As I have said before, and will undoubtely say again, , the writer of CNNFN's "The Buzz" column, Paul R. La Monica, is a complete Pratt.
Well, a few days back, La Monica claimed that the next bubble will be -- get this -- short selling.
This is the statement of someone who does not get the concept of a bubble beyond the fact that it's an "in word" in the media.
A bubble is an artifact of an unreasonable optimism, and short selling is a manifestation of pessimism, but the clue train has not arrived to La Monicaville.
Showing posts sorted by relevance for query paul la monica. Sort by date Show all posts
Showing posts sorted by relevance for query paul la monica. Sort by date Show all posts
15 September 2008
12 August 2010
Financial Media Wankery
Paul La Monica does it again in his Panglossian pursuit of reasons for investors to reasons to reenter the market.
So, his advice to investors is to masturbate:
<Facepalm>
So, his advice to investors is to masturbate:
Investors need to follow the immortal words of the 80's one-hit wonder Frankie Goes to Hollywood: Relax.What? You mean that Mr. La Monica doesn't know that the song was about masturbation?
<Facepalm>
31 May 2008
A Good Debunking of a Panglossian Financial Press
A few days ago, I read a fairly typical don't worry, be happy article on CNN by Paul La Monica.
After perusing it for a while, and I shook my head, and thought, "Moron", but decided not to pursue it on my blog. It just seemed be the all to ordinary whistling past the grave yard that one sees in far too much of the financial press.
Yesterday however, I got an email from Paul Lamont, who I have cited before here, who runs Lamont Trading Advisors, who sees their mission as being to prepare clients for a, "major bear market".
He has a very nice rebuttal to Mr. Lamonica's article, noting that:
That's why I have 30% of my 401(k) in overseas index funds.
After perusing it for a while, and I shook my head, and thought, "Moron", but decided not to pursue it on my blog. It just seemed be the all to ordinary whistling past the grave yard that one sees in far too much of the financial press.
Yesterday however, I got an email from Paul Lamont, who I have cited before here, who runs Lamont Trading Advisors, who sees their mission as being to prepare clients for a, "major bear market".
He has a very nice rebuttal to Mr. Lamonica's article, noting that:
- Lamonica's use of unemployment as a metric is disingenuous, as it is a lagging indicator. [I would add that the unemployment stats are also highly massaged these days as compared to 1933].
- The absence of deflation is not a difference, inflation continued until 1931 in the great depression, and the same applies to commodity inflation and inflationary concerns.
- That the recent bounce back of the stock market is actually rather similar to what happened in the great depression, with the eventual bottom occurring because the banking system froze up:
That's why I have 30% of my 401(k) in overseas index funds.
08 August 2008
Financial Journalism Pigs Fly
In this case, Paul La Monica, who always seems to find a silver lining, no matter how bogus, is now saying that he expects losses in the financial industry to exceed $1 trillion. He even quotes noted bear Nouriel Roubini.
It would appear that the financial journalists are starting to notice reality chewing on their tuchas.
It would appear that the financial journalists are starting to notice reality chewing on their tuchas.
12 March 2009
Signs of the Apocalypse
Signs of the Apocalypse, I Agree With Paul La Monica, who I generally find trite and relentlessly upbeat, when he says that mark to market is not a problem, but rather that the problem is that the banks made sh$% loans and created sh%$ derivatives, and did not hold enough capital.
That being said, he is not as inventive in his lede as David Reilly, who says that, "Elvis Lives, and Mark-to-Market Rules Fuel Crisis," and notes that even now, only a fraction of the big sh$%pile is marked to market:
This stuff is worth pennies on the dollars, and the banks are insolvent. Let's recognize reality and move on.
That being said, he is not as inventive in his lede as David Reilly, who says that, "Elvis Lives, and Mark-to-Market Rules Fuel Crisis," and notes that even now, only a fraction of the big sh$%pile is marked to market:
Of the $8.46 trillion in assets held by the 12 largest banks in the KBW Bank Index, only 29 percent is marked to market prices, according to my analysis of company data. General Electric Co., meanwhile, said last week that just 2 percent of assets were marked to market at its General Electric Capital Corp. subsidiary, which is similar in size to the sixth-biggest U.S. bank.They both make the point that mark to model to a large created this crisis, by encouraging banks to create risky pieces of crap that no one wants to buy, though this reality is not preventing Congress from pressuring regulators to relax the rules on mark-to-market.
