle started to show its face.

I see. Yes, that's a different position. Unfortunately, you may be right, at least in the short to medium term. In the long run, however, Main Street will lose its memory of the distasteful bailouts that had to occur, and they may be more swayed by historians. Sort of like how FDR was viewed as Socialist by half the population during his presidency but is now viewed as one of the best presidents ever.

You're blaming the debt bubble on Bernanke? Wow. no I a blaming it on the bubble blowing fed and their zero percent interest rates that encourage bubbles. but I guess you don't see any cause and effect. Oh, I thought this was a thread about Ben Bernanke -- not an End the Fed thread. The Fed is partially to blame for the leveraging up pre-crisis. In fact, they are probably responsible for the most dangerous leveraging up that occurred in the real estate sector. However, you can't blame everything on the Fed. And certainly not on Ben Bernanke, who came into his office in 2006, well after the US became overlevered. I never said I was blaming everything on the fed. but I believe the fed and easy money policies were large contributors and set the stage for a massive leveraging. You'll hear no contrary argument from me on that point. I just think the leap from that to Ben Bernanke only understanding how to print money is a big one. From the article: There was, I think, another reason for his blindness: Bernanke had an academic’s faith in the market’s essential rightness. He was so skeptical of the notion of mass-market folly that in his scholarly writings, he referred to bubbles in quotation marks. He was not, like Greenspan, ideologically opposed to government intervention, but he was dubious that anyone could identify, in real time, when markets were off course. These criticisms aside, if one is assigning blame, it is important to note that the bubble inflated almost entirely on Greenspan’s watch. The time to avoid a crash was when mortgages were getting written, or when banks could still sell off assets without sparking a panic; by the time Bernanke arrived, a crisis was probably inevitable. In any case, by 2008, Bernanke was confronting the very type of banking meltdown he had spent his academic life studying. No one was better suited to the job; indeed, the Fed adopted the remedies Bernanke had outlined in his 2002 address nearly point for point. And another excerpt: But after talking with the chairman at length (he was generally not willing to be quoted on this issue), I think that, although Bernanke appreciates the intellectual argument in favor of raising inflation, he finds more compelling reasons for not doing so. First is the fear that inflation, once raised, could not be contained. The Fed creates inflation by adding reserves to the banking system (falling interest rates are the market’s way of registering the increasing plenitude of money). If so much money enters the system that wages and prices start ratcheting upward, the momentum can be self-perpetuating. “The notion that we can antiseptically raise the target and control it is highly questionable,” Bernanke told me. This does not sound like someone who believes that money printing is the answer to everything. Indeed, he sounds almost Austrian in the way that he doubts that the Fed can manage the economy. Let's give the guy some credit. did he not lower the fed funds rate through 2006/2007 as the financial system has it's best bonus period ever? Correct me if I'm wrong, but I believe he raised the fed funds rate in 2006/2007. And then we started to go into recession and the fed funds rate was lowered in late 2007/2008.

You're blaming the debt bubble on Bernanke? Wow. no I a blaming it on the bubble blowing fed and their zero percent interest rates that encourage bubbles. but I guess you don't see any cause and effect. Oh, I thought this was a thread about Ben Bernanke -- not an End the Fed thread. The Fed is partially to blame for the leveraging up pre-crisis. In fact, they are probably responsible for the most dangerous leveraging up that occurred in the real estate sector. However, you can't blame everything on the Fed. And certainly not on Ben Bernanke, who came into his office in 2006, well after the US became overlevered. I never said I was blaming everything on the fed. but I believe the fed and easy money policies were large contributors and set the stage for a massive leveraging. You'll hear no contrary argument from me on that point. I just think the leap from that to Ben Bernanke only understanding how to print money is a big one. From the article: There was, I think, another reason for his blindness: Bernanke had an academic’s faith in the market’s essential rightness. He was so skeptical of the notion of mass-market folly that in his scholarly writings, he referred to bubbles in quotation marks. He was not, like Greenspan, ideologically opposed to government intervention, but he was dubious that anyone could identify, in real time, when markets were off course. These criticisms aside, if one is assigning blame, it is important to note that the bubble inflated almost entirely on Greenspan’s watch. The time to avoid a crash was when mortgages were getting written, or when banks could still sell off assets without sparking a panic; by the time Bernanke arrived, a crisis was probably inevitable. In any case, by 2008, Bernanke was confronting the very type of banking meltdown he had spent his academic life studying. No one was better suited to the job; indeed, the Fed adopted the remedies Bernanke had outlined in his 2002 address nearly point for point. And another excerpt: But after talking with the chairman at length (he was generally not willing to be quoted on this issue), I think that, although Bernanke appreciates the intellectual argument in favor of raising inflation, he finds more compelling reasons for not doing so. First is the fear that inflation, once raised, could not be contained. The Fed creates inflation by adding reserves to the banking system (falling interest rates are the market’s way of registering the increasing plenitude of money). If so much money enters the system that wages and prices start ratcheting upward, the momentum can be self-perpetuating. “The notion that we can antiseptically raise the target and control it is highly questionable,” Bernanke told me. This does not sound like someone who believes that money printing is the answer to everything. Indeed, he sounds almost Austrian in the way that he doubts that the Fed can manage the economy. Let's give the guy some credit.

