The Economist on Wall Street
This week's The Economist has a big feature on Wall Street's crisis.
Check out the cover:
>
Here's the list of related stories:
- Comparing banking crises past and present
Mar 19th 2008- Central banks diverge (A dangerous divergence)
Mar 19th 2008- Where finance went wrong
Mar 19th 2008- How to invest in a panic
Mar 19th 2008- Caveat counterparty
Mar 19th 2008- A lifeline of sorts to Wall Street
Mar 19th 2008- Flipside of the falling dollar
Mar 19th 2008- China's stockmarket swoons
Mar 19th 2008- The fallout at Bear Stearns
Mar 19th 2008- A wobble in commodities
Mar 19th 2008- The $2 bail-out; Sore heads
Mar 19th 2008- Apocalypse now? (Investment havens in a time of panic)
Mar 19th 2008
>
Sources:
Wall Street's crisis
The Economist, Mar 19th 2008
http://www.economist.com/opinion/displaystory.cfm?story_id=10880718
Tuesday, March 25, 2008 | 05:00 PM | Permalink
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Comments
My gut tells me this qualifies as the "contrary magazine cover that means go the other direction".
Posted by: rj | Mar 25, 2008 5:08:21 PM
Exactly what I was going to say.
Posted by: Eddie | Mar 25, 2008 5:14:50 PM
You'll have to be kidding. Did you read the piece?
The counter-trend rally may last a few days. But no way is there any way to support anything resembling the sham that was going on. Expect more dominoes to fall - just a matter of time.
Posted by: Spectator | Mar 25, 2008 5:27:26 PM
You want a contrarian indicator? How about all the talking heads and analysts saying the storm has passed, all clear to jump back into equities. Suckers.
Posted by: MitchN | Mar 25, 2008 5:41:06 PM
It's the Economists usual thorough, comprehensive and insightful job on special surveys. Highly recommended. The NYT had a shorter piece over the weekend "What Created the Monster? " that's a shorter but also thorough and competent survey. I'll also presume that everyone saw the special on the front-page of the WSJ on the breakdown of market regulatory mechanisms ? This has been over 20 years in the making and it'll take a while to unravel but will be unraveled.
Posted by: dblwyo | Mar 25, 2008 5:49:28 PM
This week's upside action is nothing but the boys on Wall Street putting end-of-quarter lipstick on the equity pig. We'll be heading south toward that much-vaunted "bottom" come Monday.
Posted by: MitchN | Mar 25, 2008 5:57:25 PM
Don't use all magazine covers as contrary indicators.
The best one I ever saw was the Economist one week in August 1982. The caption was "The Bull Jumps Over The Moon". We all know what happened for that next 18 years. Sometimes smart guys get it right.
Posted by: Ross | Mar 25, 2008 6:18:34 PM
YEAH! Bring on the parade of magazine covers!
The long standing sign is beginning. It won't be complete until it is on Time, US News, Businessweek, Newsweek, etc.
The Economist is almost too esoteric for it alone to be the contrary indicator. Its grade level of writing is too high for it to be the populist news source.
Posted by: JasRas | Mar 25, 2008 6:26:34 PM
The Economist is generally right on track. Also one of the best-written magazines out there. I knew a lady who did fact checking for them, and they were really, really serious about it - despite being a weekly.
In any case, their "Housing Bust" (a brick falling) cover was June 18, 2005. Compare that to the RE promo of Time Magazine's "Home Sweet Home" (guy hugging a house) cover on June 13, 2005.
Posted by: NiNM | Mar 25, 2008 6:38:43 PM
NiNM,
The Economist was off in 2005. The peak was in July. They were early!
I liked the quote from Barton Biggs. "Buy a farm".
Posted by: Ross | Mar 25, 2008 6:44:04 PM
The bottom isn't in. When the powers that be at the SEC in collusion with some brocker banks eliminate the ability to short on a down tick, they are setting up the short money machine. When the last big squeeze has eliminated 99% of the shorts, THEN the stocks will fall and fall and fall. I believe this will dovetail with high poll numbers for the Democratic presidential nominee right after the convention. Whatever you plan to do, if you don't like log rolling in whitewater, don't try to make money in this market.
Posted by: AGG | Mar 25, 2008 6:55:54 PM
Jesus, not everything is a contrarian indicator.