What are all those other assets that aren’t marked to market prices? Mostly loans -- to homeowners, businesses and consumers.
Loans are held at their original cost, minus a reserve that banks create for potential future losses. Their value doesn’t fall in lockstep with drops in market prices.
Yet these loans still produce losses, thanks to the housing meltdown and recession. In fact, bank losses on unmarked loans are typically bigger than mark-to-market losses on securities like bonds backed by mortgages.
This stuff is worth pennies on the dollars, and the banks are insolvent. Let's recognize reality and move on.
07 February 2012
It's Official, We Have a 2nd Tech Bubble in 15 Years
How do I know this? I know this because Paul R. La Monica says that we are not in one.
When he says, "If you want to declare that tech stocks are once again a bubble ... you'd be dead wrong," any sane person would start shorting tech.
This is a guy who called short sales the next bubble, and used a song about masturbation to suggest that it was time to reenter the market. (My posts about him can be found at this link.)
In the world of investing advice, it's hard to find someone who gets it right even half the time, but there lots of people, like Paul, who can be counted on to function reliably as a reverse barometer.
I'm just sayin'.
When he says, "If you want to declare that tech stocks are once again a bubble ... you'd be dead wrong," any sane person would start shorting tech.
This is a guy who called short sales the next bubble, and used a song about masturbation to suggest that it was time to reenter the market. (My posts about him can be found at this link.)
In the world of investing advice, it's hard to find someone who gets it right even half the time, but there lots of people, like Paul, who can be counted on to function reliably as a reverse barometer.
I'm just sayin'.
24 March 2008
Re-Regulating the Financial Markets
The New York Times notes that there is a tug of war going on between the Bush Administration and Democrats over the type and extent of new regulations.
While I think that some centralization of the "regulatory alphabet soup" is a good idea, one of the things you are hearing, particularly from the Bushies, is that there is a, "tangled web of federal and state regulators".
I think that this is Bush speak for cutting the states out of it, so actions like those of Elliot Spitzer* will be impossible.
On the other end of Pennsylania Avenue, you have Barney Frank, who I like, but truth be told, I think does not go far enough.
We have large organizations operating under the idea that they are too big to fail, and remember that Bear Stearns is a smallish player in this market, so this assesment is correct.
If the taxpayers are at risk, and they are, then the taxpayers must be allowed to regulate to minimize that risk.
Krugman makes this very point:
Many of these institutions have, through years of lax antitrust enforcement become "too big to fail".
So, my first suggestion is that the continuing concentration of market among fewer and fewer firms in the financial arena needs to be reversed.
These firms need to be broken up into small pieces.
On CNN Money, of all places, Paul R. La Monica suggestion that investment banks need to be treated like children. It's eye catching, but wrong, particularly when he suggests that the repeal of Glass-Steagall was still a good thing..
The behavior of the banks, or more accurately the individual people working in those banks, was quite mature, if amoral.
From top to bottom, the employees of these firms behaved in a manner consistent with those employees own personal best interests, as opposed to those of the firm or the market.
The name for such a system, where individual players arbitrage for their own personal best outcome is called Capitalism, by the way.
What we need to do is to ensure that taxpayers are not left on the hook down the road for decisions made for personal benefit now.
Among other things, this means that we need real regulations of wages and benefits in the financial services industries, with real consequences including asset forfeiture and jail.
People will continue to do stupid things for good results this quarter so long as their bonuses and promotions are a result of their performance in this quarter.
I would note that I have not yet come up with any specifics on how to limit excessive compensation for short term results beyond taxing all excessive taxes. I'll put my thinking cap on.
The push for quarterly results is what leads to excessive leverage, which is what has led to many of the problems.
In 1929, you needed about 20¢ to buy $1.00 stock on margin. Following the Roosevelt regulations it was 75¢ to buy that same stock on margin, though this was lowered to 50¢ in the late 1970s.