You're blaming the debt bubble on Bernanke? Wow. no I a blaming it on the bubble blowing fed and their zero percent interest rates that encourage bubbles. but I guess you don't see any cause and effect. Oh, I thought this was a thread about Ben Bernanke -- not an End the Fed thread. The Fed is partially to blame for the leveraging up pre-crisis. In fact, they are probably responsible for the most dangerous leveraging up that occurred in the real estate sector. However, you can't blame everything on the Fed. And certainly not on Ben Bernanke, who came into his office in 2006, well after the US became overlevered.

Lots of people use this BS argument: only hedgies or savvy investors love Bernanke. I'm not a hedgie, but I think Bernanke did the right thing. The fact that he did not engage in QE3 also indicates that he does not just know only one thing (i.e., money printing). I'd argue that people who are obsessively focused on the purchasing power of the dollar are the ones who are only concerned with their wealth growing. Planned inflation is a tax on savers in favor of debtors. That's not a pro-wealthy policy. That's a redistributive policy that focuses on the employment side of the Fed's dual mandate. Yes, Bernanke messed up pre-crisis. So did Hank Paulson. But both atoned for their prior mistakes they made when the sh#! hit the fan.

You're blaming the debt bubble on Bernanke? Wow.

Thanks for sharing.

I have yet to see anyone articulate what Apple is actually doing, including those who are very vocal supporters on the board.. I'm a bit confused about what you're asking here. I guess what I'm asking for is a more detailed thesis regarding AAPL that addresses the more credible criticisms from people on the board -- for example, criticisms regarding potential gross margin compression. Note that I do not view criticisms of Apple products as faddish convincing in the least. I also do not view responses like "look how awesome the new iPad is" as particularly convincing. What will happen to moat, margins going forward? What is the addressable market? What are the revenue streams? Why is AAPL like an "annuity"? Is there operating leverage in the business? Etc. The only post I have seen that even attempts to do something like this is a post by Tariq Ali reporting on what Einhorn has said on AAPL: I own some AAPL, btw.

I have yet to see anyone articulate what Apple is actually doing, including those who are very vocal supporters on the board. I have seen a lot of Apple supporters dissing on GOOG and RIMM though. Here's the short version: Apple is one of the few design-driven tech companies in the world. It's fairly easy to add new features to tech products but it is really, really hard to make them both simple and powerful. Apple is one of the few companies in the world that has mastered this. As Jony Ive said, when design is done right, it feels obvious. But getting there is incredibly difficult. The reason why people have a hard time getting Apple is that they look at the end result and go, "Oh yeah, anybody can do this" because they don't understand what it took to get there. It's fairly easy to copy an existing design once you know it works but it is really hard to come up with a new one that pushes the boundary. An Apple product is tens thousands of little details honed to perfection and stitched together coherently. Most people don't notice the details but somehow the product feels "right" and "slick". Any one of these details won't make a big difference but when you have thousands of them working together, you have a product that few can match but many can imitate. That's what Apple does. The long version will take a whole book: http://www.amazon.com/Inside-Apple-Americas-Admired---Secretive--Company/dp/145551215X/ref=sr_1_1?ie=UTF8&qid=1331841684&sr=8-1 Not quite what I was looking for. But thanks for the book recommendation. Will have to check it out.

Indeed. In my opinion, the BAC story also shoots down the theory that you must focus on the less followed names -- particularly, those stocks that operate in countries that are secular economic growth stories -- to make outstanding returns. My opinion is that this is a myth that RIAs or hedge fund managers perpetuate because that's their niche in the market. When you get a punch card opportunity like BAC, one of the most followed stocks on the planet, you damn well better take it if you are confident in your analysis and can summon up the intestinal fortitude. Unless you're an RIA, of course.

What does RIA stand for? guessing .... Registered Investment Advisor Ah, ok. That makes sense, I guess. Why take the career risk of owning BAC until everyone likes it?

Even Meredith Whitney has changed her tune on the banks. Well, sort of. It sounds like she still thinks compressed NIMs and increased capital requirements mean they are not good investments.

What does RIA stand for?

I never know when something is a good short candidate. I don't short, and if I did, I would only short a company that was highly leveraged and in danger of going into BK, or one that was clearly a fraud.

I have yet to see anyone articulate what Apple is actually doing, including those who are very vocal supporters on the board. I have seen a lot of Apple supporters dissing on GOOG and RIMM though.

This move in Sears has been astonishing. I cannot believe that it was at less than $30 a little more than two months ago and is now at $84. Wild.

Isn't the joke that you always get version 3 of the new Apple product? That has held true for me in almost very situation

Incidentally, I find it incredibly funny that whenever I watch a video on Bloomberg about GS, including interviews where people (e.g., Hank Greenberg) are slamming GS, a video ad for Goldman comes up before the actual video.

Mercury and Air Toxic Standards or MATS. According to EXC conference call. Got the info from Longleaf shareholder call that just went public.

"Why I am leaving the Empire" - by Darth Vader http://www.thedailymash.co.uk/index.php?option=com_content&task=view&id=5007&Itemid=81

By the way, I don't recall anyone posting about how WFC is planning on expanding its global corporate banking ops. http://www.reuters.com/article/2012/03/05/us-wellsfargo-expansion-idUSTRE82402K20120305 And I believe IRE sold a portfolio of US loans to WFC a month or so ago. One might expect more of that in the coming months.