Time to regulate self-appointed experts

tradetime

Opinions differ widely and anti-establishment financial guru Jim Rogers thinks Bernanke and Paulson ought to be locked up for crimes agoinst humanity.

Yeah Jim always has a lot to say about everything, and not a lot of it constructive, his hands are as dirty as all speculators. I must admit I do find him amusing as one of the more colourful commentators.

wombat42_2

tradetime wrote: »

Bernanke and Paulson were only appointed to their current positions in 2006, this crisis was well on it's way by then. Paulson was formerly CEO of Goldman Sachs, one of the US investment banks least exposed to the crisis. Bernanke on the other
hand was an academic teaching economics at various universities prior to his appointment at the Fed. So all in all they are probably no worse a choice of candidates to sort the mess out than anyone else.

Yes Paulson was part of the problem. Goldman Sachs were still steeped in the problem for example they paid Paulson a huge golden goodbye when he left. It is true that Bernanke only arrived on the scene in 2006 but only a year ago he promised everyone everything was fine. How wrong can you be ?

Opinions differ widely even amongst academic economists.

wombat42_2

tradetime wrote: »

Yeah Jim always has a lot to say about everything, and not a lot of it constructive, his hands are as dirty as all speculators. I must admit I do find him amusing as one of the more colourful commentators.

I am not suggesting he is always right but when you stack up his successful predictions against his unsucessful predictions he has been uncannily successful in many cases.

He also predicted early this year that things were set to get a whole lot worse which was not predicted by Bernannke and co.

tradetime

wombat42 wrote: »

I am not suggesting he is always right but when you stack up his successful predictions against his unsucessful predictions he has been uncannily successful in many cases.

He also predicted early this year that things were set to get a whole lot worse which was not predicted by Bernannke and co.

Hi wombat, I know you're not mate and that's fair enough, as I say I quite like listening to Rodgers, he's a colourful character, and a very astute investor he's up there with Soros and the likes, whom he once partnered with. Early this year the prediction was not hard, if you look into Robert Prechter, he was predicting this since 2002, accurately calling the end of the commodities run and the end of the stockmarket run, though his timing was a little early on that one.

As for Bernanke and Paulson, their position in society does not afford them the luxuary of being so candid 50% of their job is to attempt to conjure up confidence. The financial markets know we are in recession, but they still don't like to be told that by anyone in office If you watched Bernanke's testimony this week, he refused to say that the US was in recession, though he has learnt to play the politician and not deny it either.

Financial people had the biggest hand in creating this mess, and you are gonna need financial people to try and sort it out, so no matter who is taking the lead in sorting it they are all going to be said to be in someway responsible for creating it. If you have a bomb to defuse, you call a bomb disposal expert, not a plumber. Unfortunately to use that analogy to it's conclusion, I don't think we have any "bomb disposal experts" only "bombmakers" still I'd rather they gave it a go than the plumber.
The fact that to date Goldman seems to have steered clear of the worst of this probably makes Paulson as good a choice as anybody.

It might be worth knowing that Jim's solution, (and he has said this on Bloomberg on several occasions) is let all the banks fail, nothing's too big to fail, which I find quite startling from a man with such an insight into investing, since an uninterrupted failure of banks would undeniably set about an unwinding in financial derivatives, that would make what we've seen so far seem like misplacing your wage packet for the week. Of course when you know that Jim's major holding currently is gold then his agenda becomes a little clearer. Like most speculators, Jim's only concern is Jim, which I can't criticize him for, but it colours his opinion somewhat I'd have thought.
That said, Jim may well be right in his assumption that this cannot be fixed, I wouldn't argue with that, I for example would have little constructive to offer, whilst letting all the banks fail would not be top of my list, I'm not sure that hyper-inflaing the global economy is the way to go either. The great depression and the Japanese depression are the only events in history that come close to what we are facing, Bernanke just happened to study both in detail, and as he has said openly, although you can draw conclusions from mistakes in managing those periods, that doesn't mean they won't make a whole load of new mistakes in fighting it his way.
Of course Paulson is part of the banking fraternity, so I think we can safely guess what colours his opinions and actions.

wombat42_2

Remember the bailout package was voted down initially mainly by republicans and Ron Paul who still oppose it. They would have preferred the banks to go under, Rogers mentions other countries who let thier banks go under such as Russia - things were hell for year or two afterwards then thngs rapidly improved. Compare with Japan in the 1990s which has never recovered even now.

Throwing things at the problem and hoping something sticks is a dodgy solution and is just inflating debt.

Apparently the US bailed out a failing bank a few years ago which sent a message to all the other banks that they would get bailed out if they mess up which was a big mistake.

tradetime

wombat42 wrote: »

Remember the bailout package was voted down initially mainly by republicans and Ron Paul who still oppose it. They would have preferred the banks to go under, Rogers mentions other countries who let thier banks go under such as Russia - things were hell for year or two afterwards then thngs rapidly improved. Compare with Japan in the 1990s which has never recovered even now.

Throwing things at the problem and hoping something sticks is a dodgy solution and is just inflating debt.

Apparently the US bailed out a failing bank a few years ago which sent a message to all the other banks that they would get bailed out if they mess up which was a big mistake.

Yeah I get what Jim has to say, and in theory it is right, though Russia hadn't fashioned over $50 trillion in derivatives to sell around the world, so there was somebody around in a financial position to help them out, you've seen the havoc a fraction of that amount unwinding from sub-prime has had on the world's financial system. If the US were to sit back and let their banking system fail I wholeheartedly believe it would take all our banking systems with it.
As for Japan, the Japanese tried to tackle their problem with a series of measures that failed, if you have a problem and a series of measures to tackle it fail, that doesn't really mean the next time the problem occurs you don't try to tackle it all because the last attempt failed. Similarly whilst Japan did in fact pose a lot of risk to the rest of the world, it was nothing on the scale of the risk that the US poses currently. Since the yanks studied Japan, they will be doing it differently, it may also fail, may even end up worse than Japan, who knows, whatever happens there will be a price to pay at some point
I could be wrong, often am, but I suspect the bank you are referring to was actually a Hedge Fund you are referring to Long Term Capital Management (LTCM)

wombat42_2

tradetime wrote: »

I could be wrong, often am, but I suspect the bank you are referring to was actually a Hedge Fund you are referring to Long Term Capital Management (LTCM)

Yes thats the one i had in mind.

GeorgeHowell

What utter tosh the article is. The only third parties who can be held responsible for the present shambles are the greedy, stupid, and irresponsible bankers who perpetrated it, and our incompetent apology for a government which failed to regulate the financial sector to any effective extent.

To blame journos or any other freely available, public domain advisors is ridiculous. To do so so savours of the dependency culture, the compensation culture, the blame culture, and the grievance culture which dominate may aspects of life in this country, after 11 years of New Labour.

To anyone who invested in Icesave, and did not see the writing on the wall earlier this years despite all sorts of cautions and warnings in the media, the message is clear :- You screwed up, get over it, and learn from the experience.