Monday, September 29, 2008

Things I Was Wrong About

To be honest, I never really expected a financial meltdown of this scale.  Sure, the housing meltdown was inevitable and subprime losses were particularly bad.  But I never envisioned that amplification effects could magnify asset losses through catastrophic deleveraging.  At this point, there have been problems in virtually every sector in finance--from real estate based paper to derivatives, brokerage firms, insurance, interbank lending, corporate lending, money markets.  The next wave will presumably come from hedge fund and private equity withdrawals.  These problems have spread far beyond Wall Street.  Decoupling is dead, as every major economic zone is facing worse conditions.  The Baltic Exchange Dry Index, a measure of shipping, is considerably down.  

The legacy of letting Lehman die is pretty mixed.  As the WSJ reports, Lehman's demise really kicked off the cash crunch.  (By the way, has anyone else noticed that they redesigned the site and are ungating more of their content?  If this is Murdoch's doing, I'm all for him.)  The fact that money market funds owned Lehman bonds contributed to their drop in Net Asset Value below par--kicking in redemptions and a Federal bailout.  Still, while it doesn't look like people took events that seriously after Bear Sterns--including Lehman, which was tardy in finding a buyer--Lehman's fall was enough to ensure a round of bank consolidations and recapitalization.  

And, of course, we are not at a bottom, though I did pick up quite a bit of stuff right around the short-term bottom that we saw.  It'd like to imagine that absent Congress not approving the bailout, we would have seen the worst, but I'm no counterfactual historian.  In any case, trying to time or predict macro events in the economy is as hard as predicting the weather.  No one worries about selling at the exact highest price, so why worry about that when buying?

All that said, I remain optimistic--cautiously exuberant, if you will--about the future.  The "fundamentals" of economic strength are doing well; growth in BRIC and frontier markets is going on a breakneck pace, developed countries remain filled with capital and educated workers, and global flows in capital and ideas remain fluid.  Meanwhile, equities have seen something like an eight year price slump combined with a third-off haircut.  It's always the end of the world when you're facing the full brunt of the crisis, and it's those people who are able to stomach buying into panic that make out like bandits.  

2 comments:

Anonymous said...

Hi !.
You may , probably very interested to know how one can collect a huge starting capital .
There is no initial capital needed You may start earning with as small sum of money as 20-100 dollars.

AimTrust is what you need
AimTrust incorporates an offshore structure with advanced asset management technologies in production and delivery of pipes for oil and gas.

It is based in Panama with structures around the world.
Do you want to become a happy investor?
That`s your chance That`s what you wish in the long run!

I feel good, I started to take up real money with the help of this company,
and I invite you to do the same. It`s all about how to choose a proper companion utilizes your money in a right way - that`s AimTrust!.
I make 2G daily, and what I started with was a funny sum of 500 bucks!
It`s easy to join , just click this link http://opolygylu.100megsfree5.com/qylehyz.html
and lucky you`re! Let`s take our chance together to become rich

Anonymous said...

Good day !.
You may , perhaps curious to know how one can reach 2000 per day of income .
There is no need to invest much at first. You may begin earning with as small sum of money as 20-100 dollars.

AimTrust is what you need
The firm incorporates an offshore structure with advanced asset management technologies in production and delivery of pipes for oil and gas.

It is based in Panama with affiliates around the world.
Do you want to become a happy investor?
That`s your chance That`s what you wish in the long run!

I`m happy and lucky, I began to take up income with the help of this company,
and I invite you to do the same. If it gets down to choose a proper partner utilizes your money in a right way - that`s it!.
I take now up to 2G every day, and my first investment was 500 dollars only!
It`s easy to get involved , just click this link http://ofyhaqoki.kogaryu.com/isilus.html
and lucky you`re! Let`s take our chance together to get rid of nastiness of the life