Human interest story
The WSJ has a report from a veteran of the 1929 crash or “break” who still goes to work every day investing money:
Seth Glickenhaus…first worked for a Wall Street firm in the summer of 1929, and founded his own money-management firm in 1938. He thinks battered stocks are due to rebound, but he worries they could fall again later…Mr. Glickenhaus got his training as a municipal bond trader at Salomon Brothers & Hutzler after studying economics and graduating from Harvard in 1934…Now 94 years old, Mr. Glickenhaus still serves as chief investment officer of Glickenhaus & Co., which manages $1.8 billion for wealthy individuals and a few pension funds.
“You have one conspicuous difference between this and the 1929 break…In the ‘29 break you had Hoover and Andrew Mellon contracting all the way. They believed that it wasn’t the role of the government to get involved. This time, the government is moving heaven and earth to reverse the cycle,” he said…
Calls from people seeking his guidance started coming in “a few months ago, when it first became apparent that the country was in trouble,” said Mr. Glickenhaus, who commutes to his Manhattan office from his home in suburban New Rochelle…Glickenhaus & Co.’s accounts are down this year through July, but less than the broad market. Over the past five years, its accounts have had an average annual gain of 17%, compared with 7% for the Standard & Poor’s 500, according to Morningstar Inc…He is keeping 20% of his clients’ money in cash, the highest level he remembers having…
“We’ve gotten soft in the United States, politically, economically and in every way. We’ve had so much prosperity that we can’t compete any more. Those days are gone, except in small companies. In things like autos — those days are gone,” said Mr. Glickenhaus, once a big Chrysler investor…Although Mr. Glickenhaus thinks stocks have fallen so far that a short-term rebound is likely, the economy is so weak and the financial system so damaged that a “recession or even possible depression will last for at least five years,” he warned. “Eventually, we could get to 9500 easily on the Dow Jones Industrial Average…
And indeed, Mr. Glickenhaus was proved correct in his prediction when the Dow dropped 800 points to around 9500 today before recovering in the afternoon.
October 7th, 2008 at 3:02 am
What did anyone expect? The investors have no confidence in these corrupt politicians. This bailout is just one more example of the indivisible handjob stroking irresponsible CEOs and CFOs with billions so that they can run the American economy even further into the ground. So much for Keynesian economics. If the goal is to stimulate the economy, why not give the money directly to the American taxpayers? The government could do twice as much good for the economy by returning half as much money (as the bailout requires) directly to the hardworking American taxpayers. A bird in the hand is worth two in the bush administration.
October 7th, 2008 at 5:52 pm
It is probably worth noting that the government, both parties, created this problem. The idea that they can or will fix it, is what troubles me most. It’s like hiring the arsonist who burnt down your house to rebuild it.
There is no government money to give. They take from the productive to provide essential services. The rest of what they do is both unconstitutional and the cause of this mess.
The American people tolerate the politicians who made this mess, and we will pay dearly for our mistake.
October 7th, 2008 at 6:35 pm
From Samizdata.net
The confidence trick
Guy Herbert (London) Personal views
“Government consistently works to undermine trust in other institutions in order to build its power. That is calculated to increase anxiety, and dependency on the state. It is a sort of reverse confidence trick. The ordinary con-man creates a false relationship of trust, and lets you believe he has something you actually want. The key political trick is, to create false suspicion in order to make you seek a “safety” you never really needed.
Now governments that have spent a decade or more telling the public to be very, very afraid, that it is helpless and needs more powerful government to save it, are very ill-adapted to deal with a loss of confidence in the financial markets. They seem to grasp dimly that stopping a panic ought to be the aim, but their approach to stopping a panic is to appear on television for emergency announcements that the situation is uniquely grave and unpredictable and so government is now going to be doing big arbitrary things inconsistently and without warning.
If they wanted calm resolution from others, then demonstrating it themselves might be a good way to start. But they don’t know how.”