Dr. Alan Greenspan – Mr. Bubbles
Gary Kaltbaum is an investment advisor with over 18 years experience, and a Fox News Channel Business Contributor. Gary is the author of The Investors Edge. Mr. Kaltbaum is also the host of the nationally syndicated radio show “Investors Edge” on over 50 radio stations. Gary is also editor and publisher of “Gary Kaltbaum’s Trendwatch”… a weekly and monthly technical analysis research report for the institutional investor. If you would like a free trial to Gary’s Daily Market Alerts click here or call 888.484.8220 ext. 1.
When I heard Alan Greenspan introduced as a doctor yesterday, don’t ask me why but the only word that came into my mind was PROCTOLOGIST. I don’t think I need to explain why.
I have written for a very long time about the errors this man made…and NOW…everyone is finally coming to the realization that Alan Greenspan should also be nicknamed Mr. Bubble, as he was one of the driving forces of what we are seeing …the great unwinding of trillions of leverage in the system…and unfortunately, a FORCED unwinding of this leverage.
I must tell you that I think this man lost his noodle because his testimony was the complete opposite of what he has been saying recently. He actually finally took some blame. Gee thanks! But…the simplest way to describe Big Al is in the following quote by this man:
“Innovation has brought about a multitude of new products, such as sub-prime loans and niche credit programs for immigrants… With these advances in technology, lenders have taken advantage of credit-scoring models and other techniques for efficiently extending credit to a broader spectrum of consumers… Where once more-marginal applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately. These improvements have led to rapid growth in sub-prime mortgage lending… fostering constructive innovation that is both responsive to market demand and beneficial to consumers.”
Now, we all know it does not take one man to cause such carnage, but without a doubt in my mind, he set the conditions that enabled all this nonsense to happen. Of course, we cannot “talk about” the wreckage without talking about the maggots on Wall Street, but that is for another day as I have started on my second book which will be a great piece of American literature.
But for me, the one day that I really knew we were in big trouble – the one day that has stood out above all…the one day that told me we were in the soup – was the day that Chris Cox, the appointed SEC Chairman, went on TV just days before Bear Stearns went out of business to defend Bear Stearns’ capital base. Yes…the SEC Chairman, the numero uno regulator this world has to offer, that same regulator that is supposed to regulate Bear Stearns…goes on TV to defend the company he regulates.
I watched him act as their attorney and PR man all at once. It was then I knew there were no checks and balances on Wall Street and that the good old boys network was alive and well. Unfortunately, Mr. Cox had too much trust in the slime bags who hid losses and leveraged stuff 30-1 and more. I can almost excuse him for believing that Wall Street could police their own greed….nah! I take that back.
I sold my small probe in the market immediately upon distribution showing up and am back to 100% out of the market. Markets have melted back toward their recent lows. From my studies, retesting after such a drop is quite normal to occur. What is not normal is the continuing carnage and the continuing breakdowns on a daily basis. Even with the DOW up over 170 on Thursday in another wild trading day, I found over 400 stocks down over $1, with many names breaking new support levels.
The best news I can give you is that the lows have held on 3 separate occasions. Those lows had better hold or next stop is the bear market lows of ’00-03. This is amazing in itself that I can even mention those lows. I do believe a good rally could come out of nowhere, but so far, nothing doing.
There is very little in the way of hiding spots except for cash equivalents. Even fixed income has been blasted. Have you seen what many bond funds and preferreds have done? I also make note that GOLD continues to be blasted. The best thing I can say about GOLD and other COMMODS is that they continue to be ridiculously oversold, extended and stretched away from the norm as I have ever seen. But this has been going on for days, and still no light at the end of the tunnel. NEW LOWS again are back above 1000 while NEW HIGHS in the market are a big fat zero.
Lastly, I have been asked to comment on all the absolutely ridiculous swings on a daily basis that we have been seeing. Recently, it has been normal to see 200-300 point moves in a matter of minutes, followed by another 200-300 points the other way. I simply do not know what is going on…but it scares the heck out of me that this type of paper thin action can occur.
As I wake up this morning, futures are lock limit down as world markets sold off badly overnight. This is what you get when we have the biggest margin call in history! I am almost speechless! Keeping fingers crossed! I hate these limits and I hate trading halts! They only invite more selling! I am in hopes that we get the mother of all washouts here, but have no blodd in the game.
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