Paul Volcker on Charlie Rose

I have long been a fan of Paul Volcker, he is now 82 years old and he brings a lifetime of experience and knowledge to any conversation he enters into, personally I can’t listen to him enough, in fact, my one complaint is that he doesn’t get interviewed nearly as often as he should be! Having said that, he is a particularly normal person, he quit being Fed Chairman so that he could ‘return to normal life’ and being in the public eye was never the highlight of his life it would seem.

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Paul Volcker wants to see a return to a split between commercial banks and investment banks, the term ‘bank’ is used so loosely that many people don’t draw distinction between them, they are both involved in financial intermediation but they don’t both necessarily warrant, or indeed merit any federal help. Volcker has kept this theme in today’s Read More

Pete Peterson formerly of Blackstone, CFR, Lehman and Secretary of Commerce

Pete Peterson is a fascinating individual, he came from humble beginnings and went on to work at executive levels in some of the most well known finance houses in the world. He mentions some of the deficit fears that have been laid out in this blog many times in the past and the inflationary risk that comes with it, Peterson is in agreement with Volcker that there is a serious dollar risk forming.

Peterson is also a human, he is one of the few Wall St. legends to come out and admit that he needed psychotherapy in the past, this interview is absolutely worth watching and learning from.

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Paul Volcker on Bloomberg

Ex-Federal Reserve Chairman Paul Volcker talks to Bloomberg about the ongoing financial crisis and gives his opinion on the situation, his take on where we are going and what some of the risks are. Volcker is one of my favourite expert commentators, he talks about macroeconomics in a way that is simple to understand, despite his amazing breadth of knowledge and years of experience he doesn’t try to confound people with lofty talk or big words and he bridges the gap between high level ability and the common man.

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Rock bottom, when you reach it, you won't know it

Capitulation, the point in the market cycle of emotions when right before despondency. Despondency is actually the point of the opportunity for greatest profit, and reaching that point requires going through a painful process. The primary factor is that before any recovery we will need to see all of the dead-wood clear from the system, and that is not a pleasant process, it is however, an important part of the process and anybody who says we can have ‘painless recovery’ is not telling the truth.

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Rock bottom, when you reach it, you won’t know it

Capitulation, the point in the market cycle of emotions when right before despondency. Despondency is actually the point of the opportunity for greatest profit, and reaching that point requires going through a painful process. The primary factor is that before any recovery we will need to see all of the dead-wood clear from the system, and that is not a pleasant process, it is however, an important part of the process and anybody who says we can have ‘painless recovery’ is not telling the truth.

Read More

The ‘Carry Trade’ or ‘Stoozing crack-smoker style’

‘Crack-addict stoozing’ or ‘stoozing on steriods’ is one way to describe the Carry Trade. It’s important at this point to realise that the carry trade knows no boundaries, and it seeps through literally millions of investments, from food to mortgages. What is the ‘Carry Trade’? Simply put it’s kind of like institutional stoozing (see previous post on stoozing). When you stooz you get a credit line of 0% or close to it (normally in the form of a credit card) you borrow all you can on it and put the money on deposit, when the 0% credit runs out you repay the loan and keep the deposit interest you earned. The same thing is being done with Japan, only in the billions, even trillions.

Institutions borrow money from the Bank of Japan at extremely low interest rates (at one point it was 0%!), typically below 1% and then they often leverage this money (borrow using it as collateral) up and invest in anything that might grow, in fact this practice had a lot to do with the worldwide credit crisis …

Read More

The 'Carry Trade' or 'Stoozing crack-smoker style'

‘Crack-addict stoozing’ or ‘stoozing on steriods’ is one way to describe the Carry Trade. It’s important at this point to realise that the carry trade knows no boundaries, and it seeps through literally millions of investments, from food to mortgages. What is the ‘Carry Trade’? Simply put it’s kind of like institutional stoozing (see previous post on stoozing). When you stooz you get a credit line of 0% or close to it (normally in the form of a credit card) you borrow all you can on it and put the money on deposit, when the 0% credit runs out you repay the loan and keep the deposit interest you earned. The same thing is being done with Japan, only in the billions, even trillions.

Institutions borrow money from the Bank of Japan at extremely low interest rates (at one point it was 0%!), typically below 1% and then they often leverage this money (borrow using it as collateral) up and invest in anything that might grow, in fact this practice had a lot to do with the worldwide credit crisis …

Read More