Bear Stearns was leveraged on the order of 50 to one, or about 2¢.
Leverage is essential to a modern financial system working, but excessive leverage causes a collapse.
We need to put government auditors in the major financial firms today, with the power to review all records and investments, and to demand changes.
Also, there should be a change in taxes. If the rich have to be bailed out, and this appears to be the case, then they should make the down payments on that bail out.
I would also suggest that a surcharge be added to income tax to which no credits or deductions apply, starting at the salary of the President (currently $400K) with a 1% surcharge, and increasing by 1% for each multiple above that (so $400k-$800K would be 1%, $800K-$1.2M would be 2%, etc), to a maximum marginal rate of 75% at around $180 million a year, which would apply to all forms of compensation (H/T to Dean Baker, see below, for noting the total compensation thing).
It would serve to put a brake on executive compensation, and generated some much needed revenue for the treasury.
Dean Baker, co-director of the Center for Economic and Policy Research in Washington, DC, suggest instead that we legislate a cap on total compensation in the financial industry of $1 million.
It appeals to my vengeful side, but I think that my suggestion is better. It applies to overpaid athletes, drugged out pop stars, and worthless hotel heiresses too†, and provides resources to create a better and more just society.
*No, I mean his legal actions against Wall Street, when the FTC, SEC, etc., led by Bush and His Evil Minions™ were letting the foxes run the henhouse.
†Let's be clear, I am keeping my promise not to mention They Who Must Not Be Named. I don't see no names, do you?
While I think that some centralization of the "regulatory alphabet soup" is a good idea, one of the things you are hearing, particularly from the Bushies, is that there is a, "tangled web of federal and state regulators".
I think that this is Bush speak for cutting the states out of it, so actions like those of Elliot Spitzer* will be impossible.
On the other end of Pennsylania Avenue, you have Barney Frank, who I like, but truth be told, I think does not go far enough.
We have large organizations operating under the idea that they are too big to fail, and remember that Bear Stearns is a smallish player in this market, so this assesment is correct.
If the taxpayers are at risk, and they are, then the taxpayers must be allowed to regulate to minimize that risk.
Krugman makes this very point:
America came out of the Great Depression with a pretty effective financial safety net, based on a fundamental quid pro quo: the government stood ready to rescue banks if they got in trouble, but only on the condition that those banks accept regulation of the risks they were allowed to take.As does Noriel Roubini who believes that the actions taken to this point are band aids, and not solutions, furthermore, he notes that, "Only a few of such securities firms are systemically important and deserve the liquidity support of the Fed in case of a run on their liabilities", which is a large portion of this crisis.
Over time, however, many of the roles traditionally filled by regulated banks were taken over by unregulated institutions — the “shadow banking system,” which relied on complex financial arrangements to bypass those safety regulations.
Now, the shadow banking system is facing the 21st-century equivalent of the wave of bank runs that swept America in the early 1930s. And the government is rushing in to help, with hundreds of billions from the Federal Reserve, and hundreds of billions more from government-sponsored institutions like Fannie Mae, Freddie Mac and the Federal Home Loan Banks.
Many of these institutions have, through years of lax antitrust enforcement become "too big to fail".
So, my first suggestion is that the continuing concentration of market among fewer and fewer firms in the financial arena needs to be reversed.
These firms need to be broken up into small pieces.
On CNN Money, of all places, Paul R. La Monica suggestion that investment banks need to be treated like children. It's eye catching, but wrong, particularly when he suggests that the repeal of Glass-Steagall was still a good thing..
The behavior of the banks, or more accurately the individual people working in those banks, was quite mature, if amoral.
From top to bottom, the employees of these firms behaved in a manner consistent with those employees own personal best interests, as opposed to those of the firm or the market.
The name for such a system, where individual players arbitrage for their own personal best outcome is called Capitalism, by the way.
What we need to do is to ensure that taxpayers are not left on the hook down the road for decisions made for personal benefit now.
Among other things, this means that we need real regulations of wages and benefits in the financial services industries, with real consequences including asset forfeiture and jail.
People will continue to do stupid things for good results this quarter so long as their bonuses and promotions are a result of their performance in this quarter.