Posted by: Johnny Debacle | Mar 25, 2008 6:58:05 PM
AGG, with the advent of so many short and ultra-short ETFs, nothing can really eliminate the shorts. In fact, this new and now permanent market demand for short contracts has probably played a role in all these bear rallies.
Posted by: E | Mar 25, 2008 7:29:09 PM
Perhaps, we are in such a "instant media age" that the old once a month magazine headlines, aint got the same old rock'n'roll? jmho
Posted by: JustinTheSkeptic | Mar 25, 2008 7:36:28 PM
Forget Wall Street; what do you think will happen to the American economy if the truckers go on strike on April 1, like they are threatening to do? Most of the talk has been about Wall Street seizing up due to the banking crisis and subprime mess. What about Main Street seizing up because nothing gets to the stores?
Posted by: OkieLawyer | Mar 25, 2008 7:48:44 PM
OK, Shorts, don't get too sure of yourselves, the next bail-out is Congress coming in and buying up loans. So far I have had heavy short positions three times,and old gentle Ben has fucked me up the ass...it hurts!
Posted by: JustinTheSkeptic | Mar 25, 2008 7:49:01 PM
The Economist is sometimes right, sometimes wrong. They were talking about the housing bubble for years... they were wrong for 3 years, and now they're right. But they were terribly wrong when they said oil was headed to $5/barrel.
Fact is that nobody knows how bad things on wall street can get, because nobody can tell you where the bad credit is, or the quantum of the eventual losses.
And for that very reason, I'm taking advantage of the current rally to sell all my Citi. Still hanging on to UBS, though.
Posted by: geoff | Mar 25, 2008 7:49:29 PM
dont worry be happy!
your government will solve this with tax dollars and we will all pay.
they know not what they do
Posted by: mj | Mar 25, 2008 7:59:12 PM
From the second article: http://www.economist.com/finance/displaystory.cfm?story_id=10881032
But there is also an intellectual rift. The Fed has long argued that central bankers should not try to prick asset bubbles, but must mop up the mess promptly when they burst.
...
Ben Bernanke, Mr Greenspan's successor, holds these views even more strongly.
First, is this accurate? Second, is this sane? What happened to "taking away the punch bowl just as the party's getting started?"
Posted by: prefect41 | Mar 25, 2008 8:13:03 PM
So sick of reading about why the system is broken due to the lack of liquidity and insolvency of Wall Street. The system is broken because American's don't make enough money
You say poTAYto, I say poTAHto...
Posted by: Jim D | Mar 25, 2008 8:20:00 PM
@ RenoDino... very well said.
Posted by: bc | Mar 25, 2008 8:23:45 PM
The one thing I learned recently is be diverse. Even if one expects the overall market to trend down should have some stock they expect will go up over time no matter what. This will keep you from a really red or green day. I'd rather have this as a really red day is really painful and it's nice to watch something go green.
Even if congress bails out the housing that doesn't solve the problem. People in the US carry too much debt.
Be careful of the some of the short indexes. Some are junk. Look at EEV versus EEM. EEV is supposed to track double against EEM but since inception it's only gained 100% not 200% and on loss days it will take the 200% loss.
Posted by: John Borchers | Mar 25, 2008 8:27:53 PM
Here's an interesting indicator from Fedco Seeds of Waterville, Maine, a very small organic seed and plant company:
We are concluding an astonishing season. The possibility of a million dollar seed order first occurred to me during our February peak, when for four consecutive weeks we bettered our previous record weekly high of $81,000, topping at $108,000. Those 4 weeks alone generated $400,000. Now it is no longer a question of 'will we top a million this year?' It is 'when will we reach the million. My guess is either March 26 o 27th. Our 22 percent sales growth this spring is our largest since Y2K."
-- C.R. Lawn, Fedco Seeds. March 15th.
Posted by: Douglas Watts | Mar 25, 2008 8:30:05 PM
Wow Douglas, thanks for that. That's a big red flag. So are earnings of over 10% for 5 years in a row.
Posted by: John Borchers | Mar 25, 2008 8:56:38 PM
RenoDino has it.
When society thinks it is better off when its talented people unbolt machines from factory floors and ship them abroad, rather than design and operate machines; said society is OVER!
Look around NYC, Barry. How many of your contemporaries ever produced a product? Yet they are awash in cash and wealth. Reward for what? Designing and operating solipsistic ponzi-scheme?
Posted by: Paul Jones | Mar 25, 2008 9:40:35 PM
