Comments on: Memorable comments from Bear Stearns at the beginning of the crisis http://www.dinocrat.com/archives/2007/08/04/memorable-comments-or-maybe-not/ Mon, 01 Dec 2008 22:40:13 +0000 http://wordpress.org/?v=2.6.3 By: gs http://www.dinocrat.com/archives/2007/08/04/memorable-comments-or-maybe-not/#comment-301783 gs Sat, 04 Aug 2007 20:55:38 +0000 http://www.dinocrat.com/archives/2007/08/04/memorable-comments-or-maybe-not/#comment-301783 <i>We don’t know that there is anything concrete that the Fed can do in this situation, but it would appear prudent for the Fed and chairman Ben Bernanke to acknowledge that there is in fact a problem, and that the Fed will act to provide all necessary liquidity to the banking system and financial markets.</i> Like Greenspan did when the '87 crash occurred shortly after he took office. But if Bernanke speaks too soon, the usual suspects may conclude that the Fed is their guarantor and resume their overleveraging. If he speaks too late, the unwinding of positions may become self-perpetuating. ************** If I knew what will happen, I'd be leveraging myself and preparing to get rich. If I had to bet--I'm glad I don't--, I'd say that this is probably not the beginning of financial armageddon. The stock market has climbed the proverbial wall of worry all the way up, and those are not propitious conditions for a meltdown. (On the other hand, such healthy worry may not be shared by our smug and arrogant elites.) <a href="http://finance.yahoo.com/q/pr?s=TMA" rel="nofollow">Thornburg Mortgage</a> has been in business since 1992 and, accordingly, has navigated one or two business cycles. Its <a href="http://finance.yahoo.com/q/it?s=TMA" rel="nofollow">founders</a> have made significant open-market purchases of the company's stock (presumably with their own, and not the company's, money). On the other hand,... We don’t know that there is anything concrete that the Fed can do in this situation, but it would appear prudent for the Fed and chairman Ben Bernanke to acknowledge that there is in fact a problem, and that the Fed will act to provide all necessary liquidity to the banking system and financial markets.

Like Greenspan did when the ‘87 crash occurred shortly after he took office.

But if Bernanke speaks too soon, the usual suspects may conclude that the Fed is their guarantor and resume their overleveraging. If he speaks too late, the unwinding of positions may become self-perpetuating.
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If I knew what will happen, I’d be leveraging myself and preparing to get rich.

If I had to bet–I’m glad I don’t–, I’d say that this is probably not the beginning of financial armageddon. The stock market has climbed the proverbial wall of worry all the way up, and those are not propitious conditions for a meltdown. (On the other hand, such healthy worry may not be shared by our smug and arrogant elites.)

Thornburg Mortgage has been in business since 1992 and, accordingly, has navigated one or two business cycles. Its founders have made significant open-market purchases of the company’s stock (presumably with their own, and not the company’s, money).

On the other hand,…

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