I would note that I have not yet come up with any specifics on how to limit excessive compensation for short term results beyond taxing all excessive taxes. I'll put my thinking cap on.
The push for quarterly results is what leads to excessive leverage, which is what has led to many of the problems.
In 1929, you needed about 20¢ to buy $1.00 stock on margin. Following the Roosevelt regulations it was 75¢ to buy that same stock on margin, though this was lowered to 50¢ in the late 1970s.
Bear Stearns was leveraged on the order of 50 to one, or about 2¢.
Leverage is essential to a modern financial system working, but excessive leverage causes a collapse.
We need to put government auditors in the major financial firms today, with the power to review all records and investments, and to demand changes.
Also, there should be a change in taxes. If the rich have to be bailed out, and this appears to be the case, then they should make the down payments on that bail out.
I would also suggest that a surcharge be added to income tax to which no credits or deductions apply, starting at the salary of the President (currently $400K) with a 1% surcharge, and increasing by 1% for each multiple above that (so $400k-$800K would be 1%, $800K-$1.2M would be 2%, etc), to a maximum marginal rate of 75% at around $180 million a year, which would apply to all forms of compensation (H/T to Dean Baker, see below, for noting the total compensation thing).
It would serve to put a brake on executive compensation, and generated some much needed revenue for the treasury.
Dean Baker, co-director of the Center for Economic and Policy Research in Washington, DC, suggest instead that we legislate a cap on total compensation in the financial industry of $1 million.
It appeals to my vengeful side, but I think that my suggestion is better. It applies to overpaid athletes, drugged out pop stars, and worthless hotel heiresses too†, and provides resources to create a better and more just society.
*No, I mean his legal actions against Wall Street, when the FTC, SEC, etc., led by Bush and His Evil Minions™ were letting the foxes run the henhouse.
†Let's be clear, I am keeping my promise not to mention They Who Must Not Be Named. I don't see no names, do you?
04 January 2010
Normally, I Don't Quote Paul R. La Monica…………
I find him rather to excessively optimistic, glib, shallow, and thoroughly conventional in his journalism.
That being said, his review of Federal Reserve Chairman Ben Bernanke's speech at the American Economic Association meeting in Atlanta, nails it in the title, "Surprise! The Fed says don't blame the Fed."
That pretty much captures the substance of what Bernanke said in a nutshell.
That being said, his review of Federal Reserve Chairman Ben Bernanke's speech at the American Economic Association meeting in Atlanta, nails it in the title, "Surprise! The Fed says don't blame the Fed."
That pretty much captures the substance of what Bernanke said in a nutshell.
29 June 2007
Rampant Speculation Points to Crash
Another sign of the oncoming crash. Vast quantities of capital racing hither and yon looking for the next big "15 minutes of fame" thing.
It's a sign that the market is over capitalized and over priced, and due for a major correction.
It's a game of musical chairs, and it gets most frantic towards the end.
It's a sign that the market is over capitalized and over priced, and due for a major correction.
It's a game of musical chairs, and it gets most frantic towards the end.
Here comes China 2.0
By Paul R. La Monica, CNNMoney.com editor at large
June 28 2007: 1:41 PM EDT
NEW YORK (CNNMoney.com) -- As Google's stock slouches toward $600 a share and Wall Street debates the future of Yahoo following the ouster of Terry Semel, it's easy to forget that there are other Internet stocks out there competing for investor attention.
But for those who prefer to take a more worldly view of the World Wide Web, paying attention to areas outside of the U.S. has been incredibly rewarding, particularly for investors that have discovered the booming Internet sector in China.
Several Chinese Internet stocks trade in the U.S. on Nasdaq so investing in these companies is as easy as buying shares of Google (Charts, Fortune 500) and Yahoo (Charts, Fortune 500). And many Chinese Internet stocks have far outperformed America's big two Net giants this year.
Shares of search engine Baidu, portals Sina and Sohu, online gaming companies The 9 Limited and Shanda Interactive and online travel site Ctrip.com are each up at least 20 percent this year, compared to gains of 8 percent and 14 percent for Yahoo and Google respectively.
.....
