Investor Steinhardt asks who are the villains?

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scotthw's picture
scotthw
Status: Bronze Member (Offline)
Joined: Oct 16 2008
Posts: 61
Investor Steinhardt asks who are the villains?

Touche Michael Steinhardt!

http://www.reuters.com/article/InvestmentOutlook09/idUSTRE4B95KP20081210

NEW YORK (Reuters) - A failure to prosecute the "villains"
responsible for the financial crisis that brought the United States to
its knees will leave the country without the moral compass needed to
avert future crises, a Wall Street luminary said.

Pioneer hedge fund manager Michael Steinhardt is angry that the
bailout of America is eroding the nation's capitalist ethos while those
whose deeds crippled the U.S. economy suffer scant opprobrium, their
names still untarnished.

"Something really went wrong here. We're about to enter a period
where our budget deficit will dwarf anything we've seen before,"
Steinhardt told the Reuters Investment Outlook Summit in New York.

"What we really needed a long time ago was a recognition that there
were villains apace. The evils of the financial system should have been
recognized long before this," said Steinhardt, who no longer manages
billions of dollars but whose counsel is sought on Wall Street and
among select politicians.

While scornful of the financial executives who should have known
better, he also belittled Washington for its lack of leadership and for
not spelling out what the future beholds.

The current and former Federal Reserve chairmen have proved
ill-prepared for the job, said Steinhardt, a former chairman of the
Democratic Leadership Council, where he helped promote the career of
Bill Clinton before he became president.

Of former Fed Chairman Alan Greenspan, often criticized for keeping
interest rates so low that they sparked the housing bubble, Steinhardt
said he may have been stupid for a long time, "but he wasn't
pernicious."

Current Fed chief Ben Bernanke is little better.

"When you see what Bernanke said five, four months ago, it's
laughable," he said. "So Bernanke is not a villain but was he prepared
for what has happened here? Not in the slightest."

Steinhardt, however, said Americans themselves must share the blame
for running away from the debacle and for not questioning the enormous
public debt the U.S. government is about to assume.

"If you cannot accept short-term pain, then you do all sorts of
things to coat reality, to pretend, to fabricate, to lie. That is what
has happened in American business in the last 10 years," he said.

....

 

machinehead's picture
machinehead
Status: Diamond Member (Offline)
Joined: Mar 18 2008
Posts: 1077
Re: Investor Steinhardt asks who are the villains?

'
Of former Fed Chairman Alan Greenspan, often criticized for keeping
interest rates so low that they sparked the housing bubble, Steinhardt
said he may have been stupid for a long time, "but he wasn't
pernicious." '

Greenspan wasn't pernicious?

Look,
Mr Steinhardt. You may be a billionaire and all. But there's a simple
fact of economic life you need to understand. The SOLE REASON why our
economic troubles are so severe is because the Bubble which preceded
them was so extreme. It is only because of the absurd overvaluations of
2007 that the drop to fair value has been so steep.

Alan
Greenspan fatuously claimed that you cannot identify a Bubble in real
time. By contrast, Jeremy Grantham published his research in 2006,
showing that the housing Bubble was more than two standard deviations
above trendline. He compared it to 26 other Bubbles which had gone more
than two standard deviations above trendline. Every one of them crashed
hard. Mr. Grantham therefore correctly inferred that US housing would
crash also, and said so in the plainest terms.

Grantham 1, Greenspan 0.

To
say that Greenspan wasn't 'pernicious' is to be as fatuous and purblind
as the Blind Maestro himself. Greenspan single-handedly Bubbled the
entire planet, causing untold misery for billions of people, and -- as
will become clear in coming years -- demoting the former U.S.
superpower to a threadbare, second-rank nation scourged by endemic
poverty and declining living standards.

The magnitude of
Greenspan's error borders on a crime against humanity. That he remains
at large is a mockery and a scandal. Rich dilettantes like you, Mr.
Steinhardt, dabbling in politics way over your head, helped to create
this debacle. I hereby sentence you to be clapped into the stocks in
Battery Park, for the edification of an outraged public. Bailiffs!

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