Monday, February 14, 2011


I smell a rat. After being told by Wall Street that their stupidity and greed were not to blame for the market collapse in 2008, we are once again being treated to big interconnected financial players saying they don't pose a systemic risk - in spite of the fact that they are much larger today than before 2008.

One would hope market players feel this way because Wall Street no longer follows off-the-books, smoke & mirrors, debt bomb, strategies like this any longer. Think again.

As I've pointed out here, here, here, and here Wall Street is still betting the house, recklessly. So, with all the "recovery is around the corner" happy talk starting to come out of Wall Street again, I think it's time that we take a stroll down Wall Street memory lane (courtesy of the Daily Show) ...

* March 11, 2008: Jim Cramer, "Bear Stearns is fine, do not take your money out ..."
Bear Stearns collapsed six days later.

* April 17, 2008: Market experts, "Will Merrill [Lynch] need to raise capital? No ..."
Five months later Merrill Lynch ran out of money, and is now owned by Bank of America.

* June 5, 2008: Market experts concur, "Lehman Bros. is no Bear Stearns ..."
Lehman Bros. went under three months later.

Want more pre-collapse Happy Talk? OK ...

* October 31, 2007: Jim Cramer, "You should be buying things ... and accept that they're over valued ... but accept that they're going to keep going higher ... that's how you make money" (Dow 13,930).
* February 1, 2008: Jim Cramer, "That's why the market just won't quit ... no matter how poorly companies are actually doing" (12,743).
* April 16, 2008: Kudlow & Company, "The worst of this subprime mess is over" (Dow 12,619).
* November 2008: Market experts, "People are starting to get their confidence back" (Dow 9625).

So, how wrong was former Fed Chair Alan Greenspan before the market collapsed in 2008? Let's just say his Utopian view of markets left even him in a Inspector Renault-like state of shock after he discovered how they really worked ...

Which begs the question, how wrong was current Fed Chair Ben Bernanke? Check it out ...

One of the sadder parts of this emerging story-line story is how the media's Talking Heads - the people who are supposed to be the Fourth Estate - acted like a bunch of gushing children, buying into everything corporate America, and the Fed's Gods of Wealth, told them about markets then ... and now.

In a few words, we're screwed. Don't buy into the happy talk. Especially when we're taking a stroll down memory lane, that delivers us into a financial dead end.

- Mark

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